Week in Markets: Iran War Escalates, NFP Crashes to -92K, Oil Crosses $100, BTC $74K Fakeout

The United States went to war with Iran, the labor market broke, and Bitcoin rallied 15% in 48 hours before giving it all back. This was not a normal week.

Last week we asked five questions. Does the Strait of Hormuz reopen? It did not. Iran's IRGC formally confirmed the closure on Monday and started hitting tankers by Thursday. Does Iran's retaliation escalate? Yes. Missile strikes on ships, a tugboat sunk, drones on oil tankers. Can BTC hold $60K? It held and then some, surging to $74,000 before reversing. Does NFP confirm stagflation? Worse. The US economy lost 92,000 jobs in February, the first negative payroll print since the pandemic. Did the Ukraine talks produce a breakthrough? They never happened. Iran consumed all diplomatic bandwidth.

Oil crossed $100 a barrel by the weekend. The VIX hit 32. The S&P 500 lost 2% and the Dow lost 3%. Gold surged to $5,417 on Monday morning, its highest since the January 29 all-time high of $5,595, before pulling back to $5,100 by Friday. Bitcoin rallied 15% to $74K on a short squeeze before giving it all back on the NFP shock. The labor market is no longer cooling. It is contracting.

Macro Pulse

NFP: The Labor Market Cracks

Friday March 6. The most important data release of the week and possibly the quarter.

The US economy shed 92,000 jobs in February. Consensus expected a gain of 58,000. This is the first negative non-farm payrolls report since the pandemic recovery period.

The sector breakdown tells the story. Healthcare lost 28,000 jobs, driven largely by a Kaiser Permanente strike that sidelined over 30,000 workers in Hawaii and California. Federal government employment fell 10,000 as Trump's workforce reduction program continued. Since October 2024, federal payrolls have shed 330,000 jobs, 11% of the total federal workforce. Transportation and warehousing lost 11,000. Manufacturing lost 12,000.

The December revision was brutal. What was originally reported as +48,000 jobs was revised to -17,000. That means the US economy was already contracting in December and nobody knew it until now.

The unemployment rate ticked up to 4.4%. Not dramatic in isolation, but combined with the negative headline number and the downward revisions, this is the strongest signal yet that the labor market has shifted from cooling to contracting.

Markets reacted immediately. The S&P 500 fell 1.33%. The 10-year yield spiked to 4.17% on stagflation fears rather than falling on growth concerns. Oil surged above $90. The dollar dropped to 99.1 on the DXY. The message: bad data plus an oil shock equals stagflation, not rate cuts.

ISM: Manufacturing Holds, Services Surge

Monday and Wednesday delivered the ISM reports for February.

Manufacturing held above 50 for the second consecutive month, signaling continued expansion despite tariff headwinds. Services was the upside surprise. The ISM Services PMI jumped to 56.1, the highest reading since August 2022, beating consensus by 2.6 points. Services represent roughly 70% of the US economy. The divergence between a strong services sector and a contracting labor market suggests the weakness is concentrated in specific sectors rather than broad-based.

ADP: Private Payrolls Weak But Not Catastrophic

Wednesday March 4. ADP reported private sector employment increased by 63,000 in February, above the 49,000 consensus but still historically soft.

Annual pay growth for job-stayers held at 4.5%. Job-changer pay growth slowed to 6.3%. The labor market is softening but wages remain sticky, exactly the worst combination for a Fed trying to cut rates.

Fed: Trapped in a Box That Got Smaller

The Fed funds rate sits at 3.50%-3.75%. CME FedWatch shows 94.1% probability of no change at the March 17-18 FOMC meeting.

The Fed's dilemma intensified this week. Growth is contracting. Inflation is being fed by two exogenous shocks: tariffs and an oil supply disruption. Services are booming. The textbook response to negative payrolls is rate cuts, but you cannot cut rates when oil is at $90+ and tariffs are adding inflationary pressure. This is the stagflation trap in real time.

The 10-year yield rose to 4.17% by Friday, up roughly 20 basis points from 3.97% at the end of W10. The bond market is pricing inflation, not recession. If it were pricing recession, yields would be falling. Instead, they rose alongside deteriorating employment data. That is the stagflation signal.

