Market Wrap 2026-03-17

Market Wrap 2026-03-17

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Today's US Market Wrap — Key Points

• Equities, Treasuries, and crude oil rise; dollar and gold fall.
• Middle East tensions persist; focus shifts to central bank decisions.
• US data mixed; strong Treasury auction; AI boosts AMZN outlook.
• RBA hikes rates; German sentiment declines; Fed decision ahead.

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MARKET SNAPSHOT

• Equities are up.
• Treasuries are up.
• Crude oil is up.
• The Dollar is down.
• Gold is down.

REAR VIEW

• Trump indicated a meeting with Xi is likely in five weeks.
• Trump stated the US is not ready to leave Iran yet, but will in the near future.
• The US and Israel reported Iranian official Larijani died from a strike, but Iran has not confirmed it.
• Iraq is in contact with Iran to potentially allow some oil tankers through Hormuz.
• The US 20-year Treasury auction was strong.
• US Pending Home Sales exceeded expectations.
• The RBA raised the cash rate as expected.
• German ZEW Economic Sentiment declined into negative territory.
• The AMZN CEO said AI is projected to double AWS sales to USD 600 billion by 2036.
• QCOM increased its dividend and announced a new buyback program.

COMING UP

• Data releases scheduled: EZ CPI Final (Feb), US PPI (Feb), New Zealand GDP (Q4).
• Events scheduled: BoC, Fed, and BCB Policy Announcements.
• Speakers scheduled: BoC's Macklem, Rogers; Fed's Powell; Nvidia (NVDA) CEO Huang.
• Supply: Australia, Germany.
• Earnings: Micron, HelloFresh.

MARKET WRAP

US indices closed higher on Tuesday amid broader risk-on sentiment. Despite ongoing Middle East headlines, there were few escalatory or de-escalatory developments. Conflicting reports emerged regarding the health of Iran's Top Security Chief, Larijani, with Israel and the US reporting his death in an airstrike, which Iran has yet to confirm. EU's Kallas suggested a Black Sea-like model for the Strait of Hormuz, pending agreement from neighboring countries, including Iran, and noted that participation in the Strait remains open. Trump stated the US is not ready to leave Iran yet, but will in the near future, and ships will soon be able to transit the Strait of Hormuz. Most sectors were firmer, with only Health and Consumer Staples declining, while Energy led the gains. WTI and Brent crude oil prices increased, retracing some of Monday's losses. Treasuries were firmer across the curve, supported by a strong 20-year auction. Precious metals weakened, with spot silver underperforming. The Dollar Index declined, benefiting most G10 currencies. The AUD outperformed following the RBA's rate hike overnight, which was widely anticipated, and Bullock's press conference was considered hawkish, with participants debating a potential third rate hike in May. There was no tier 1 US data, although pending home sales exceeded expectations. The upcoming highlights on Wednesday include the US PPI, FOMC, and SEPs.

US

PENDING HOME SALES:

Pending home sales for February increased by 1.8% M/M, compared to January's decline of 0.8%, and above the expected -0.5%. Gains were seen in the Midwest, South, and West, but declined in the Northeast. NAR Chief Economist Lawrence Yun attributed the increase to improved affordability, but noted that regions like the Northwest continued to be constrained by higher home prices and limited supply. Yun cautioned that "conditions could reverse if higher oil prices lead to an uptick in mortgage rates." He added, "For first-time homebuyers, purchasing a home is not a snap decision. It takes time to build credit, save for a down payment, and fulfill existing rental lease agreements. Still, there is sizable pent-up demand that could be released into the market."

FIXED INCOME

T-NOTE FUTURES (M6) SETTLED 3+ TICKS HIGHER AT 112-00

Yields continued to retrace recent gains as attention shifts to the FOMC on Wednesday.

