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A Ceasefire That Nobody Fully Agrees On
On Monday, we wrote that this week would produce one of two outcomes: either the war starts winding down, or it escalates. What actually happened was both — simultaneously.
The ceasefire itself was genuine. Pakistan brokered it. Trump agreed to suspend strikes. Iran agreed to reopen Hormuz. Oil plunged. Futures ripped higher. For about 14 hours, it looked like the best-case scenario from our Monday dispatch was playing out.
Then Wednesday arrived. Israel launched massive strikes in Lebanon, calling it the largest coordinated attack since the war began. Netanyahu’s office said the ceasefire doesn’t cover Lebanon. Iran’s parliament speaker accused the U.S. of violating three clauses. Reports from IRGC-affiliated media said Hormuz was closed again to non-Iranian shipping. The White House called that “completely unacceptable.”
What markets are pricing right now: hope with conditions. The S&P rallied on the ceasefire but hasn’t broken above its 200-day moving average. Oil dropped but hasn’t fallen below $100. Traders are treating this as a temporary reprieve, not a resolution. That’s probably the right read. A two-week ceasefire with disputed terms, ongoing strikes in Lebanon, and unresolved questions about uranium enrichment is not a peace deal. It’s a pause. Whether that pause becomes permanent depends on what happens in Islamabad starting today.
The number that may matter more than the ceasefire: March CPI hits at 8:30am this morning. FactSet consensus expects headline inflation at 3.4% year-over-year — up from 2.4% in February. BofA forecasts a 0.9% month-over-month increase driven by a 10.6% spike in energy prices. If that prints anywhere close to consensus, it will be the largest single-month jump since the Russia-Ukraine shock in 2022.
Here’s why the CPI matters more than the ceasefire for your portfolio over the next six months: the ceasefire is temporary and disputed. Even if it holds, Morningstar has already revised its full-year inflation forecast from 2.6% to 3.6%. The Fed raised its own 2026 inflation projection by 30 basis points at the March meeting — the largest single-year upward revision in recent cycles. Seven of 19 Fed participants see zero rate cuts this year. The oil shock has already happened. The CPI is just the receipt.
The fork remains the same one we identified Monday: if markets treat today’s CPI as a one-time oil-driven spike that fades with the ceasefire, equities hold up and the rally extends. If they treat it as evidence that inflation is re-accelerating — especially in core categories beyond energy — the narrative shifts from “temporary shock” to “stagflation risk.” Watch core CPI closely. BofA expects 0.3% month-over-month. If core comes in hot too, the transitory argument gets much harder to make.
Six weeks ago the market was hitting all-time highs and the only question was how many times the Fed would cut rates. Now the question is whether they cut at all. That shift happened in 40 days. The reversal, when it comes, won’t wait for anyone to feel ready.
The ceasefire is a headline. The CPI is a data point. Headlines get revised. Data points compound. Know which one to react to.
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