Week in Markets: Hormuz Commander Killed, Houthis Enter War, Oil Crosses $100

Israel killed the man who closed the Strait of Hormuz. Admiral Alireza Tangsiri, commander of the IRGC Navy since 2018, died in an Israeli strike on Bandar Abbas on Thursday March 26. Within 48 hours, Yemen's Houthis fired their first missiles at Israel, opening a second front and threatening a second chokepoint. Brent crude surged to $112.57. WTI crossed $100 intraday for the first time since July 2022.

The week started with hope. Trump had delayed strikes on Iran's power grid the previous Monday, citing "productive conversations." By Tuesday, Russia launched its spring offensive with the largest drone barrage since the war began. By Thursday, Israel escalated in Iran while Trump extended his deadline a second time to April 6. By Friday, China launched two trade probes against the US, the Dow plunged 800 points, and Iranian missiles hit a Saudi air base hosting American troops. Saturday brought the Houthis.

Five consecutive weekly losses for the S&P 500. Nasdaq in correction territory. Bitcoin below $66,200. Ethereum briefly under $2,000 for the first time since mid-2024. The Fear and Greed Index at 12, its lowest reading since October 2023. And the week ahead brings NFP, ISM Manufacturing, and Powell at Harvard. The war is a month old. The damage is compounding.

Macro Pulse

Rate Expectations Flip

The biggest shift this week was not in rates themselves but in what markets expect next. CME FedWatch crossed a threshold on Friday: for the first time in this cycle, traders priced a greater than 50% probability of a rate hike by end of 2026. Not a cut. A hike.

Three weeks ago, markets expected two cuts. Now they expect one hike. The 2-year Treasury yield has climbed 53 basis points since March 1, reflecting this complete repricing. The catalyst is oil. With Brent above $110 and WTI touching $100, energy-driven inflation is forcing the Fed into a corner it has not faced since the 1970s.

The 10-year yield hit 4.44% on Thursday, its highest level since July 2025. The curve continues to normalize from its long inversion, now firmly positive at +55 basis points on the 2s10s. In a normal environment, that would signal growth. In this one, it signals that long-end investors see persistent inflation while the front end prices a Fed that may have to tighten again.

The FOMC held rates at 3.50-3.75% on March 18 in an 11-1 vote. Governor Miran dissented, preferring a cut. The dot plot projects just one reduction this year. But the market has moved well past the dots. If oil stays above $100 through Q2, the question is no longer when the Fed cuts. It is whether the Fed hikes.

Consumer Confidence Crumbles

The University of Michigan's final March reading came in at 53.3, missing the 54.0 consensus and down 6% from February's 56.6. The one-year inflation expectation jumped to 3.8% from 3.4%. Consumers see their energy bills rising, their portfolios falling, and their economic outlook darkening.

Recession odds are climbing across forecasters. Goldman Sachs raised its probability to 30%. Moody's AI model sits at 49%. The consumer is not panicking yet, but the confidence erosion is accelerating at exactly the wrong time for an economy already absorbing an oil shock.

Dollar Steady on Fear

The DXY dollar index edged up to 99.9, its third consecutive session of gains. The move was modest but telling. The dollar is benefiting from safe-haven demand despite structural headwinds from the deficit and tariff uncertainty. In a flight-to-safety regime, the dollar still wins.

Sources - Macro Pulse: Federal Reserve: FOMC Statement | CNBC: Markets See Potential Rate Hike | Advisor Perspectives: Consumer Sentiment | FRED: 10Y Treasury

The War Enters Its Second Month

Hormuz: Deadline Extended, Nothing Resolved

Trump extended his ultimatum to Iran for the second time on Thursday March 26. The new deadline is Monday April 6, 8 PM Eastern. Via Truth Social, he claimed Iran had let "a few tankers through" as a goodwill gesture. Iran denied any direct negotiations, acknowledging only messages exchanged through intermediaries.

The Strait of Hormuz has been under IRGC Navy control since early March. Commercial traffic to and from US-allied ports remains blocked. Iran has created a selective transit regime: ships heading to or from Chinese, Russian, Indian, Iraqi, and Pakistani ports may pass. Everyone else pays in yuan or does not pass at all. Approximately 17.8 million barrels per day of Persian Gulf crude flows remain disrupted.

The killing of Admiral Tangsiri on Thursday was the most significant escalation of the week. Israel struck the port of Bandar Abbas at 3 AM local time, eliminating the commander directly responsible for the mining and blockade operations. Israeli Defense Minister Israel Katz called it the removal of "the man directly responsible for the terrorist minelaying and blockade of the Strait of Hormuz." Several senior IRGC Navy officers were killed in the same strike.