At settlement:

• 2-year: -0.2bps at 3.671%
• 3-year: -0.8bps at 3.675%
• 5-year: -1.2bps at 3.786%
• 7-year: -1.7bps at 3.977%
• 10-year: -2.2bps at 4.198%
• 20-year: -2.7bps at 4.819%
• 30-year: -1.9bps at 4.849%

THE DAY:

T-notes were higher across the curve, with yields decreasing by 0-3bps. The decline in yields occurred despite further increases in oil prices and a lack of fresh tier 1 data. The weekly US ADP Employment Change was 9k from 15.5k, while the NY Fed Services Business Activity declined. Pending Home Sales rose M/M in February. There was little fresh driving price action, seemingly just a further unwind of recent price action and perhaps still supported by some of the sell side commentary, about risks being tilted to the downside for yields. While focus remains on the Middle East, attention will be on the FOMC Rate decision and summary of economic projections tomorrow. Before that, the February US PPI will be released, albeit it will still not incorporate any impacts from the war. Nonetheless, it will be a gauge into the February PCE report due April 9th. The 20-year auction was strong, echoing the strength in the 30-year last week, while overnight also saw a strong JGB 20-year auction.

SUPPLY

Notes

• Overall, a very strong 20-year bond offering. The USD 13 billion 20-year reopening was sold at a high yield of 4.817%, stopping through the when issued by 0.7bps, a notable improvement when compared to the prior 2bps tail and six auction average of coming in on the screws. The bid-to-cover was also solid, rising to 2.76x from 2.36x, and above the average 2.63x. The strong demand was led by a jump in indirect bidders to 69.2% from 55.2%, above the 62.1% average. Direct demand fell to 21.6% from 27.2%, below the 27% average. However, dealers were only left with 9.2% of the auction, well below the prior 17.6% and a touch beneath the 10.9% average. The strong 20-year auction was likely supported by a combination of factors. The offering came off the back of a very weak February auction, while yields were higher this time around, providing a more attractive entry point for investors. Reopenings in the 20-year sector have also tended to perform well, as highlighted by BMO Capital ahead of the sale. The strength further mirrors demand seen in last week’s 30-year auction, in contrast to the softer 3-year, suggesting investors are favouring duration over the front end. It also follows the strong 20-year JGB auction overnight. In addition, recent sell-side commentary pointing to lower yields ahead may have encouraged participants to lock in the higher yield on offer. US to sell USD 19bln of 10-year TIPS on March 19th; all to settle March 31st

Bills

• US sold 6-wk bills at a high-rate of 3.635%, B/C 3.02x; sold 1-yr bills at a high rate of 3.485%, B/C 3.43x

STIRS/OPERATIONS

• Fed Rate Cut Pricing: March 0bps (prev. 0bps), April 0bps (prev. 0bps), June 2.7bps (prev. 3.9bps), December 24.6bps (prev. 24.1bps).
• NY Fed RRP op demand at 0.80bln (prev. 0.58bln) across 5 counterparties (prev. 9) on March 17th
• SOFR at 3.70% (prev. 3.65%), volumes at USD 3.178tln (prev. USD 3.164tln) on March 16th
• EFFR at 3.64% (prev. 3.64%), volumes at USD 88bln (prev. USD 92bln) on March 16th

CRUDE

WTI (J6) SETTLED USD 2.71 HIGHER AT USD 96.21/BBL; BRENT (K6) SETTLED USD 3.21 HIGHER AT USD 103.42/BBL

The crude complex was firmer, reversing some of Monday's losses, while the Middle East war dominates, there has been no further major escalation. Headlines remain exceedingly busy, but there was not too much new on Tuesday, though there have been conflicting reports regarding the health of Iran's Top Security Chief, Larijani. Israel says he was killed in an airstrike, but Iran has yet to confirm this. Crude saw downside as EU's Kallas remarked a model similar to the Black Sea could be used in the Strait of Hormuz, but the question is what neighbouring countries, including Iran, could agree on; the door is not closed on the participation in the Strait. From the US side of things, Trump spoke heavily and did not garner much reaction, but he noted they are not ready to leave Iran yet, although will leave in the near future, and won't be too long before ships can go through the Strait of Hormuz. He once again issued his dissatisfaction with NATO allies. WTI traded between USD 92.88-97.65/bbl and Brent USD 100.86-104.98, respectively, as the latter closed above USD 100/bbl for the fourth consecutive day. Heading into settlement, benchmarks saw a slight boost, albeit well within session ranges, as Iran's parliament speaker Qalibaf said the Strait of Hormuz situation won't return to its pre-war status. After-hours we get the weekly private inventory figures, whereby current expectations are (bbls): Crude +0.4mln, Distillates -1.5mln, Gasoline -1.6mln.

