The core event dominating last week's market action was the ongoing US-Iran conflict, which entered its fifth week with significant overnight escalation. Houthi rebels launched their first ballistic missile toward Israel from Yemen, and Iranian strikes on Saudi Arabia's Prince Sultan Air Base wounded more than two dozen US service members. US Vice President Vance stated that the war will continue 'a little while longer.' Trump's April 6 deadline for Iran to reopen the Strait of Hormuz is approaching, with both sides' positions becoming more entrenched compared to the previous week [1].
A Trump social media post about 'productive talks' initially triggered a sharp Monday reversal, but Iran denied the claims, leading markets to reprice higher on geopolitical safe-haven demand and strong domestic economic data. Manufacturing PMI exceeded forecasts, Unit Labor Costs printed at more than twice consensus, and Michigan inflation expectations rose to 3.8%, reinforcing the Fed-hold narrative [1].
At the Friday close, the US Dollar Index (DXY) traded near 100.19, marking its best weekly close in months and decisively above the 100.00 handle. Gold stabilized around $4,493 after a sharp selloff from early-March highs near $5,200. The S&P 500 closed near 6,354, pressured by rising Treasury yields and growing stagflation anxiety that is now affecting the bond market. WTI crude traded near $98.70 at the Friday close, with a caution to verify the Sunday open due to weekend escalation. Bitcoin held at $66,520 on the Sunday morning open [1].
The combination of escalating geopolitical tensions and strong inflationary data has locked in expectations that the Federal Reserve will hold rates steady, further fueling safe-haven flows and increasing volatility across asset classes. The market is closely watching the approaching Iran deadline and ongoing conflict for further direction [1].
CONCLUSION
Escalating US-Iran tensions and strong inflation data have driven safe-haven demand, pushing the US Dollar Index to multi-month highs and pressuring equities. With the Fed expected to hold rates and the Iran deadline looming, markets remain highly sensitive to further geopolitical developments and economic releases.