Week Ahead
Heightened geopolitical tensions and a packed calendar of central bank meetings will keep markets on tenterhooks this week. Policy decisions include the Fed on Wednesday, followed by the Bank of Japan, Bank of England and European Central Bank on Thursday. While all are widely expected to leave rates unchanged, the accompanying press conferences will be closely scrutinised for any shift in policy guidance. On the data front, the US Empire manufacturing survey and industrial production figures are released later today. Tuesday brings Germany’s ZEW survey alongside the US Conference Board leading index and pending home sales. Wednesday will see eurozone CPI and US PPI and factory orders. Thursday’s focus turns to the UK labour market report and a cluster of US indicators including wholesale inventories, new home sales, initial jobless claims and the Philadelphia Fed outlook. The week concludes with the quarterly “quadruple witching” in US markets, coinciding with the start of spring.
Last week was dominated by a sharp spike in energy prices as the conflict involving the US, Israel and Iran intensified, sending Brent Crude above $100pb amid blockades in the Strait of Hormuz. The escalation fuelled widespread stagflation concerns and was compounded by a sharp downward revision to US Q4’2025 GDP growth to just 0.7%, half the initial 1.4% estimate. Markets experienced notable volatility across asset classes. The yield on the 10-year UST rose 14bps to 4.28%, while the S&P 500 fell 1.6%, marking its third consecutive weekly decline. The US dollar gained 1.39% as investors moved toward safe-haven assets and reassessed interest rate expectations.
In the US, February’s CPI and January PCE prints appeared stable, but markets viewed the figure as largely backward-looking as it failed to capture the mid-March oil price spike. This concern was echoed in the March 2026 consumer sentiment survey from the University of Michigan, where the headline index dropped sharply to 55.5, its lowest level this year. While early-month data had hinted at stabilisation, the post-February escalation in the Iran conflict triggered a 7.5% decline in personal finance expectations as households reacted to rising petrol prices. One-year inflation expectations stalled at 3.4%, ending a six-month decline and suggesting that consumers believe the “easy” phase of disinflation has passed. For the Fed, this combination of recession-like sentiment (currently in the 2nd percentile of historical averages) and sticky short-term inflation expectations complicates the path toward potential rate cuts.
Amid the global volatility, China has emerged as a relative haven, benefiting from reduced structural exposure to oil shocks due to rapid electric-vehicle adoption, diversified energy supply routes and expanded strategic reserves. The conclusion of the National People's Congress on 12 March signalled a shift from isolated “AI+” initiatives toward a broader “intelligent economy” strategy aimed at redefining the country’s growth model. Complementing this, the State Council of the People's Republic of China introduced a new “negative list” to curb inefficient local government subsidies and encourage a more transparent, rules-based business environment. While China continues to post a sizable $213.6 billion trade surplus and solid corporate lending growth, the domestic economy remains bifurcated: strong M2 expansion of around 9% and resilient exports are offset by ongoing household deleveraging linked to the property market adjustment. The Chinese renminbi has remained broadly stable against the dollar, while government bond yields have barely moved, signalling a degree of resilience despite heightened global uncertainty.
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