[Market Brief] Asset re-pricing amid Middle East conflict, stocks and bonds have reached critical levels!

What we want you to know is:

Last week, despite Trump saying that negotiations had made progress, actual traffic through the Strait of Hormuz was nearly at a standstill, and military operations by the U.S.-led coalition showed no sign of cooling off. This pushed WTI crude oil briefly above $100. Meanwhile, U.S. stocks remained under pressure as interest-rate and inflation-expectation risks heated up; the S&P 500 hit a new low since August 2025. Overall, the market has shifted from viewing the conflict as a simple geopolitical clash to re-pricing the chain reaction “energy shock → inflation → interest rates.” In the short term, market volatility has noticeably intensified. In addition to updating developments in the U.S.-Iran war, I also provide an in-depth analysis of why U.S. Treasury yields and the U.S.-China talks will become key focal points for monitoring the situation in the Middle East.

**Key points of this article: **

2. Continued restrictions on the Strait of Hormuz disrupt crude oil supply, driving oil prices above the $100 level, which boosts inflation and rate-expectations at the same time and once again expands market volatility.

3. We will observe subsequent impacts from four angles: inflation, interest rates, valuation, and fundamentals, to judge whether the market is shifting from liquidity-driven adjustments to weakening fundamentals.

4. Two major signals have already appeared—this will be the deciding factor in whether the situation in the Middle East will avoid further deterioration! The two signals are: U.S. Treasury yields breaking through the “Trump fatal bottom line,” and U.S.-China talks being held in May.

Given that the U.S.-Iran war continues to rage, we will consolidate the related analysis here under this category: blog—U.S.-Iran war!

I. The Middle East conflict has dragged on into its fifth week—tracking the latest developments in geopolitics, energy, and China-U.S.

Below is a roundup of the latest changes in the international situation after the Middle East conflict entered its fifth week:

The U.S.-Israel-Iran geopolitical situation keeps fluctuating, showing a “pressure-for-talks” dual-track strategy

On March 23, Trump claimed that he had held a “very good and productive” conversation with Iran and instructed the Department of Defense to delay military strikes by 5 days. Then, on March 26, Trump again announced that the action would be delayed by another 10 days (to April 6). At the same time, the United States is also using Pakistan as an intermediary to convey to Iran a peace-proposal framework with “15 ceasefire conditions,” signaling that Trump is trying to calm market sentiment.

However, the actual military operations by the U.S.-Israel coalition have not cooled down in practice. This includes the arrival in the Middle East of U.S. forces deploying the “USS Tripoli” and the “USS Boxer,” with plans to send ground special forces to seize Hark Island or key infrastructure. The Israel Defense Forces’ firepower also has not softened over the past week: it has continued to strike military bases, missile factories, and heavy-water reactors, and on the 30th it claimed it began striking military facilities across “the entire Tehran.”

In addition, divergences in Iran’s internal stance have also emerged. Although reports previously said Iran proposed six ceasefire conditions—covering ceasefire guarantees, shutting down U.S. bases in the Middle East, war reparations, ending regional battle lines, reshaping the legal regime of the strait, and prosecuting/extraditing anti-Iran media influence—most public statements denied that any dialogue or negotiations were underway. The Islamic Revolutionary Guard Corps (IRGC) remains hawkish, launching daily drone attacks on Gulf neighboring countries through more than 30 drones each day, including the Kuwait International Airport, the Al Oman Salalah Port, Bahrain Aluminium, and the Israel Haifa oil refinery.

Strait of Hormuz monitoring: shipping remains sluggish and still constrained by Iran—keeping a close watch on Saudi Arabia’s Red Sea reroute export volumes

**Last week, the number of ships transiting the Persian Gulf stayed below 5% of normal levels **. During the weekend, although a small amount of Saudi crude oil headed to Pakistan, on Saturday alone seven vessels left the Persian Gulf (two LPG, four bulk carriers). Tankertrackers.com estimates that the average daily crude oil flow over the 23 days before March was about 1.6 million barrels per day. Compared with the pre-war level of about 20 million barrels per day (15 million barrels of crude oil + 5 million barrels of refined products), it remains low.

Iran’s current posture toward the Strait of Hormuz is still…

Have you already subscribed? If you are already a subscriber, please click here to log in

            Become a subscriber

Enjoy M-square full services

                    ![](https://img-cdn.gateio.im/social/moments-1ed5903dab-b9e3ae9c30-8b7abd-badf29)
                    

                        **Unlimited macro chart browsing**

Get a grip on the world’s investment
Key indexes for commodities

                    ![](https://img-cdn.gateio.im/social/moments-5e9e2c6b72-e1d69f0b42-8b7abd-badf29)
                    

                        **Exclusive focus reports**

About 6 to 8 exclusive per month
Major event / data analysis briefings

                    ![](https://img-cdn.gateio.im/social/moments-41cd9507b4-c821742abb-8b7abd-badf29)
                    

                        **Research tools toolbox**

Custom-built key charts
Backtest performance

                    ![](https://img-cdn.gateio.im/social/moments-bc92b05c8f-2baeae947d-8b7abd-badf29)
                    