EQUITIES

CLOSES: SPX +0.25% at 6,716, NDX +0.51% at 24,780, DJI +0.10% at 46,994, RUT +0.67% at 2,520

SECTORS:

• Health -0.92%
• Consumer Staples -0.48%
• Utilities -0.26%
• Materials +0.17%
• Real Estate +0.20%
• Technology +0.21%
• Industrials +0.25%
• Financials +0.51%
• Communication Services +0.67%
• Consumer Discretionary +1.00%
• Energy +1.02%

EUROPEAN CLOSES: Euro Stoxx 50 +0.50% at 5,768, Dax 40 +0.67% at 23,721, FTSE 100 +0.83% at 10,404, CAC 40 +0.49% at 7,974, FTSE MIB +1.22% at 44,888, IBEX 35 +0.92% at 17,247, PSI +0.50% at 9,175, SMI +0.50% at 12,959, AEX +0.50% at 1,013

STOCK SPECIFICS:

• Nvidia (NVDA): Following CEO Huang’s keynote address at GTC, the company projects USD 1 trillion in Blackwell & Rubin sales by 2027.
• Victory Capital submitted a revised bid for Janus Henderson (JHG), amounting to USD 56.84 per share for JHG shares.
• Delta Airlines (DAL) raised its revenue outlook due to demand momentum.
• United Airlines (UAL) CEO stated the company remains on track for low double-digit margins, and a prolonged fuel spike could accelerate industry restructuring towards mid-double-digit margins.
• JetBlue Airways (JBLU) anticipates stronger Q1 travel demand compared to prior expectations.
• Steel Dynamics (STLD) cut its Q1 profit guidance.
• Nebius (NBIS) plans to raise USD 3.75 billion in a convertible loan offering.
• Lensar (LNSR) and Alcon agreed to terminate their previously announced merger agreement.
• Morgan Stanley indicated that default rates in private credit could rise to 8% due to AI disruption pressuring the software sector.
• Qualcomm (QCOM) increased its quarterly cash dividend and announced a new USD 20 billion stock repurchase authorization.
• New Fortress Energy (NFE) signed a restructuring support agreement, according to Bloomberg.
• Nvidia (NVDA) plans to allocate 50% of free cash flow for investor returns and will shift to returns when funded investment commitments; the CFO anticipates a shift to buybacks and dividends in H2.
• Amazon (AMZN) CEO projects AI to double AWS sales to USD 600 billion by 2036, previously estimated at USD 300 billion.

FX

The Dollar continued to trim last week's gains as risk-on sentiment entered global equities amid a modest bounce in oil prices after yesterday's weakness. Energy and geopolitical headlines dominated the session, with updates bringing neither escalations nor easing of tensions. Attacks continue, Iran remains firm on restricting the Strait of Hormuz to its enemies, and Trump shows no imminent sign of walking away, citing "a couple weeks". Other updates included US Pending Home Sales topping expectations, ADP weekly easing from the prior, while the 20yr bond auction came in strong. On Wednesday, focus will be on the Fed, where expectations are for a hold as money market pricing for the first 25bps rate cut has been pushed back to December amid the surge in oil prices over the last month.

AUD outperformed despite initial downticks on the "dovish" framing of the RBA announcement, while a hawkish response from Governor Bullock in the press conference afterwards supported further strength. The RBA hiked the Cash Rate by 25bps as expected to 4.1%, but in a 5-4 vote split. Later, Bullock stated the discussion over the decision was about the timing, not the direction of policy and the hike (March vs May).

EUR, GBP, and CHF all saw strengthening on Tuesday, while JPY and NZD were flat, and CAD weakened modestly. Currency-specific news was generally light in the G10 space. For EUR, the German ZEW Economic Sentiment Index saw its third-largest monthly decline ever in March, but its downside impact on EUR/USD was limited and brief. EUR/USD sits around session highs of 1.1547.

On Wednesday, CAD is in focus amid the BoC, which is expected to hold rates at 2.25%, as seen by money markets and a Reuters poll of economists. In the past two months, cooling in inflation and losses in employment have reduced bets for a return to hikes by year end.