First monthly economic data released after the Middle East conflict: Consumer confidence in the United States has plummeted to freezing point, can non-farm jobs hold up in March?

Notice that, due to the ongoing and seemingly endless war in the Gulf region, the US stock market fell again last week, with equity markets continuing to decline. The S&P 500 index fell about 1.7% last Friday, marking the longest losing streak since 2022; the Dow Jones Industrial Average also fell 1.7% on Friday, dropping by about 800 points. So far this year, these two major indices have fallen by 7% and 6% respectively. The tech-heavy Nasdaq Composite Index saw an even deeper decline on Friday, dropping by 2.2%, expanding its year-to-date loss to about 10%. Preview of this week's news The employment report to be released by the Bureau of Labor Statistics on Friday will be a highlight in a busy economic calendar. The core question for investors is: after the drastic fluctuations of adding 130,000 jobs in January and losing 92,000 jobs in February, will the payroll numbers return to normal? In addition, investors will also receive a report on market sentiment and expectations from the World Business Leaders Forum on Tuesday; on the same day, there will also be the JOLTS job openings report; and on Thursday, professional introduction company Challenger, Gray & Christmas will provide additional labor market insights. On the corporate front, the quarterly earnings report from NIKE, Inc. Class B (NIKE.US) to be released on Tuesday will lead this typically infrequent earnings week. Investors will also receive earnings reports from two major critical mineral companies in the US - USA Rare Earth and Trilogy Metals on Monday and Friday respectively. Continuous blockage of the Hormuz Strait As the Iran war enters its fifth week, the Hormuz Strait remains effectively closed, leading to about 15-16 million barrels of oil unable to enter the market daily. Oil prices continue to rise, with Brent crude and US WTI crude prices rising by over 45% and 50%, respectively, in the past month. Gareth Ramsay, Chief Economist of BP p.l.c. Sponsored ADR, said earlier last week, "I don't think you could compare this to anything in the past," adding that the disruption in the Hormuz Strait is a "subject of study for every analyst, or a nightmare we never thought possible." There is no sign of an immediate end to the conflict. Last Thursday, President Trump announced he would delay Iran's return to the negotiating table for a second time before the US strikes the country's domestic power infrastructure - yet, oil prices continue to rise and the stock market continues to fall. Strategists state that the only thing that matters now is: how long Iran is willing to block Persian Gulf oil, and how long the rest of the world will tolerate this situation. Mohammad Baqer Qalibaf, Speaker of the Iranian Parliament, said in a television interview last week that the Hormuz Strait "cannot return to its former state as it was." Seeking normalcy in employment data The data in January showed significant growth, while February showed an even larger unexpected decline. For investors, the biggest question this week is: will March be the month when the Bureau of Labor Statistics' key indicator - the Nonfarm Payrolls report - returns to near-expected levels? As of last Friday, economists expected job growth to be 50,000, with the current dominant status of "no hiring, no layoffs" in the US labor market not expected to change significantly, and the impact of the Iran war on the economy not yet fully reflected in the data. Andrew Husby, Senior US Economist at BNP Paribas in Paris, said, "We tend to think that, as businesses are already streamlined in terms of adding new hiring demand, it will be difficult to break the current 'low hiring/low layoffs' balance unless there are more severe energy price or confidence shocks than currently." But this does not mean that the economic obstacles brought by the war will not drag on the labor market. Goldman Sachs Group, Inc. US economist Piofrancesco Mere believes that these impacts may simply not have manifested yet. Mere wrote in a report, "Taking into account job gains in the energy industry and job losses in other industries, we estimate that by the end of the year, high oil prices will reduce monthly net job growth by about 10,000." Fed may turn hawkish While the Fed may be signaling caution, the bond market is increasingly digesting the possibility of a more hawkish stance by the committee. The 10-year US Treasury yield (inverse to bond price movements) soared to 4.48% at one point, hitting its highest level since July last year, as news of Trump's delay in striking Iran's infrastructure failed to calm investors' anxieties. At the short end of the curve, the 2-year US Treasury yield rose to 4% on Friday. Notably, short-term yields have decoupled from oil prices. In the weeks leading up to the conflict, the 2-year US Treasury yield followed oil prices, but since the Fed's meeting, the 2-year yield, seen as a gauge for expected policy direction, has risen by over 30 basis points, while oil prices have remained largely stable. Adia Bavay, Global Chief Economist at Bank of America Corp's research department, wrote, given the divergence between post-meeting short rates and oil prices, "we believe the market is now anticipating a more hawkish Fed response mechanism and may see a larger scale of commodity shocks." A change that was unimaginable before the war started is that traders now expect a 22% probability of a 25-basis-point rate hike by the end of 2026. Market sentiment turns bearish Apart from the stagnant labor market, the overall mood in the US economy is not ideal. Data from the University of Michigan shows that consumer confidence in March has fallen to its lowest level since December last year, as the worsening of the Iran war has affected public perceptions of the US economy. This is not surprising. Major stock indices have given back all gains from 2026, with gold prices falling by 12% since the war started. The national average retail gasoline price is just $0.03 away from $4 per gallon, and rising diesel prices are pushing up transportation costs. Joanne Xu, the survey manager, said, "Consumers' reactions are not just about the political shocks from GEO Group Inc, but more about the changes happening in the entire economic sector." The data from the World Business Leaders Forum on Tuesday will provide investors with another reference point to measure US market satisfaction following the pessimistic data from the University of Michigan.