Summary
Next week’s market calendar is dominated by a widening conflict involving the U.S. and Israel with Iran that has already driven large swings in energy and commodity prices. The timing of routine economic reports - including two U.S. inflation gauges compiled before the escalation - risks being eclipsed by the immediate shock to oil, European gas and shipping. Outside the Middle East, China’s annual political sessions and a set of domestic data releases will be watched for growth signals, while Colombia holds congressional elections and presidential primaries that could shape the May presidential contest.
1. The fog of war
The recent escalation in the Middle East has underlined how fast an energy-price shock can appear and ripple through markets. Since Israel and the U.S. launched their attack on Iran on February 28, oil has risen by nearly 20%, while European natural gas prices have climbed by almost 60%. Those moves have prompted investors to unwind some of last year’s most popular trades - from emerging-market equities to silver and technology stocks - as market participants scramble to cover losses and reallocate risk.
Currency and precious-metal dynamics have shifted as well. The dollar, which lost nearly 10% of its value over 2025, has recovered ground and strengthened against almost every major currency. Gold, meanwhile, has temporarily lost its traditional safe-haven role and been used more as a tool for portfolio damage control. Most market participants polled expect the conflict to last only a few weeks before reaching some form of unresolved settlement, but observers note the potential for surprises in either direction remains large.
2. Inflation reads compiled before the fighting
Traders will receive a double helping of U.S. inflation data next week even though both sets of figures were compiled before the recent spike in oil and gas prices. That timing creates a mismatch between market-moving developments and the data that will inform policy expectations.
Wednesday will bring the February Consumer Price Index, which a Reuters poll shows is expected to rise 0.2% month-on-month. That forecast follows a softer January reading driven by moderating rent inflation and lower gasoline prices. The other key release is Friday’s personal consumption expenditures (PCE) price index for January. Taken together, the two reports will provide a snapshot of inflation trends ahead of the Federal Reserve’s meeting later in March, even if they do not reflect the latest energy-price surge.
3. Central bank policy and sovereign checks
G7 finance ministers and central bank governors are set to meet in France next week, with the Middle East crisis high on the agenda. Market participants are increasingly concerned that higher oil and gas prices could prompt a hawkish tilt by major central banks.
Investors in the euro area have sharply revised expectations for the European Central Bank, now viewing a rate hike by year-end as more likely than another rate cut - a notable reversal from just a week earlier when another cut still appeared possible. Reflecting rapid repricing, Germany’s two-year yield is headed for its largest weekly increase in a year. For the UK, gilt yields have experienced their biggest weekly rise since late 2024, and traders are increasingly skeptical that the Bank of England will proceed with a rate cut this month.
Also on the radar are Friday’s slate of European sovereign rating reviews, which include assessments for Germany, Italy and Spain. Turkey’s central bank will announce its policy decision on Thursday, a cut-or-hold cliffhanger given spillovers from regional instability.
4. China’s Two Meetings and activity data
China’s political season will continue to shape market expectations. The annual "Two Meetings" - the National People’s Congress and the Chinese People’s Political Consultative Conference - opened on Thursday and will run until March 12. The sessions have already produced a headline growth target of 4.5-5%, but next week’s flow of economic data will show how feasible that target may be.
Monday is scheduled for February inflation data, and Tuesday will bring trade figures covering the first two months of the year. Lending data may also be released, although the timing of such reports is less certain. These numbers will provide context for the policy choices discussed at the political meetings and highlight domestic demand and external trade trends in the opening months of the year.
5. Colombia’s pre-election tests
In Latin America, Colombia’s congressional elections this weekend will serve as an early gauge for the presidential ballot at the end of May. The vote coincides with inter-party presidential primaries that should help identify which candidates have momentum heading into the decisive contest.
Polling indicates shifts in the presidential race. Left-wing candidate Ivan Cepeda of the ruling Pacto Historico coalition has been gaining ground, while right-wing outsider Abelardo de la Espriella could benefit in a potential second-round runoff as other rivals fall away. For investors the central concern is how electoral outcomes will affect the next president’s ability to govern. A fragmented Congress after May’s vote would likely limit policy changes and keep markets broadly steady. Conversely, stronger opposition gains could bolster the peso and lift Colombian bonds, whereas gains for the left might weigh on those assets if fiscal concerns re-emerge.
Key takeaways
- The Middle East conflict has already produced large energy-price moves with broad market consequences, notably in oil, European gas, currencies, precious metals and certain equity sectors.
- U.S. inflation reports due next week were compiled before recent price shocks, creating a timing mismatch for policymakers and markets assessing the Fed’s path ahead of its March meeting.
- Policy and political events in Europe, China and Colombia add further near-term sources of volatility for rates, currencies and local sovereign markets.
Risks and uncertainties
- Escalation in the Middle East - further conflict could push energy prices higher and prompt central banks to reconsider easing plans, affecting interest-rate-sensitive assets.
- Data timing mismatch - U.S. inflation measures for February and January (CPI and PCE) do not capture the latest energy-price spikes, complicating real-time policy assessment.
- Shifts in political momentum in Colombia - a change in congressional or presidential dynamics could influence the peso, Colombian sovereign bonds and investor sentiment depending on perceived fiscal trajectories.
The coming week presents a dense mix of geopolitical shocks, routine data releases and political events that together will test markets' ability to digest rapidly changing information. Energy markets and policy-sensitive rates remain the immediate focal points as participants weigh the implications for growth, inflation and central bank paths.