Macro Storm of the Week: Escalating US-Iran Conflict Shakes Global Markets, Rate Hike Expectations Resurge, Energy and Gold Soar

On March 28, the global markets experienced significant volatility over the past week due to the dual impacts of geopolitical tensions and monetary policy shifts. The confrontation between the United States and Iran has entered a phase of ‘military pressure + diplomatic maneuvering’, with restrictions on passage through the Strait of Hormuz becoming a core variable, driving oil prices back to high levels and significantly raising global inflation expectations. In this context, there has been a critical shift in Federal Reserve policy expectations. Several officials have signaled a hawkish stance, leading the market to quickly pivot from betting on interest rate cuts this year to ‘maintaining high rates for a longer period’, even re-evaluating the possibility of rate hikes. The US dollar index has risen above 100, US Treasury yields have also increased, tightening global liquidity expectations. The performance of major asset classes has shown clear divergence: gold has maintained high-level fluctuations amid intense volatility, while oil has emerged as the strongest asset; US stocks have faced downward pressure, with all three major indices closing lower for the week, led by declines in technology stocks. In the foreign exchange market, the yen continues to weaken, approaching a key intervention zone, while non-US currencies are generally under pressure. Meanwhile, significant changes in global policy and capital flows have also emerged. Japan has released a large amount of strategic oil reserves and is considering intervening in oil prices through the futures market; Singapore is accelerating the establishment of a gold trading hub; Turkey is significantly using its gold reserves to address liquidity pressures. Overall, the current market has entered a high-volatility cycle driven by ‘geopolitical conflict-induced inflation - monetary policy repricing - asset revaluation’, with the short-term focus still revolving around the evolution of the Middle East situation and the global central bank policy path.