A clearly exasperated Trump put out a series of unhinged expletive-ridden social media posts over the weekend threatening the destruction of civilian infrastructure in Iran starting on Tuesday evening which pushed oil prices deeper into triple digits, but there was very little in terms of credible clarity for traders to chew on at the weekend.

A week including some key economic data and the start of Q1 2026 earnings season kicked off quietly on a low-volume Monday session with a temporary pause in the headline roulette and stocks tentatively built on the previous week’s gains in a state of confused optimism ahead of potentially violent two-way volatility from either a brutal US/Israel onslaught or another TACO Tuesday.

In fact, Israel seemingly couldn’t wait to start hitting civilian targets in Iran and jumped the gun on Tuesday morning which pushed up energy prices. Trump, who appears to be treating this whole situation like some tawdry New York real estate transaction characterized by shameless brinkmanship and nasty threats, posted that “a whole civilization will die tonight”.

A sense of unease settled on Wall Street. Stock prices sank and interest rates drifted higher as the deadline grew closer. However, there was a late-session recovery on the back of rumors of some kind of diplomatic breakthrough brokered by Pakistan and the indexes closed unchanged on the day.

After the close, Trump capitulated, announcing a two-week suspension of all strikes on Iran, improbably claiming that the US had “already met and exceeded all military objectives”. In return, Iran agreed to conditionally re-open the Strait of Hormuz for the two-week period (but still charging crypto tolls to any traffic) and bilateral talks were set for the weekend in Pakistan.

As both sides desperately tried to spin the narrative as a win including undisguised victory laps with “mission accomplished” rhetoric from both Trump and Hegseth, traders scrambled frantically to re-price risk assets in the wake of the announcement. Oil prices crashed by the most since early COVID, interest rates tumbled and stock markets around the world absolutely skyrocketed in Asia and Europe for their biggest one-day gains in years.

When Wall Street opened on Wednesday, its comeback was a little less spectacular, but it was still a very strong day for the stock indexes. While it was unclear how long it would last, traders treated themselves to at least a day of euphoric relief. Some Q1 earnings began to trickle in and were mostly positive ahead of the banks kicking off the season in earnest this week.

After Wednesday’s massive dopamine hit, the jubilation subsided across global markets on Thursday with accusations already flying that terms were being violated and the Strait of Hormuz still basically closed.

Oil prices and interest rates bounced back higher overnight and international stocks fell. The latest PCE numbers and the most recent Q1 GDP estimate were published ahead of the US opening bell, showing sticky inflation, consumer spending stalling and a declining rate of economic growth. However, reports that Israel and Lebanon were planning direct ceasefire talks helped to reverse early losses on Wall Street and the indexes closed with light gains.

The late rebound followed through into Asian and European markets on Friday. Wall Street got to see the latest CPI data which saw inflation shoot up to an annualized rate of 3.3%. The month-to-month jump was the biggest since 2022, but over three-quarters of it was down to war-related energy price increases.

Wall Street chose to look through the hopefully-transitory oil price effect and stocks made further incremental gains when markets opened as traders marginally added to bets that the Fed may still cut the Fed Funds Rate at least once this year. This was despite the fact that Americans are feeling miserable right now with the monthly measure of Consumer Sentiment collapsing to the lowest level in history.

Trader reluctance to go into yet another highly unpredictable high stakes weekend with meaningful long positions caused prices to ease back to unchanged by the close and the indexes’ best week for months came to a relatively quiet end.

Markets are quite heavily banking on the war being in the rear view mirror relatively soon with a noticeable improvement in Strait of Hormuz traffic, even if not back to pre-conflict levels for a while. Whether tolls are going to be charged and exactly to whom they will be paid doesn’t matter much to traders who feel they can probably live with $80-$90 oil for a while.

Confirmation of this scenario will likely see a continuation of last week’s solid rally but in the case that everything goes to s**t (possibly as early as this weekend), this rather asymmetric view of things means that renewed significant falls in stock prices are far from off the table if oil prices get back into the $110-$150 range or higher.

If you are not yet a financial planning or investment management client of Anglia Advisors and would like to explore becoming one, please feel free to reach out to arrange a complimentary no-obligation discovery call with me.

ARTICLE OF THE WEEK ..

Your brain is buggy software, badly infected with recency bias when it comes investing. Learn to zoom out.

.. AND I QUOTE ..

“We won’t applaud those who set the world on fire just because they turn up with a bucket.”

Spanish Prime Minister Pedro Sanchez refuses to fully endorse the ceasefire.

LAST WEEK BY THE NUMBERS:

Last week’s S&P 500 market color courtesy of finviz.com

Last week’s best performing US sector: Technology (two biggest holdings: Welltower, Prologis) ⬆︎ 4.9% for the week

Last week’s worst performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) for the second week in a row ⬇︎ 3.9% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price rose 3.6% last week, is down 0.4% so far this year and ended the week 2.6% below its all-time record closing high (01/27/2026).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price rose 4.0% last week, is up 6.2% so far this year and ended the week 3.8% below its all-time record closing high (01/22/2026).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price rose 4.9% last week, is up 5.7% so far this year and ended the week 3.6% below its all-time record closing high (02/25/2026).

INTEREST RATES:

* FED FUNDS RATE * ⬌ 3.625% (unchanged from a week ago)

* PRIME RATE ** ⬌ 6.75% (unchanged from a week ago)

* 3 MONTH TREASURY ⬇︎ 3.69% (3.70% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.81% (3.79% a week ago)

* 5 YEAR TREASURY ⬌ 3.94% (3.94% a week ago)

* 10 YEAR TREASURY *** ⬌ 4.31% (4.31% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.89% (4.88% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.91% (4.88% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday

* Decided upon by the Federal Reserve Open Market Committee at periodic meetings 8x a year. Used as a basis for overnight interbank loans and for determining high yield savings interest rates.

** Wall Street Journal Prime Rate as of Friday’s close. Tending to move in lockstep with the Fed Funds Rate, this measure is used as a basis for determining certain consumer loan...