WTI crude futures climbed to around $106 per barrel on Tuesday, on track for a record monthly surge of about 60% as the Middle East conflict showed no signs of abating and continued to disrupt global energy markets. In the latest developments, President Donald Trump threatened strikes on Iran’s electricity plants, oil facilities, and desalination infrastructure if the Strait of Hormuz is not reopened. This overshadowed his earlier signals that a deal with Iran could be near, even as the US deployed additional troops to the region. Iran-backed Houthis in Yemen also entered the conflict by targeting Israel over the weekend, while Tehran is reportedly urging militant groups to prepare for a renewed campaign to disrupt Red Sea shipping. Such developments risk further tightening energy flows from the Middle East, as two of the main strategic waterways in the world for trade and energy supplies could potentially be cut off.

Germany’s inflation rate climbed to 2.7% year-over-year in March 2026, up from 1.9% in February and matching market forecasts, according to a preliminary estimate. This marks the highest level since January 2024, driven by a 7.2% spike in energy prices, the first yearly increase since December 2023, amid the ongoing Middle East conflict. Services inflation held steady at 3.2%, while core inflation, which excludes food and energy, remained at 2.5%, and food inflation eased to 0.9% from 1.1%. The harmonized CPI, closely watched by the ECB, also rose to a 14-month high of 2.8%, keeping both measures above the ECB’s 2% target.

US stock indices were mixed on a volatile Monday as a sharp retreat in Treasury yields failed to sustain a broad based equity rally following dovish remarks from Federal Reserve Chair Jerome Powell. While the Dow edged 0.1% higher, the S&P 500 and Nasdaq Composite dipped 0.4% and 0.8% respectively as heavy losses in the semiconductor sector offset gains in financials and utilities. Powell signaled that the central bank intends to look through the current energy price shock with West Texas Intermediate futures surging amid persistent threats to Red Sea exports and Iranian infrastructure. Although the 10-year Treasury yield tumbled, chipmakers like Micron (-9.7%) and Lam Research (-5.4%) led the decline as investors pivoted toward energy and utility giants reaching all time highs. Despite President Trump's report of serious discussions in Iran the CBOE Volatility Index remained elevated as markets weigh resilient corporate earnings against the risk of an energy infrastructure meltdown.

The Dallas Fed's general business activity index for Texas manufacturing fell to -0.2 in March 2026 from 0.2 in February, indicating no change in activity. However, the company outlook index dropped nearly seven points to -3.5, moving into negative territory. The outlook uncertainty index surged 20 points to 26.0, its highest reading since April 2025. Employment growth stalled and workweeks were flat in March. The employment index came in near zero, with 15 percent of firms reporting net hiring and 16 percent reporting net layoffs. The hours worked index fell to 0.9 from 6.1. Price pressures were little changed while wage growth slowed. The finished goods prices index and raw materials prices index held relatively steady at 18.4 and 32.7. The wages and benefits index fell to 25.2 from 31.9. Looking ahead, manufacturers expect increased activity in six months. The future production index held steady at 35.7 and the future general business activity index fell two points to 10.6.

US natural gas futures dropped more than 5% to $2.866 per MMBtu as warmer weather forecasts across the eastern US reduced demand expectations heading into spring. Temperatures are now seen above average from March 30 to early April and again mid month, limiting heating needs and supporting expectations of rising stockpiles. Although the EIA reported a larger than usual storage draw last week, it is widely viewed as the final withdrawal of the winter season, with inventories projected to shift from a small surplus in mid March to a much larger surplus by mid April. Meanwhile, President Donald Trump said a deal to end Middle East hostilities is likely but warned of potential strikes on Iran’s energy infrastructure if the Strait of Hormuz is not reopened. Despite geopolitical tensions, US gas prices remain relatively stable due to strong production, ample inventories and limited short-term exposure to global markets.

The Eurozone Economic Sentiment Indicator (ESI) dropped to 96.6 in March 2026, down from a revised 98.2 in February and missing market forecasts of 96.8. The decline was fueled by rising inflation expectations tied to the Middle East conflict, with consumer confidence plunging (-16.3 vs. -12.3) as inflation fears surged 17.2 points to 43.4, the highest since July 2022. Retailer sentiment also weakened (-7.2 vs. -5.2), while service sector confidence held steady (4.9 vs. 5.0). Manufacturers saw a slight improvement (-7.0 vs. -7.2), though their selling price expectations jumped 7.4 points to 19.7, the highest in three years. Construction sentiment edged up (-2.0 vs. -2.2). Among major economies, the ESI fell sharply in France (-3.7) and Spain (-2.4), with notable declines in the Netherlands (-1.5) and Italy (-1.3), while Germany remained stable (-0.1).