Macro Hurricane Eye: Middle East Warfare and Inflation Data Clash Next Week

Next week’s global markets will be torn between two forces. On one side is the ongoing Iran conflict entering its second week, with black smoke over the Strait of Hormuz directly threatening the energy supply chain; on the other side are the upcoming U.S. CPI and PCE inflation data, which could trigger new market moves amid the lingering threat of stagflation. When gunfire meets data bombs, where will the market go?

1. Strait of Hormuz: The Global Economy’s “Oil Pipe” Under Threat

● On March 9, the Iran conflict entered its second week, and the situation has not eased but worsened. Latest reports indicate that Iran’s expert committee has made a final decision on the new Supreme Leader candidate, while Israel’s Defense Forces have responded firmly, continuing to hold the successor accountable. The conflict has shifted from military confrontation to political succession, increasing uncertainty.

● What truly makes global markets hold their breath is the status of passage through the Strait of Hormuz. Recent developments show multiple attempted oil tanker crossings have been attacked, and the strait is effectively blocked.

● Qatar’s energy minister issued a stern warning on Friday: if oil tankers cannot pass and oil prices spike out of control, it will “drag down the global economy.” This is no exaggeration—nearly 20 million barrels of crude oil pass through here daily, accounting for one-third of global oil trade. A prolonged disruption could see oil prices at $100 per barrel as just the starting point, not the end.

2. Wednesday’s CPI Release: The “First Shot” in Inflation

● On March 11 (Wednesday) at 8:30 p.m., the U.S. will release February’s unadjusted CPI year-over-year and monthly data. This is one of the most closely watched data points this week and a key indicator for market expectations of the Federal Reserve’s next move.

● A detail worth noting: the February CPI reflects price changes for the entire month, but the sharp rise in oil prices mainly occurred from late February to early March. In other words, this CPI data does not fully capture the energy price surge caused by the Middle East conflict. If the market only reacts to seemingly moderate CPI figures and relaxes, it would be a dangerous misjudgment.

● Economists generally expect the February CPI YoY increase to slightly decline, but core CPI will remain sticky. The real concern is how Fed officials interpret the data—will they focus on the ongoing war’s impact or rely on outdated statistics?

3. Friday’s PCE Data: The Fed’s Most Important Indicator

● On March 13 (Friday) at 8:30 p.m., the more critical PCE data will be released. As the Fed’s preferred inflation measure, the January core PCE price index YoY and monthly rates will directly influence the tone of the March interest rate decision.

● Compared to CPI, PCE covers a broader scope and better reflects actual consumer spending changes. More importantly, this data will begin to show the transmission effect of rising energy prices. If the PCE monthly rate exceeds expectations, it’s a warning sign—meaning the Middle East conflict has started to impact U.S. inflation figures.

● On the same evening, the U.S. will also release revised Q4 GDP figures, January personal spending monthly rate, and other economic indicators. This series of releases will provide a more complete picture of the U.S. economy: Is growth slowing? Is consumption weakening? Is inflation rising? The answers to these questions will outline how challenging the Fed’s stagflation dilemma is.

4. Unusual Market Logic: Why Isn’t Gold Rising?

● In this geopolitical conflict, a phenomenon has emerged that confuses many veteran traders: despite escalating warfare, gold prices have fallen. Last week, gold posted its first weekly decline in five weeks, reflecting a unique market transmission mechanism.

● The traditional logic is “buy gold in wartime,” but now the issue is that the conflict first impacts energy supply. Rising oil prices boost inflation expectations, which in turn push up U.S. Treasury yields. Higher yields suppress non-yielding gold. Worse, the dollar has strengthened due to safe-haven demand and rate hike expectations, further pressuring gold prices.

● This distorted transmission has caught many investors off guard. If the conflict continues to escalate next week, markets may reassess stagflation risks—where “economic stagnation + high inflation” becomes the real driver for gold’s shine.

5. Other Highlights: Earnings, Vulnerabilities, and Regulations

Beyond macro themes, next week also features several points to watch:

● On March 9, SharpLink will hold its 2025 full-year earnings call. As a company deeply tied to the crypto market, management’s stance on Ethereum holdings and future outlook could influence related sectors.

● On the same day, cross-chain platform Neutron is expected to relaunch previously paused features due to vulnerabilities. While official statements emphasize security, such incidents remind markets that technical and geopolitical risks can both trigger sudden shocks.

● On March 11, the UK’s House of Lords Financial Services Regulatory Committee deadline for submitting opinions on stablecoins will arrive. The UK’s regulatory stance may set new benchmarks for global stablecoin rules.

● On Friday at 10 p.m., the U.S. will also release March’s initial University of Michigan Consumer Sentiment Index and one-year inflation expectations. These data will reveal how anxious Americans are about prices and how pessimistic they are about the economy.

Next week’s markets are destined to be highly volatile amid the interplay of war and data. The gunfire at the Strait of Hormuz will determine the ceiling for oil prices, while CPI and PCE figures will set the Fed’s baseline. The convergence of these lines will guide investors’ next steps. Whether going long or short, every move must be carefully considered: Are you betting on escalating war, or on cooling inflation?