General Market News

A new survey of 50 economists finds that crude oil prices reaching approximately $138 per barrel and staying there for about 14 weeks would push US recession odds above 50%. The ongoing Iran conflict has disrupted the Strait of Hormuz, causing the largest-ever energy supply disruption and driving Brent crude to $105 and WTI to $96 per barrel. While economists currently see a 32% recession chance in the next 12 months, temporary supply shocks are expected to boost inflation rather than trigger immediate recession.

• Recession probability has risen from 27% in January to 32% currently, with oil at $138/barrel for 14 weeks cited as the critical threshold for pushing odds above 50%
• Economists have raised their year-end inflation forecast to 2.9% CPI (from 2.6%) and expect core PCE at 2.8% (from 2.6%), driven by broader price pressures beyond gasoline, which has hit $3.88/gallon nationally
• GDP growth forecast remains at 2.1% for Q4 with unemployment expected at 4.5% by December, while oil prices are projected to settle at $86.70 by end of June and $73.54 by year-end

The average U.S. 30-year fixed mortgage rate climbed to 6.22%, its highest level since early December, as the U.S.-Israeli war with Iran drove up oil prices and Treasury yields. The increase reverses earlier declines and threatens to hamper home sales during the spring season, complicating the Trump administration's housing affordability goals ahead of midterm elections.

• The 30-year mortgage rate rose from 6.11% last week to 6.22%, up from 5.98% just before the Iran conflict began
• Mortgage rates increased as war-driven oil price spikes and rising 10-year Treasury yields (which mortgage rates track) stoked inflation fears
• Rising rates could dampen the typically busy spring home-buying season and hurt housing affordability, a key political issue before November midterm elections

President Donald Trump indicated his support for a Department of Justice investigation into Federal Reserve Chairman Jerome Powell, a move that may delay the nomination of Kevin Warsh as Powell's potential successor. Trump has publicly criticized Powell as 'grossly incompetent' and called for immediate rate cuts.

• Trump continues to pressure the Fed by backing a DOJ probe into Chairman Powell while criticizing his competence
• Kevin Warsh's nomination to succeed Powell as Fed Chair may face further delays due to the ongoing investigation
• The president is publicly demanding immediate interest rate reductions from the Federal Reserve

Moody's Analytics has assessed the probability of a U.S. recession within the next year at 49%, one of their highest figures in recent years. The elevated risk is driven primarily by deteriorating labor market data and an escalating energy crisis, with oil prices surging and threatening to replicate the 2022 oil shock when Russia invaded Ukraine.

• February employment data showed nonfarm payrolls declined by 92,000 jobs with unemployment at 4.4%, and Moody's chief economist Mark Zandi noted that 'almost all the economic data has turned soft since the end of last year'
• Rising oil prices from $3 to $5 per gallon would increase typical household gas costs from $2,000 to $3,300 annually, significantly impacting families earning the median income of $83,000
• The current oil supply disruption is broader than the 2022 Russia-Ukraine crisis, with experts warning the energy crisis could be the most severe since the 1970s and take weeks to resolve even if it ends immediately

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