Markets are finishing Week 4 of the Iran conflict, which began with the launch of Operation Epic Fury on February 28 and transitioned to a series of rolling delays in President Donald Trump’s ultimatum for Iran to reopen the Strait of Hormuz. The first 5-day delay on Monday, following the initial 2-day ultimatum last Saturday, effectively capped Brent crude at $120 per barrel; this morning’s 10-day extension appears to be doing the same at $110. Even so, currencies failed to rally amid a stronger stagflation narrative, as evidenced by the sell-off in commodity currencies. Despite aggressive market pricing for rate hikes in Australia, New Zealand, and Canada, these high-beta currencies faced a double-whammy from 1) a decline in risk appetite that sent the S&P 500 Index back to its previous low last Friday; and 2) the upward shift in the US Treasury yield curve that reflected the Fed’s pivot towards more persistent energy-driven inflation. February’s US PPI inflation and import prices also showed that disinflation had already lost momentum before Operation Epic Fury began. 
Today, the G7 Foreign Ministers' meeting in Vaux-de-Cernay, France, has become a high-stakes arena of diplomacy as the US-Israel-Iran war enters its second month next week. Finding a credible "off-ramp" for President Trump is proving difficult, as the summit exposes conflicting interests and deeply entrenched ideologies. While the US pushes for a "Coalition of the Willing" to enforce its rolling ultimatums and secure the Strait of Hormuz, European partners are resisting the Trump administration’s pressure to provide multilateral support for what they view as an American-led unilateral escalation. The ideological divide is stark: Washington remains focused on a "Peace Through Strength" via the Witkoff 15-Point Plan, whereas the EU and global partners like India are prioritizing a rules-based de-escalation that avoids a permanent regional explosion. Iran has dismissed and countered the US plan with a 5-point ultimatum of their own.
Trump’s extensions of ultimatums were also a reminder that the 60-day clock under the War Powers Resolution is ticking. Trump has roughly four weeks left before facing a constitutional showdown with Congress over the legality of this undeclared war. If President Trump does not secure a formal Authorization for Use of Military Force or a declaration of war by April 29, he is legally required to withdraw US forces within 30 days. Investors will likely hope that the shadow of past judicial overreach, specifically the Supreme Court’s stinging reversal of his IEEPA-backed tariffs, will temper Trump’s resolve, forcing a pragmatic pivot toward an off-ramp before the 60-day clock triggers another high-stakes constitutional defeat before the November midterms. Hence, the USD’s haven status has a narrowing shelf life.
Quote of the Day
“Idealism increases in direct proportion to one's distance from the problem.”
John Galsworthy
March 27 in history
Suharto officially succeeded Sukarno as president of Indonesia in 1968.
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