This week, markets spent time trying to price a conflict with no clear timeline. The war with Iran has shown some signs of de-escalation, with ongoing peace talks, but the actions on the ground tell a more cautious story. Additional troops and equipment continue to be deployed, although not at levels that would suggest a full-scale ground invasion. This looks more like positioning for targeted operations or securing key areas, rather than a broad escalation.

The market fell because the gap between the two sides is wide. The U.S. is holding firm on dismantling Iran’s nuclear program, handing over enriched uranium, and limiting missile capabilities. Iran is asking for guarantees, reparations, the removal of U.S. forces, and even control over transit through the Strait of Hormuz. None of those are realistic starting points for a quick resolution, which is why markets have started to adjust to a longer timeline rather than a short, contained conflict.

That shift is showing up in a few key areas. Oil continues to move higher, and that feeds directly into inflation expectations. At the same time, the 10-year Treasury is back near 4.40% and creeping toward levels that have forced reactions in the past. When rates start pushing toward 4.50%, it tightens financial conditions quickly, and equities tend to feel it almost immediately. That’s really what’s been driving markets over the past few weeks more than anything else.

What’s interesting is that not much has actually changed in the U.S. economy. There’s no immediate supply issue domestically, and the U.S. is still in a much better position from an energy standpoint than Europe. The pressure is more global. Energy costs are rising faster overseas, which increases the chances of a slowdown abroad before it shows up here. Markets don’t wait for that data to come through and they price it in ahead of time.

From a sentiment standpoint, this isn’t panic, but it’s definitely not confidence either. It’s more of a slow grind lower with investors starting to pull back. People aren’t chasing like they were a few months ago, but they also haven’t fully de-risked. Markets over the last few weeks have felt the most frustrating, which is when there’s no clear washout, just a steady repricing.

At the same time, valuations are starting to come down to more reasonable levels. A lot of large-cap technology names are now 10–20% off their highs. That doesn’t mean the leadership is over, but it does mean expectations are being reset. In some areas, markets are already starting to price in a mild slowdown or recession.

That’s where things get a little counterintuitive. If you want better long-term returns, you need lower entry points, and those only come when the backdrop feels uncertain. We saw that during Covid, when participation actually increased despite the economic shutdown. The same dynamic is starting to build here. It doesn’t feel good in real time, but this is typically where longer-term opportunities begin to show up.

You’re also starting to see companies take advantage of it. Buyback activity is picking up again, and that matters. When companies are willing to repurchase their own stock at lower prices, that’s a direct return to shareholders. Berkshire Hathaway is a good example. They held off for years and are now stepping back in. Large-cap tech is in a similar position, with the balance sheets to be more aggressive at these levels.

It wouldn’t take much to shift the negative sentiment the other way. A ceasefire, even a temporary one, or some type of agreement could reverse a lot of the recent losses fairly quickly. So the move back up could be just as fast.

Looking ahead, the focus stays on a few key areas. Oil prices will continue to drive inflation expectations. The 10-year Treasury is the most important number to watch, especially if it pushes over 4.50%. There’s likely more volatility ahead and more back and forth. But markets are already adjusting, and as they do, they’re starting to create the kind of opportunities that only show up when most investors don’t want them.

Have a great weekend!

* The Wall Street Journal / The Guardian: Analysis of Trump’s 15-point Iran plan (March 24-26, 2026).

* Reuters/Ipsos: Public opinion poll on Iran ground invasion (Released March 19, 2026).

* SEC Filing (Form 8-K): Berkshire Hathaway Inc. resumption of share repurchases (March 4-5, 2026).

* Trading Economics / AP: U.S. 10-Year Treasury Yield data reaching 4.48% (March 27, 2026).

* The Times of Israel: Reports on Iranian rejection of truce conditions and Hormuz demands (March 25, 2026).

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