Financial Markets Daily Report
16 March 2026
Escalating tensions in the Middle East drove a risk-off move across markets on Friday, with Brent crude rising above USD 100/barrel as concerns over energy supply disruptions intensified. Global equities declined, while the US dollar strengthened as a safe haven, pushing the EURUSD cross toward 1.14.
In the euro area, concerns over higher energy costs and inflationary pressures pushed sovereign bond yields higher, accumulating increases of around 15bp over the week. US Treasury yields were mixed after PCE inflation came in line with expectations (headline at 2.8% yoy, and core at 3.1% yoy), with long-term yields moving higher amid inflation concerns.
Focus now turns to this week’s central bank meetings. The Fed and the ECB are both widely expected to leave policy rates unchanged (Fed funds at 3.50–3.75%, ECB depo rate at 2%). Markets currently price the first Fed rate cut toward year-end, while for the ECB investors see limited near-term easing and around two rate hikes priced for 2026.