Iran responded Friday by striking the Prince Sultan Air Base near Riyadh with 6 ballistic missiles and 29 drones. Between 12 and 15 American soldiers were wounded, some seriously. Two KC-135 refueling tankers and one E-3 Sentry were damaged. Total US military casualties in the conflict now exceed 300 since February 28.

Houthis Open a Second Front

On Saturday March 28, Yemen's Houthis fired their first ballistic and cruise missiles at Israel since the Iran conflict began. Both were intercepted. The Houthis had remained on the sideline at Tehran's request for the first four weeks of the war.

That restraint is over. The immediate implication is strategic: if the Houthis begin targeting commercial shipping in the Red Sea again, the Bab al-Mandeb strait becomes a second chokepoint alongside Hormuz. A dual closure would affect global shipping routes at a scale not seen in decades. JD Vance said publicly on Friday that the war "will continue for a while."

Russia: Spring Offensive Begins

On Tuesday March 24, Russia launched 948 drones and missiles against Ukraine in a single 24-hour period, the largest aerial barrage since the invasion began. 556 drones were fired during daylight hours, targeting central and western Ukraine. A maternity hospital in Ivano-Frankivsk was hit. Seven killed, 73 wounded. The Institute for the Study of War confirmed the spring offensive had officially begun.

US-China: Trade War Reignites

China's Ministry of Commerce launched two investigations against the United States on Friday March 27, explicitly retaliating for the Section 301 probes initiated by the USTR in March. The first targets US restrictions on Chinese market access and technology export controls. The second examines barriers to Chinese clean energy exports.

Both investigations cover a six-month window, expiring conveniently after the Xi-Trump summit scheduled for May 14-15 in Beijing. The timing is intentional. These are negotiating cards, not judicial proceedings. China also warned it could reactivate rare earth restrictions and suspend US soybean purchases if new Section 301 tariffs proceed.

Sources - Geopolitics: CNBC: Trump Extends Iran Deadline | Al Jazeera: Tangsiri Killed | Al Jazeera: Houthis Enter War | Al Jazeera: Russia Spring Offensive | BNN Bloomberg: China Trade Probes | Military Times: US Troops Wounded

Markets

Equities: Fifth Straight Weekly Loss

The S&P 500 closed at 6,369, down 2.1% for the week. It was the fifth consecutive weekly decline, the longest losing streak since 2022. The index is now down approximately 7% year-to-date and sits at its lowest close in seven months.

The Nasdaq is now officially in correction, down more than 10% from its recent highs. The Dow entered correction territory intraday before closing slightly above the threshold. The VIX at 31 reflects sustained fear, not a one-day panic.

The Great Rotation

Sector performance divergence has reached extreme levels. Energy stocks are up 27% year-to-date. Defense names continue to climb. Meanwhile, software applications are down 10% YTD on average, airlines are crushed by fuel costs, and yield-sensitive sectors are suffering from rising Treasury rates.

FedEx reported Q3 FY2026 results that beat estimates across the board: revenue $24.0B vs $23.4B expected, adjusted EPS $5.25 vs $4.09 consensus. The stock jumped 9% after hours. Micron's massive Q2 beat from the previous week continued to be digested, but the stock fell for four consecutive sessions despite the numbers. Macro headwinds are overriding micro fundamentals.

Commodities: Oil Breaks $100

Oil was the week's dominant asset. WTI crude closed at $99.64, up 5.5% on Friday alone and touching $100 intraday for the first time since July 2022. Brent surged to $112.57, up 4.2% on the session. For the month of March, Brent has gained approximately 51%, the largest single-month percentage increase since the COVID demand recovery.

The oil story is structural, not speculative. Hormuz remains closed. Qatar's Ras Laffan LNG terminal, representing 17% of global capacity, sustained damage requiring an estimated 3-5 years to repair. European TTF natural gas jumped 20% on the week to $72/MWh, up from $37 before the war.

Gold recovered modestly to $4,430 after the previous week's 10% crash. The recovery was limited by rising real yields and a stronger dollar. Oil, not gold, is the true fear thermometer of this cycle. Copper continues its quiet ascent at $5.47/lb, driven by electrification and AI datacenter demand.

Sources - Markets: CNBC: S&P Fifth Straight Losing Week | CNN: Dow Closes in Correction | Middle East Insider: Oil March 28 | FedEx Newsroom: Q3 Results | ETF Trends: Treasury Yields March 27

Crypto

Prices: The Bleed Continues

Bitcoin closed the week near $66,200, down 6.9%. Ethereum briefly broke below $2,000 for the first time since mid-2024 before recovering marginally to the $2,030 area. Solana dropped 7% to $83. The total crypto market cap fell to $2.37 trillion.

