Fin-X Weekly 16th March 2026

Disruption in the Strait of Hormuz has sent energy prices sharply higher, lifted bond yields, and weighed on global equities and rate-sensitive sectors.

Central banks are adopting a more hawkish outlook. In Australia, comments from the RBA’s Deputy Governor shifted market pricing towards a higher probability of another rate rise tomorrow following last month’s increase.

Concerns in US private credit deepened despite Oracle’s strong results.

Attention this week will likely remain centred on the Middle East. Other key events include seven G10 central bank meetings, China’s monthly activity data, and the Australian employment report.

Global market news was dominated last week by events in the Middle East and their impact on energy prices. Oil and the US dollar moved higher, global equities traded lower, 10yr bond yields rose to their highest levels this year, and rate-sensitive sectors such as real estate underperformed as markets pushed out expectations for rate cuts.

Iran declared an intention to keep the Strait of Hormuz effectively shut and conducted several attacks on shipping in the Persian Gulf, producing one of the most volatile weeks on record in the oil market. Brent crude has traded back above US$100.0 per barrel, with futures up more than +11.0% this week after a near +28.0% surge the previous week. A coordinated release of 400.0 million barrels from IEA strategic reserves has so far only tempered the rally, as that figure represents about three weeks’ blocked supply.

Higher energy prices are feeding back into global inflation expectations and have become a key input to policy rate deliberations at the Federal Reserve, ECB, Bank of England, and other central banks in the coming week.

Based on data before the escalation in hostilities, the US February CPI report showed headline prices up +2.4% yoy while core CPI rose +2.5% yoy, both unchanged from January and in line with consensus estimates. Shelter and food were the main contributors in the month, with energy up +0.6% and food prices rising by +0.4%, while several discretionary categories fell. Producer price figures are due out just before Wednesday’s FOMC meeting.

Fed officials are emphasising that, adjusted for the data distortions from last year’s government shutdown, underlying inflation may be closer to +2.7% yoy, offering little comfort that the job is finished. The FOMC is expected to leave rates on hold, as are most of the seven G10 central banks that are holding meetings. However, statements are likely to adopt a more hawkish tone following the energy price shock.

In Australia, Reserve Bank Deputy Governor Andrew Hauser said the Iran conflict and associated increase in energy prices represent an upside risk to inflation, and that further price pressures from Iran would be “not a helpful development” for the RBA’s policy debate this week. He indicated headline inflation is likely to be higher than the projections the RBA published in February, stressing that higher energy prices from the Middle East conflict add to already elevated domestic inflation pressures. Following his comments, the market is pricing a roughly 60% chance of a cash rate increase to 4.1% on Tuesday.

The shift in interest rate expectations comes as investors are becoming more concerned about the resilience of the global economy. The BEA’s second estimate of Q4 2025 GDP revised annualised growth down from +1.4% to +0.7%. The government shutdown affected the numbers, but consumption’s contribution also slowed, adding only +1.3% annualised. Friday’s delayed January JOLTS job openings improved on December but continued to point to a broader downtrend.

In contrast, the RBA continues to view the Australian economy as operating above capacity. The NAB Business Survey for February indicated that firms’ capacity utilisation is running about +1.5% above its long-run average. Business conditions were unchanged at +7, around their long-run average, as slightly stronger trading conditions were offset by a fall in the employment sub-index and flat profitability. Business confidence, however, fell 4 points to -1, its first negative reading in about 11 months, down from +3 to +4 in prior months, with NAB attributing the decline to caution following the February interest rate increase.

This Thursday’s labour force data is expected to show that unemployment remained at 4.1% in February.

The March Westpac-Melbourne Institute survey showed a small lift in sentiment, but households remain clearly pessimistic and increasingly concerned about the near-term economy and global risks.

That leaves the domestic picture uneven in composition, with business capacity indicators still firm while consumers remain under pressure from rates, living costs and a more uncertain external backdrop.

Elsewhere in the Asia-Pacific region, China’s latest data showed a sharp holiday-driven rebound in trade. Exports surged by +39.6% yoy and were up +21.8% over the combined January-February period.

Headline CPI in China also rose +1.3% yoy in February, up from +0.2% yoy in January, the fastest pace in more than three years and above market expectations of around +0.8% yoy. PPI deflation narrowed as producer prices fell -0.9% yoy, versus -1.4% yoy in January and a consensus expectation of about -1.1% yoy, marking the smallest decline in more than 18 months and suggesting that factory-gate pricing power is stabilising.

China will publish the February monthly activity data later today. Those figures will indicate whether the recent rebound in trade and prices is being matched by firmer momentum across production, consumption and investment.

In company news, Oracle’s share price bucked the broader market trend, adding +1.4% as fiscal Q3-26 delivered a blowout AI- and cloud-driven quarter, with both growth and guidance well ahead of expectations. Revenue was US$17.2 billion, up +22.0% yoy, marking the fastest organic top-line growth in more than 15 years.

The results were also welcomed because the company had become an emblem of concerns about high capital expenditures, particularly those funded by private credit.

Even so, JPMorgan Chase & Co. is reported to be restricting some lending to private credit funds after marking down the value of certain loans to software companies. The issue is becoming more relevant as tighter financial conditions and higher benchmark yields expose the weaker parts of private market structures that were built during a period of cheap money.

Morgan Stanley also became the latest private credit manager to tell investors that its flagship semi-liquid private credit vehicle, North Haven Private Income Fund, is capping redemptions after withdrawal requests far exceeded its quarterly limit. That development adds to evidence that liquidity pressure in parts of private credit is not confined to isolated cases.

The focus this week is likely to remain on events in the Middle East, the ongoing disruption to energy supply, and any potential broadening in the conflict. In a post on his platform, Truth Social, over the weekend, President Trump wrote that he hopes China, France, Japan, South Korea, and the UK will also send warships to reopen the Strait of Hormuz as several thousand US Marines were reportedly on their way to the region.

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