Markets Fall Despite In-Line CPI, 400 Million Additional Barrels of Supply: March 11, 2026

Markets fell broadly on Wednesday even with the CPI arriving in line with expectations and IEA members agreeing to provide 400 million barrels of oil from strategic reserves. Stocks sank and yields soared throughout the Treasury curve as WTI crude remained above $87. Progress in the Middle East amidst cooperation amongst Western countries has certainly helped oil cool off from the $119.48 level reached on Monday; however, the commodity was still up 54% year to date, illustrating the ongoing risk of an extended conflict which would likely be accompanied by transportation constraints along the Strait of Hormuz and upside risks to inflation. In trading, every equity sector and major benchmark declined minus energy and technology, as the greenback strengthened as a result of tightening financial conditions stemming from loftier interest rates. Elsewhere, non-energy commodities faced selling pressure, but volatility protection instruments caught catching bids in light of defensive winds on Wall Street. Cryptocurrencies and forecast contracts also experienced engagement.

February Inflation Was Steady and Met Expectations

February inflation was in line with forecasts and roughly unchanged from the preceding month as subdued housing costs and declining used car prices offset the impact of groceries, medical care and apparel becoming much more expensive, according to the Consumer Price Index (CPI). The gauge was up 2.4% year over year (y/y) and 0.3% month over month (m/m). The y/y print matched January’s result while the m/m rate inched up from 0.2%. Both February metrics were consistent with consensus estimates.

Within the m/m gauge, shelter increased 0.2% and had the largest impact on the headline. Food and energy, furthermore, climbed 0.4% and 0.6%. The food at home and away from home components increased by 0.4% and 0.3%, respectively. In other areas, apparel, medical services and transportation were 1.3%, 0.6% and 0.2% more expensive m/m.

The Core CPI, which excludes energy and food due to the items’ volatile prices, depicted easing m/m inflation and a y/y print that matched January’s result. When compared to January, the gauge was 0.2% higher, exactly the same as the consensus estimate and softer than the preceding print depicting a 0.3% ascent. The y/y core result, at 2.5%, was consistent with the economist consensus and January’s print.

Oil Needs to Plunge to Keep CPI In Low 2s WTI crude oil had advanced over 34% y/y as of Wednesday even after the dramatic pullback from the jump to $119.48 and it will be almost impossible to keep the CPI in the low 2s unless we see a plunge in the critical commodity’s price. For this reason, Fed watchers on Wednesday anticipated only one rate cut in 2026, which derailed investor sentiment regarding cyclical equity areas that benefit the most from monetary policy accommodation amidst a reaccelerating economy. The problem with elevated energy costs is that they are not only inflationary, but they also reduce the capacity for consumers to spend on goods and services and for firms to hire and initiate capital expenditures, as more funds must be allocated toward fuel. An increasingly cautious outlook paired with expectations of a tighter central bank has reversed powerful year-to-date rallies in the Dow Jones Industrial and Russell 2000 indices, which were offsetting declining AI enthusiasm that continues to weigh on the Nasdaq 100 and S&P 500 benchmarks. The good news, however, is that valuations have decreased substantially against the backdrop of flat stock performance during the past six months, and favorable Middle East developments could potentially generate a meaningful advance from here.

Past performance is not indicative of future results.

International Roundup

Japan Wholesale Inflation Slows Despite Weakening Yen

Wholesale price pressures in Japan eased during January with the preliminary Producer Price Index down 0.1% m/m and up only 2% y/y. The results showed gate price inflation slowing from December’s 0.2% m/m and 2.3% y/y ascents. The metrics were also below the m/m and y/y economist consensus estimates for 0.1% and 2.2% hikes.

On a yen basis, exporters boosted prices by 1.2% m/m and 9.5% y/y while importers experienced cost climbs of 0.1% and 2.8% at a time when the country’s currency is weakening.

More broadly, m/m price gains within Japan were led by petroleum and coal products, which became 3.1% more costly after sinking 2.5% in December. Other categories with notable price gains and the extent of the changes were as follows:

• Scrap and waste 1.7%
• Metal products, 1.2%
• Production machinery, 0.5%
• Pulp, paper and related products, 0.4%
• Lumber and wood products, 0.3%
• Electrical machinery and equipment, 0.3%

The impacts of those results were more than offset by the following categories that experienced price declines as stated:

• Electric power, gas and water, 6%
• Textile products, 0.9%
• Information and communications equipment, 0.3%
• Plastic products, 0.2%
• Minerals, 0.2%