Bitcoin dominance held at 55.9% as altcoins underperformed across the board. Only 21 of the top 100 cryptocurrencies ended the week in the green. The 30-day correlation between BTC and the S&P 500 has risen to 0.67, confirming that crypto is trading as a risk asset, not as a hedge.

ETF Flows: First Triple Outflow Day

Bitcoin spot ETFs recorded approximately $296 million in net outflows for the week, the first negative week of March. The most significant development was Wednesday March 26: for the first time in 2026, all three categories of spot crypto ETFs (Bitcoin, Ethereum, and Solana) posted net outflows on the same day.

Thursday's $225 million outflow was dominated by BlackRock's IBIT, which alone shed $201.7 million, its largest single-day outflow since early January. Despite this rough week, March cumulative BTC ETF flows remain positive at approximately +$2.5 billion, and IBIT has attracted $8.4 billion in net inflows for Q1 2026.

Ethereum ETFs continued their losing streak with eight consecutive sessions of net outflows. BlackRock's new staked ETH product (ETHB) attracted $97.7 million, but traditional ETHA more than offset it with $140 million in outflows on Wednesday.

The $14 Billion Options Expiry

Thursday March 27 brought the largest cryptocurrency options expiration of 2026. Deribit settled $14.16 billion in Bitcoin options notional value, clearing approximately 40% of its open interest. Over 122,000 traders were liquidated. Realized losses hit $451 million in a single session. Bitcoin dropped to $65,720 intraday before recovering.

Total crypto liquidations for the week exceeded $700 million. Funding rates reset to neutral post-purge, with leveraged positions largely cleared. The options expiry amplified selling pressure that was already building from geopolitical risk and ETF outflows. It was a perfect convergence of forced selling.

On-Chain: Whales Diverge

Bitcoin exchange inflows surged to $340 million (14,200 BTC) in 24 hours on Friday, signaling visible selling pressure. The Exchange Whale Ratio hit 0.64, a peak not seen since October 2015, meaning 64% of all exchange inflows came from the top 10 depositors. Whales are sending coins to exchanges.

Yet the number of wallets holding 100+ BTC reached a record 20,031. Bitcoin's Scarcity Index on Binance hit 5.10, the highest since October. The divergence tells a nuanced story: tactical sellers are taking profit or reducing risk, while structural accumulators continue to stack. Stablecoin supply has rebounded toward $315 billion, with USDC leading institutional adoption.

DeFi TVL held near $97 billion despite the market drawdown. Aave crossed $1 trillion in cumulative loan originations, a milestone for decentralized lending. No major exploits occurred during the week.

Morgan Stanley Enters the ETF Race

On Thursday March 27, Morgan Stanley filed an amended S-1 for MSBT, the Morgan Stanley Bitcoin Trust. The headline: a management fee of 14 basis points, the lowest in the market, undercutting BlackRock's IBIT at 25 bps and Grayscale's GBTC at 150 bps. Listing is planned for NYSE Arca with SEC approval expected in Q2-Q3 2026.

Morgan Stanley has also filed for Ethereum and Solana trusts. Filing on the same day IBIT saw its largest outflow of the year is not a coincidence. MS is positioning for the next wave of institutional adoption, building infrastructure while others are selling.

Sentiment: 46 Days of Extreme Fear

The Fear and Greed Index sits at 12, deep in "Extreme Fear." The streak has now lasted 46 consecutive days, the longest since the FTX collapse in November 2022. Only 21 of the top 100 tokens finished the week positive. The five factors crushing sentiment: the Iran war and oil shock, the $14 billion options expiry, persistent tariff uncertainty, delayed Fed rate cuts, and the AI tech selloff dragging correlated assets.

Sources - Crypto: LatestLY: Bitcoin March 28 | Bloomberg: $14B Options Expiry | The CC Press: Triple ETF Outflows | CoinDesk: Morgan Stanley ETF 14bps | BeInCrypto: Whale Accumulation | Spoted Crypto: Fear Greed 12

Week Ahead: March 30 to April 3

This is one of the most data-heavy weeks of the quarter, arriving at the worst possible time for markets already on edge.

Powell at Harvard on Monday will set the tone. The market wants to know how the Fed views the inflation-growth dilemma created by $112 oil. Any hint toward tightening would accelerate the repricing already underway.

Friday's NFP is the main event. The consensus is 56K, a modest recovery from February's shocking -92K. A second negative print would be devastating for sentiment and would sharply raise recession odds. Then Monday April 6: Trump's deadline for Iran expires. A third extension is the base case. But if strikes on Iranian power plants proceed, oil goes to $130+ and everything reprices.

Sources - Week Ahead: ForexFactory: Calendar | CNBC: Treasury Yields After Deadline Extension

Key Levels