by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM ET] | PDF

Our Comment today opens with an update on the US-Israeli war against Iran and President Trump’s call for foreign nations to chip in with naval forces to restart the flow of oil, natural gas, and other commodities through the Strait of Hormuz. We next review several other international and US developments with the potential to affect the financial markets today, including a preview of this week’s many central bank policy meetings around the world and the start of talks on updating the USMCA trade agreement.

United States-Israel-Iran: President Trump on Saturday called on foreign countries such as China, France, and Japan to send naval forces to the Persian Gulf to help secure commercial shipping traffic through the Strait of Hormuz. The call has produced political headaches for countries as it would put their navy ships at risk for a war they didn’t start. They also may be reluctant to contribute if they feel they can’t rely on the US military coordinating with them. Still, in the interest of easing energy prices, many are mulling whether and how to help.

• Separately, US Energy Secretary Chis Wright yesterday warned that there are “no guarantees” that oil prices would fall in the coming weeks,” despite rosier assessments from the White House.
• Indeed, the Wall Street Journal reported over the weekend that top US energy firms such as Exxon Mobil and Chevron have warned the US administration that energy prices could well keep rising as long as hostilities continue.
• On a more positive note, however, Iranian Foreign Minister Araghchi said yesterday that the strait “is open to everyone, except American ships and those of its allies.” That could suggest that Iran is open to letting some shipping through the strait, although ship owners, crews, and insurers are still likely to avoid the area until the fighting ceases definitively.
• On balance, investors appear to be encouraged by the weekend developments, pushing oil prices lower so far today and giving a boost to US stock index futures.

Global Monetary Policy: Major central banks from the Federal Reserve to the European Central Bank and the Bank of England will hold their latest policy meetings this week, and all are expected to hold their benchmark short-term interest rates unchanged as they gauge the potential impact of the Iran war on consumer price inflation. The Fed will open its meeting on Tuesday and will release its decision on Wednesday at 2:00 PM ET. Investors are nearly unanimous in expecting it to hold its fed funds rate at the current 3.50% to 3.75%.

United Kingdom: In response to the massive jump in natural gas prices touched off by the war against Iran, the British energy industry is reportedly pressuring the government to boost the country’s investment in gas storage facilities. The aim would be to give the UK economy emergency reserves that could help it better weather supply shocks. More broadly, we see the effort as consistent with our view that global fracturing and rising geopolitical tensions will spark more hoarding of natural resources and drive up commodity prices over the longer term.

Cuba: With the US continuing to essentially blockade oil deliveries to Cuba even as it wages its war against Iran, reports show a growing number of Cubans are protesting against their regime. The growing protests suggest the US policy is prompting greater popular unrest, which could potentially encourage further US pressure on Cuba once the US administration can divert its attention from Iran.

United States-Mexico-Canada: The US and Mexico today launch their long-planned review of the USMCA free-trade agreement that was struck in 2020 to replace the previous NAFTA deal. The talks will focus on curbing imports from Asia and other regions, tightening the rules that make products eligible for USMCA benefits, and improving North America’s supply chain security. However, the US administration has indicted its displeasure with the trade deal, so the result could well be a significant weakening of it, to the detriment of Mexico and Canada.

US Monetary Policy: A federal judge late Friday invalidated the Department of Justice’s subpoenas against the Federal Reserve and Chair Powell, accusing the White House of issuing them for political purposes. According to the judge, “There is abundant evidence that the subpoenas’ dominant (if not sole) purpose is to harass and pressure Powell either to yield to the President or to resign and make way for a Fed Chair who will.”

• The DOJ has already said it will appeal the ruling, potentially delaying the confirmation of Kevin Warsh as the new Fed chair.
• That means the Fed is likely to continue holding its benchmark short-term interest rate steady at its current high level. As we have argued in the past, any rate cuts this year are likely to be backloaded in the second half of 2026.

US Private Credit Industry: In new research published today, credit hedge fund Davidson Kempner Capital Management warns that the private capital industry’s problems are far worse than Wall Street has acknowledged, as traditional metrics obscure weaknesses in the leveraged buyout market. The analysis indicates that excessive leverage, weak cash flows, and loose debt contracts have converged to significantly boost the risk of defaults. The news will likely raise further concerns about growing risks in the US financial system.

US Movie Industry: At last night’s Academy Awards ceremony, Warner Brothers production One Battle After Another won six Oscars, including for best picture and best director. The movie beat out Sinners, also from Warner Brothers, which won four Oscars.

China: Retail sales in January and February were up 2.8% from the same period one year earlier, roughly matching expectations and accelerating from a gain of 0.9% in the year to December. Fixed-asset investment in the same period was up 1.8% on the year, beating expectations and reversing part of its 3.8% decline in 2025. Despite the improved figures, however, home sales in the period were down 22.0% year-over-year, reflecting how the lingering effects of China’s real estate bubble continue to weigh on economic growth.

France: In the first round of local elections yesterday, the far-right populist National Rally did well across the country, including in the southern areas it was prioritizing. That sets the party up to sharply increase its local political power after the run-off elections of March 22. The elections are being taken as an indicator of how well National Rally could do in the presidential election next year. If it wins the presidency, France would likely undergo major policy changes, such as embracing Russia in foreign policy and enacting populist economic policies at home.

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