                        **The most professional macro community**

Users’ secret indicators
Sharing of views

                Subscribe now

                            Click your question—let MM AI answer you
                        

                                                        *                                       

                                        
                                            How does the disruption of traffic through the Strait of Hormuz affect crude oil supply?
                                        
                                        

                                            💡Disruption of traffic through the Strait of Hormuz limits crude oil supply. Shipping volume in the Persian Gulf remains at less than 5% of normal levels, causing oil prices to climb above the $100 threshold and, in turn, driving inflation and rate expectations to rise in sync—leading to another expansion in market volatility.
                                        

                                    

                                
                                                        *                                       

                                        
                                            How will higher oil prices affect inflation and rate expectations?
                                        
                                        

                                            💡Rising oil prices will push up inflation and rate expectations. This will bring the U.S. breakeven inflation rate on track to reach the highest level since 2022. Also, implied policy-rate pricing in futures indicates that Fed rate-cut room within the year is being squeezed, and even markets may start pricing rate hikes in the second half of the year.
                                        

                                    

                                
                                                        *                                       

                                        
                                            Does expanding short-term market volatility mean liquidity is shifting to weakening fundamentals?
                                        
                                        

                                            💡As short-term market volatility expands, we need to observe from four aspects: inflation, interest rates, valuation, and fundamentals. If oil prices remain above $100 for more than a quarter, it’s highly likely that the shock will shift from a supply shock to a demand shock, which could cause the market to move from liquidity-driven adjustments to weakening fundamentals.
                                        

                                    

                                
                                                        *                                       

                                        
                                            Is there disagreement within Iran over ceasefire talks?
                                        
                                        

                                            💡There is disagreement within Iran over ceasefire negotiations. Although ceasefire conditions were previously reported, most public remarks deny that dialogue is underway. Meanwhile, the Revolutionary Guards remain hawkish and continue to launch drone attacks on Gulf neighboring countries.
                                        

                                    

                                
                                                        *                                       

                                        
                                            Can Saudi Arabia’s Red Sea oil export volumes ease supply tightness?
                                        
                                        

                                            💡Saudi Arabia’s Red Sea Yanbu port crude oil export volume has reached an average of 4.4 million barrels per day, pushing hard toward 5 million barrels per day. This could ease some supply tightness. But we still need to watch for the possibility that Yemen’s Houthi militants could participate and pose threats to merchant shipping in the Red Sea.
                                        

                                    

                                
                                                        *                                       

                                        
                                            Why do U.S. Treasury yields become a key indicator for Trump’s Middle East policy?
                                        
                                        

                                            💡U.S. Treasury yields become a key indicator for Trump’s Middle East policy mainly because U.S. debt as a share of GDP is high, leaving less tolerance in the fiscal system for changes in interest rates. When the 10-year Treasury yield hits the alert range of 4.4% to 4.6%, Trump’s stance will clearly soften in order to keep rates in a safe zone.
                                        

                                    

                                
                                                        *                                       

                                        
                                            How will U.S.-China talks affect the development of the situation in the Middle East?
                                        
                                        

                                            💡U.S. President Trump will visit China in mid-May. This not only sets a potential time boundary for the Middle East conflict, because if the conflict does not cool down quickly, the U.S. may face pressure to raise rates. Trump has motivation to stabilize the Middle East before his visit—especially ensuring that the Strait of Hormuz restores normal traffic.
                                        

                                    

                                
                                                        *                                       

                                        
                                            How can we measure the impact of the Middle East conflict on inflation, interest rates, and economic fundamentals?
                                        
                                        

                                            💡The impact of the Middle East conflict on inflation, interest rates, and economic fundamentals can be assessed through the March CPI data, whether market inflation expectations are anchored, whether demand destruction has occurred, the S&P 500 price-to-earnings multiple and EPS, the MM economic expectation index, recession probability, and the year-over-year rising EPS proportions across each industry.
                                        

                                    

                                
                                                        *                                       

                                        
                                            How should we judge market reaction after the March CPI release to see whether expectations have been fully reflected?
                                        
                                        

                                            💡If after the March CPI is released the market drawdown is limited, it suggests that prior inflation expectations have already been digested in prices and that the market’s response to periodic risks is fairly complete. Conversely, if the market experiences a clear broadening sell-off, it means expectations have not been fully reflected.
                                        

                                    

                                
                                                

                
                
                

                

                    Save
                    
                    

                

                
                

                                                
                            【Market flash】 Tech new Cold War: A deep-dive diagnostic report on U.S.-China AI competitiveness (2026-03-24)
                        
                                                                        
                            【Market flash】 The Fed holds steady; M-square outlines the oil price, inflation, and interest-rate path! (2026-03-19)

**【Watch now】 90-minute global economic outlook, plus get all six deep live streams for the year in one bundle! Join now

**【MM Podcast】 After Meeting EP. 192｜Short-term re-pricing of valuation, or does it run all the way to the “Davis double” slaughter? Listen now>>

**【New launch】 MM AI limited-time open trial experience! Our customer service and macro questions are handled end-to-end Join now

**【Subscribe to unlock】 Join a membership plan to watch research institute special project reports instantly! Subscribe now