WTI Touches $98.56 as Investors Consider an Extended Conflict, Economic Slowdown: March 27, 2026

Oil prices are soaring today as investors increasingly consider an extended Middle East conflict. President Trump’s attempts to inject calm into markets appears to have a lessening impact every time, with yesterday’s decision to extend the reprieve on Iran’s energy facilities to April 6 only having a temporary positive effect on Wall Street that reversed promptly. Stocks are currently sharply lower and the Nasdaq 100 even sank more than 10% from its record, entering correction territory and erasing notable overnight gains as Washington and Tehran remain far apart on a ceasefire deal. But despite WTI touching $98.56, fixed-income watchers are now increasingly worried about an economic slowdown rather than an inflationary episode, as yields fall even as a 4-handle on CPI this year becomes closer to reality. A downward revision to UMich Consumer Sentiment alongside surging crude costs certainly didn’t help to bolster confidence in the health of the cycle either. Safe-haven, defensive bids are driving interest for Treasuries and additionally, the greenback, volatility protection instruments, precious metals and commodities as a whole. A lack of animal spirits across asset classes against the backdrop of the major benchmarks on track for their longest stretch of weekly losses since 2022 is weighing on cryptocurrencies, although forecast contracts are experiencing engagement.

Consumer Sentiment Report Revised Downward

Household moods concerning the economy worsened as this month progressed with this morning’s final March Consumer Sentiment Index from the University of Michigan (UMich) downwardly revised from 55.5 to 53.3. The sub-indices of current conditions and expectations for the future were adjusted from 57.8 and 54.2 to 55.8 and 51.7. Furthermore, folks from across the income and wealth spectrums exhibited disappointment with the present level and trajectory of price pressures, geopolitical uncertainty stemming from the Middle East conflict and volatility on Wall Street that has been hampering equity and bond portfolios alike. 

Treasuries Break Their Correlation With Crude Oil

Interest rates and crude oil prices climbed simultaneously during the past four weeks as the Middle East conflict has escalated. The rationale for the correlation is that higher energy costs would lead to central bank restriction amidst heavier inflation expectations, lifting both the shorter tenors and the long end of the Treasury complex. But a material change since the war began is that the ongoing relationship has reversed sharply this morning, as fixed-income traders begin to factor in the adverse, demand destruction effects of West Texas Intermediate (WTI) trading near $100 for a prolonged period of time. Yield watchers are increasingly considering the unfortunate pressures to corporate revenues, margins and earnings as a result of ballooning charges across the economy and the ensuing hit to consumer spending and employment. The significant shift occurs as President Trump’s persistent efforts to reassure markets that he is making progress in Iran are having a declining effect after each attempt as investors struggle to keep calm against the backdrop of continued violence in the energy-rich region.

International Roundup

Profits Strengthen in China’s Industrial Sector

China’s efforts to curtail price wars and excess factory capacity appear to be paying off – industrial profits jumped 15.2% year over year (y/y) during the first two months of 2026, according to the National Bureau of Statistics (NBS). The gain follows December’s 5.3% y/y growth. For the entirety of 2025, however, earnings were up only 0.6%, which nevertheless was an improvement from the prior three years of declines. For the recent period, the bottom line for the electronics sector soared 200% with demand for semiconductors accelerating due to worldwide efforts to build artificial intelligence services. A global uptick in orders for metals, additionally, was a tailwind for mining, smelting and pressing companies.

Iran Angst Pushes UK Consumer Confidence Down

Sentiment among UK shoppers sank this month to its lowest level since April 2025 with the Gfk Consumer Confidence Barometer from NIM retreating from -19 to -21. Despite the decline, the result was a tad stronger than the economist consensus estimate of -24. Within the report, the general economic situation over the last 12 months was the only category that strengthened, moving from -44 to -43. The other four categories declined or were unchanged as follows:

• Personal financial situation over the last 12 months, unchanged at -7
• Personal financial situation in the next 12 months, down 1 point to 1
• General economic situation over the next 12 months, down 6 points to -37
• Major purchase index, down 4 points to -18

Separately, the savings index climbed six points to 27.

And UK Sales Weaken

UK shoppers tightened their purse strings in February with retail sales sinking 0.4% month over month (m/m) after climbing 2% in the preceding month, according to preliminary data from the Office for National Statistics (OFNS). The result still beat the economist estimate for a 0.6% drop and total transactions were 2.5% higher than in the year-ago period. The y/y result, while beating the estimate for growth of 2.1%, was a deceleration from January’s 4.8% expansion.

According to the OFNS, retailers said rainy weather kept customers at home while promotional events in January pushed sales forward, lowering February demand. Indeed, overall purchases for the three-month period ended in February were positive, albeit weak, at 0.7% relative to the September through November period. Underscoring the observation of weather headwinds and sales being pushed forward, activity at household goods stores plunged 2.6% m/m. Other categories that weakened and the extent of their changes were as follows:

• Textile clothing and footwear stores, 1%
• Food stores, 0.7%
• Non-store retailing, 0.5%
• Automotive fuel, 0.5%

Department stores and other non-food stores bucked the trend with total receipts climbing 0.8% and 1.4%.