Daily Market Outlook - Tuesday, March 10

Asian markets surged, and crude oil prices took a tumble after President Trump suggested a potential de-escalation in the Iran conflict, lifting spirits after Monday's sharp selloff in riskier assets. The MSCI Asia Pacific Index climbed 3%, with tech stocks leading the charge. European stocks were also set to ride the wave of optimism, with futures pointing to a 1.3% uptick. However, U.S. equity futures painted a slightly different picture—S&P 500 Index contracts edged down by 0.2%, hinting that Monday’s Wall Street rally might be losing momentum. Meanwhile, Brent crude took a nosedive, dropping 6.1% to settle at $92.90 per barrel, after briefly plunging as much as 11%. Despite Tuesday’s drop, oil prices remain up over 50% for the year so far. The U.S. dollar weakened against most of its Group-of-10 counterparts, while yields on 10-year Treasury notes ticked up two basis points to 4.11%, snapping a five-day winning streak from earlier in the week. Precious metals like gold and silver also saw gains.

However, the critical Strait of Hormuz remains largely closed, forcing major oil producers in the Persian Gulf, including Saudi Arabia, to scale back production. The strait is a vital chokepoint for global oil shipments, keeping energy markets on edge despite the day’s upbeat sentiment.

Trump’s recent statements about the conflict have been somewhat contradictory. While he described the war as "very complete," he also indicated it wouldn’t end this week but "very soon," and issued a stark warning to Iran, vowing to retaliate "twenty times harder" if the Strait of Hormuz were blocked. These remarks appear to be aimed at calming the surge in oil prices. His references to potentially waiving oil-related sanctions further underscore this intention. To some extent, this strategy has been effective—Brent crude is now trading around $92 per barrel, nearly back to Friday’s closing levels and significantly lower than yesterday’s peak of $119.50 per barrel. However, despite any signs of indecision or "TACO"-style wavering from Trump, the Iranian response remains unpredictable, leaving the trajectory of the conflict unclear. Additionally, the damage to regional energy infrastructure suggests that a full recovery in energy production and transport will take time, even in the best-case scenario. For central banks, this uncertainty poses challenges. Market expectations around near-term policy decisions have already shifted significantly over the past ten days. While the recent oil price spike is notable, when adjusted for inflation (calculated in real 2026 dollars), it is far from a historical extreme—less than half of the 2008 peak. If this marks the beginning of a de-escalation with energy prices continuing to stabilize, it could provide macro investors with a bit more clarity. In such a scenario, anticipated rate cuts by the Fed and the Bank of England might only be slightly delayed, rather than canceled outright or replaced with rate hikes.

Domestically, overnight, the UK British Retail Consortium released its monthly sales monitor for February, revealing that same-store sales values grew by just 0.7% year-on-year, a significant decline from the 2.3% growth recorded in January. Total sales followed a similar trend, rising only 1.1% year-on-year compared to 2.7% previously. A clear divide emerged between food and non-food sales: food sales values increased by 2.9% year-on-year, while non-food sales values dropped by 0.4% year-on-year. With UK food price inflation still exceeding 3%, the data suggests that the rise in food sales value was primarily driven by price increases rather than higher sales volumes. In essence, the already lackluster figures in value terms appear even weaker when adjusted for inflation. More broadly, the smoothed quarterly data from the BRC indicates that the strength seen in January's ONS retail sales data may not be sustained, as February's figures hint at a potential slowdown.

Overnight Headlines

Trump Says War to End ‘Very Soon,’ Floats Removing Oil Sanctions
G7 To Take 'Necessary Measures' To Support Energy Supplies
Trump Weighs Several Options To Tame Surging Gasoline Prices
Iran’s Leadership Signals It Is Still In Control And Able To Fight
UK Consumer Confidence Plunges To Four-Month Low Amid Iran War
Japan’s Growth Beats Estimates In Boost A For BoJ Hikes
China’s Exports Surge in First Two Months of Year
Xi’s Export Juggernaut Is Leaving China’s Factory Workers Behind
Apple Now Makes About 25% Of iPhones In India After China Pivot
Anthropic Sues US Government Over Supply Chain Risk Label
Goldman-Led Lenders Brace For Loss On Arclin Debt As Demand Cools
HPE Raises Earnings Outlook, Expects Memory Shortage To Persist
Soaring Credit Risk Pushes Borrowers To Keep Delaying Bond Sales

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

EUR/USD 1.1500 (€757m), 1.1525 (€720m), 1.1595 (€545m), 1.1600 (€939m), 1.1640 (€1.2bn), 1.1650 (€1.5bn), 1.1695 (€1.0bn), 1.1700 (€3.7bn)
USD/JPY 155.00 ($1.1bn), 157.75 ($622m), 159.00 ($739m)
USD/CHF 0.7725 ($550m), 0.7950 ($655m)
AUD/USD 0.7100 (A$703m)
EUR/GBP 0.8800 (€810m)

CFTC Positions as of March 6, 2026:

Equity fund speculators trim S&P 500 CME net short position by 66,786 contracts to 399,180 Equity fund managers cut S&P 500 CME net long position by 8,773 contracts to 996,776
Speculators increase CBOT US 5-year Treasury futures net short position by 25,863 contracts to 2,090,794 Speculators trim CBOT US 10-year Treasury futures net short position by 119,513 contracts to 654,507 Speculators trim CBOT US 2-year Treasury futures net short position by 9,495 contracts to 1,338,541 Speculators trim CBOT US UltraBond Treasury futures net short position by 24,793 contracts to 255,694 Speculators raise CBOT US Treasury bonds futures net long position by 15,191 contracts to 20,265
Bitcoin net long position is 1,011 contracts Swiss franc posts net short position of -41,283 contracts British pound net short position is -72,686 contracts Euro net long position is 136,498 contracts Japanese yen net short position is -16,575 contracts