US Treasury yields rose after the Labor Department reported 178,000 jobs were added in March, surpassing expectations. The 10-year Treasury yield climbed to 4.344%. The report also showed the unemployment rate fell to 4.3%. However, the ongoing war between the US and Iran has caused a significant energy shock, with oil prices surging and investors bracing for inflation.

JPMorgan CEO Jamie Dimon warned that the Iran war could drive higher inflation and interest rates through renewed commodity shocks, with a prolonged conflict risking further pressure on financial markets and economic growth. He flagged energy prices as a key channel for sustained inflation.

Value stocks have outperformed growth stocks this year, with the Russell 1000 Value Index up 2.4%, driven by companies such as SanDisk and Moderna. However, the escalating conflict in Iran has started to impact these gains, causing a 4.3% drop in the index since February. The S&P 500's energy sector has benefited from rising oil prices, while other value stocks have faced declines amid economic uncertainty.

Private equity buyouts dropped 36% in Q1 compared with the previous quarter because of concerns about artificial intelligence's effect on software companies and geopolitical instability, particularly in the Middle East, according to Dealogic. "We're in one of the most turbulent periods I can remember," says a European buyout group executive. "Things are grinding down quite quickly now in terms of activity."

The Securities and Exchange Commission has proposed a $1.9 billion budget for the upcoming fiscal year, an 11% reduction from current levels, as it emphasizes fiscal discipline, efficiency and modernization. While SEC funding is offset by industry fees, the agency said it plans to reallocate resources and modestly increase staffing through attrition to support policy priorities. Chair Paul Atkins is advancing a broad agenda that includes crypto rulemaking, potential changes to public company disclosures and market structure reforms, with several proposals already under White House review.

US inflation data this week will reflect the initial impact of President Donald Trump's war in Iran, with February's core personal consumption expenditures index expected to increase 0.4%. March's consumer price index is anticipated to show a 0.9% surge, driven by higher oil prices.

Investors are expecting central banks to raise interest rates in 2026 following a spike in inflation caused by the war in Iran. However, rate hikes would not address the underlying supply issues and could unnecessarily exacerbate economic weakness. The US Federal Reserve is now expected to hold rates steady rather than cut, given the economic hit from expensive oil. Central banks should avoid tightening policy and instead focus on supporting economic resilience.