Sources - Macro Pulse: BLS: Employment Situation Summary | CNBC: February 2026 Jobs Report | Yahoo Finance: NFP -92K | ADP: February Employment Report | CME FedWatch Tool

Geopolitics

Iran: From Strikes to Blockade

The week began with war and ended with an energy crisis.

On Monday March 3, the IRGC senior command formally confirmed the closure of the Strait of Hormuz. What had been a de facto shutdown through insurance withdrawal and tanker suspensions became an official naval blockade. On Wednesday March 5, the IRGC refined its position: the strait would remain closed only to ships from the US, Israel, and their Western allies. In practice, the distinction was irrelevant. Insurers pulled war risk coverage for any vessel transiting the strait, effectively shutting it to everyone.

The attacks on commercial shipping escalated through the week. A tugboat was sunk on Thursday. Two oil tankers were hit by drones on Friday. This is no longer a closure by implication. Iran is actively targeting maritime traffic.

Roughly 20 million barrels of oil per day transit the Strait of Hormuz, approximately 20% of global supply. Iraq has begun shutting down production at its largest oil fields because it has no export route. Supertanker rates soared as insurers dropped war risk protection entirely.

QatarEnergy: Force Majeure on LNG

On Wednesday March 4, QatarEnergy officially declared force majeure to its LNG buyers after Iranian drone strikes hit its Ras Laffan and Mesaieed facilities on March 2. Qatar supplies roughly 20% of global LNG. Europe and India are the most exposed. Dutch TTF natural gas surged 76% on the week, with a 35% single-day spike on Tuesday. Asian LNG benchmarks rose 39%.

USS Charlotte Torpedoes Iranian Frigate

On Tuesday March 4, the USS Charlotte torpedoed and sank the Iranian frigate IRIS Dena in international waters south of Sri Lanka. At least 87 dead, 61 missing. This was the first offensive torpedo fired by a US submarine against a surface vessel since World War II. The geographic extension of the conflict beyond the Middle East to the Indian Ocean was a significant escalation signal.

Iran Leadership Succession

Under IRGC pressure, Iran's Assembly of Experts elected Mojtaba Khamenei, the 57-year-old son of the slain leader, as the new Supreme Leader (officially announced March 8). The selection of a hardliner connected to the IRGC security apparatus signals no near-term de-escalation.

US Eases Russian Oil Sanctions

Facing the Hormuz supply shock, the US Treasury issued General License 133 on March 5, authorizing Indian entities to purchase Russian oil cargoes already at sea. The waiver expires April 3. Bloomberg reported Bessent was considering broader sanctions relief on Russian oil to offset the Iranian supply disruption. A geopolitical irony: the US is simultaneously at war with Iran and easing sanctions on Russia to manage the energy consequences.

Ukraine-Russia: Talks Postponed

The March 4-5 trilateral talks never happened. Zelensky announced that the peace negotiations were on hold because the Iran conflict had consumed all US diplomatic bandwidth. The one bright spot: Ukraine and Russia exchanged 200 prisoners of war each on March 5.

European Defense: Record Week Despite Market Selloff

The DAX suffered its worst week since the US tariff shock in April 2025, falling 6.7% to 23,591. But defense names surged.

Sources - Geopolitics: NPR: Strait of Hormuz Traffic | CNBC: Oil Surges 35% | The Peninsula Qatar: QatarEnergy Force Majeure | USNI News: USS Charlotte Torpedoes Iranian Frigate | Al Jazeera: Mojtaba Khamenei New Supreme Leader | Bloomberg: US Eases Russian Oil Sanctions | Al Jazeera: Ukraine-Russia POW Exchange

Markets

Indices: War, Data, and a 3% Dow Plunge

This was the most volatile week of 2026. The Iran conflict, an oil shock, the worst jobs report in years, and a crypto summit all compressed into five trading days.

Monday: Dow lost 521 points. Tuesday: S&P fell 0.94%. Wednesday: ADP and ISM Services triggered a relief rally, S&P +0.78%. Thursday: gains held. Friday: NFP at -92K killed everything. S&P fell 1.33%, Dow dropped 453 points, Nasdaq lost 1.59%.

Yields: Stagflation Signal

The 10-year yield surged 20 basis points alongside negative payrolls. In a normal cycle, bad jobs data sends yields lower. In a stagflation cycle, bad jobs data plus an oil shock sends yields higher. This is the latter.

