Market Briefing: The End of TACO? Markets Confront a Real Macro Test

Happy March Madness,

Markets are entering the week with a “geopolitical weekend premium” still embedded in crude. It remains the dominant macro force, with prices elevated due to shipping disruptions and production uncertainty tied to the Iran conflict. Any escalation, cease‑fire hint, or shipping‑lane update will move risk assets immediately. 

1. Market Overview

•  Major indices sit just shy of correction territory: 
•  S&P 500: −6.8% from highs, Nasdaq: −9.6%, and Dow: −9.2%
• The Iran conflict is now the primary macro driver, with oil >$110 and no signs of de‑escalation. 
•  Cross‑asset signals are dislocated: gold selling off, yields rising, bitcoin rallying. 
•  The historical “geopolitical dip → quick rebound” pattern is at risk of breaking. 

2. Geopolitics & Energy

• Strait of Hormuz disruptions are choking off both oil and fertilizer flows. 
• U.S. and Israel continue military operations; Trump signals no cease‑fire despite sending more forces. 
• Markets still partially price in a TACO pivot (“Trump Always Chickens Out”), but the setup is weaker than past episodes. 
• Elevated oil is feeding directly into inflation expectations and consumer sentiment. 

3. Inflation & Supply Chain Pressures

• Fertilizer prices up 50%+; diesel and natural gas rising sharply. 
• U.S. farmers face six‑figure cost spikes heading into planting season — worst timing possible. 
• Grocery inflation accelerating: from Produce to Coffee/tea/chocolate, Seafood, Beef prices are up 5% to 20% 
• Packaging costs rising due to petrochemical‑based plastics. 
• No quick fix for fertilizer shortages — no pipeline, no reserve, no reroute. 

4. Cross‑Asset Behavior

• Gold: Worst week in 14 years (−9.6%); selling driven by strong USD, rising yields, and unwind of crowded longs. 
• Treasuries: 10‑year yield up to 4.39% — inflation fears > safety flows. 
• Bitcoin: +8% in March, breaking correlation with risk assets. 
• Equities: Down but not fully pricing oil‑shock risk due to lingering TACO expectations. 

5. Macro Risks & Market Psychology

• The economy is more fragile than in 2025: softer labor, rising inflation expectations, and a Fed that may need to re‑tighten. 
• Investors are struggling to price the conflict — different markets are sending conflicting signals. 
• The longer the conflict persists, the more likely structural inflation becomes. 
• Market sentiment is shifting from “temporary shock” to “persistent macro drag.” 

6. What Matters Most This Week 

•  Any shift in the Iran conflict — escalation or credible de‑escalation will move markets instantly. 
• Oil trajectory — sustained >$110 keeps inflation pressure elevated. 
• Bond market behavior — yields rising into geopolitical stress is a red flag. 
• Consumer‑price pass‑through — food, packaging, and shipping inflation will start showing up in data. 
• Equity positioning — watch for whether the TACO trade finally breaks as markets lose patience. 

7. ClearPath Takeaway

• This is not a standard geopolitical dip. 
• The inflation shock is broader, stickier, and more supply‑chain‑disruptive than prior episodes. 
• A durable rebound likely requires actual conflict resolution + materially lower oil prices, not just rhetoric. 
• Expect volatility, headline‑driven moves, and cross‑asset dislocation to remain the dominant regime. 

MyCompass Takeaway 

We’re entering the week with all the 3 indexes below 200sma and November's lows. That's a technical breakdown which could move the market further down. This week is dominated by energy, rates, and geopolitics. Crude is the macro anchor, bonds are repricing the entire rate path, and inflation sensitivity is rising. Corporate catalysts exist but are secondary to the macro regime. Expect volatility, headline‑driven moves, and a market that punishes complacency. 

At MyCompass Trading, we're all ready for this opportunity to capture the moves. Are you?