Market sentiment is tilting toward the extreme fear end of the scale as geopolitical tensions between the United States and Iran intensify. A significant jump in oil prices occurred last week. If elevated oil prices persist the economic consequences could be severe. Volatility measures moved notably higher with the VIX at its highest point in ten months.

Oil supply disruptions translate into higher fuel costs for commuters and for essential logistics such as planes, ships and cargo trucks. Rising fuel costs feed through to higher prices for goods and services and add to existing inflationary pressure stemming from tariffs and other cost inputs. The recent oil move coincided with a pronounced lift in market volatility.

The U.S. Strategic Petroleum Reserve is reported to be near its lowest levels in four decades which limits its immediate availability. After the Russian invasion of Ukraine the administration tapped the reserve to help stabilize global fuel markets. The reserve has not been fully replenished. A prior campaign pledge to refill the reserve to the top was made which affects perceptions of whether it will be tapped now that demand for emergency supply has grown.

The upcoming economic slate includes several headline reports that will draw attention during the week.

• Consumer Price Index (Wed) - key inflation report
• U.S. Trade Deficit (Thu)
• Q4 GDP - first revision (Fri)
• Personal Income (Fri)
• PCE (Fri) - another key inflation report
• Job Openings (Fri)
• March Consumer Sentiment (Fri)

On the technical front SPY recently slipped below its 100 day moving average which had acted as support since early April of last year. That move increases vulnerability to further downside. The nearest material support sits below current levels and a breach could lead to a retest of the 200 DMA. The market remains headline driven which is contributing to elevated volatility.

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