Commodities: Gold's Wild Ride, Oil's March to $100

Gold surged to $5,417 on Monday, its highest since the January 29 ATH of $5,595, then reversed to $5,100 by Friday. Rising yields and a stronger dollar capped the war premium. Gold remains up approximately 100% over 12 months.

Oil made history. WTI surged 35.63% on the week, the largest weekly gain in futures trading history dating back to 1983. By the weekend, both Brent and WTI crossed $100. Iraq has suspended 1.5 million barrels per day of production with no export route available.

Sector Rotation

Sources - Markets: Yahoo Finance: Volatile Week | CNBC: Stock Market March 3 | CNBC: Stock Market March 6 | Axios: Oil Tops $100

Crypto

Price Action: The $74K Fakeout

Bitcoin had its most dramatic week since the January crash. A 15% rally from the lows, a $74K print, a complete reversal, and a net weekly change of approximately +3%.

Monday-Tuesday: BTC surged from $66,500 to $71,890 on a massive short squeeze. Funding rates had been deeply negative for weeks. Post-Iran bounce and ETF inflows ($458M Monday, $225M Tuesday) forced shorts to cover violently.

Wednesday-Thursday: The breakout accelerated to $74,000. Crypto gained access to the Federal Reserve payment system for the first time on March 5.

Friday into the weekend: Complete reversal. Oil above $90 and NFP at -92K crushed risk appetite. BTC dropped from $74K to $67,340. A massive spike in $1M+ transactions occurred exactly at the top. Whales used the liquidity to exit.

Strategic Bitcoin Reserve: One Year Later

This week marked the one-year anniversary of Trump's Executive Order establishing the Strategic Bitcoin Reserve. The reserve exists on paper but not in practice.

ETF Flows: Two Weeks of Inflows, Then Friday

Monday's $458M was among the strongest daily inflows in months. BlackRock's IBIT dominated. But the pattern broke Thursday-Friday as the rally reversed.

Institutional Milestones

Tuesday March 4 was the single most important day for crypto institutional adoption in months. Three announcements in 24 hours:

1. Kraken secured a Federal Reserve Master Account through the Kansas City Fed, becoming the first crypto exchange with direct access to the Fed payment system.

2. ICE (NYSE's parent company) invested in OKX at a $25 billion valuation, creating a strategic partnership for tokenized stocks.

3. Morgan Stanley named BNY Mellon as custodian for its Bitcoin ETF, deepening the TradFi infrastructure stack.

The irony: these three announcements represent the most significant week of institutional crypto news since the ETF launches. BTC's response was to rally to $74K and then give it all back.

Derivatives & Sentiment

Retail is panicking. Institutions are buying. Whale wallets accumulated 270,000 BTC over the past 30 days, one of the largest accumulation sprees in Bitcoin's history. The Fear and Greed Index remained in Extreme Fear for the 38th consecutive day.

Monad Ecosystem

Aave DAO voted to approve deployment of Aave v3 on Monad, with 873,000 votes in favor and zero against. The Monad Foundation committed $15 million in incentives. Chainlink CCIP is now bridging cbBTC from Base to Monad, unlocking access to $5B+ in BTC liquidity.

Sources - Crypto: CoinDesk: Bitcoin Breaks $73K | CoinDesk: Bitcoin Drops Under $71K | CoinDesk: SBR One Year Later | Bloomberg: Kraken Secures Fed Access | CoinDesk: ICE-OKX Partnership | CoinDesk: $110B Wipeout

Week Ahead

March 10-14: CPI, GDP, and the FOMC Countdown

The week ahead is loaded. CPI on Wednesday is the most important data point before the March 17-18 FOMC meeting.

CPI is the macro event of the week. Core CPI at 0.2% would be a meaningful deceleration. A hot print above 0.3% would cement the stagflation narrative. Core PCE on Friday at 0.4% would remove any possibility of a March cut.

Key Questions for W12

1. Does CPI confirm the stagflation thesis, or does a cooler print offer relief?

2. Does the Strait of Hormuz situation escalate further, or does the "Western allies only" narrowing create room for partial reopening?

3. Can BTC hold $65K support after the $74K rejection, or does the bear market resume?

4. Do the Ukraine-Russia trilateral talks finally happen, or does Iran continue to consume all diplomatic oxygen?

5. With oil at $100+, does the White House take any action (SPR release, diplomatic overture) to cap energy prices?