Ed's World Market Insights: Week 10, 2026: Bombs Over Tehran, Jobs Below Zero, and AI's Existential Pop Quiz

The views expressed are Ed le Feuvre's personal market observations and do not constitute investment advice, a financial promotion or a recommendation to buy or sell any security. Read the full disclaimer.

Dear Quay Financials,

Sunday afternoon in Gibraltar, and the Rock stands silent beneath a sky the colour of spent gunmetal. Normally at this hour I'd be nursing a double espresso at Casemates Square, exchanging mild pleasantries with shipping brokers about container rates and the weekend's football. Not today. Today, the Strait feels less like a scenic crossing and more like the world's most contested bottleneck... because a few thousand miles to the east, the other strait (Hormuz) is now functionally closed, oil is trading above $90, and the café conversations have turned from brunch suggestions to bomb damage assessments.

This was no ordinary week. Week 10 will be remembered as the moment geopolitics stopped being background noise and became the headline, the lead, and the kicker. US and Israeli forces launched a full-scale military assault on Iran. The February jobs report delivered an outright contraction in employment. And the lingering spectre of an AI-driven labour apocalypse, courtesy of a Substack research note, of all things! continued to haunt the edges of every portfolio allocation discussion.

So, espresso gripped tight, garden chair angled towards the strait, let's survey the wreckage... and see whether anything survived the week with its thesis intact.

Recap: Where We Left Off (Week 9)

Week 9 closed with markets already unsettled. The S&P 500 had slipped 0.4% as the Citrini Research paper on AI-driven mass unemployment circulated across every trading desk in New York and London, sparking a selloff in tech and software names. NVIDIA had just reported strong earnings but couldn't lift sentiment; the mood was defensive, with utilities and consumer staples outperforming while financials and technology dragged. European equities were a rare bright spot, with the STOXX 600 notching a record close at 633.85; its eighth consecutive monthly gain. Japan's Nikkei had rallied 3.6%, and gold held steady near $5,184/oz.

The setup, then, was a market already leaning on one crutch... AI anxiety... when someone kicked the other one away entirely.

Last week's dispatch closed with a warning that hedges and liquidity were 'not optional but existential.' Week 10 proved the point with brutal clarity. The Iran escalation scenario; flagged as potentially pushing oil toward $90–100 and reshuffling every macro assumption; materialised almost precisely to script. Gold tested $5,400, the VIX surged 48%, and the Strait of Hormuz closed for the first time since the June 2025 scare. Of the five specific watches laid out for Week 10, four landed squarely; the fifth, ISM Manufacturing, was simply trampled beneath the boots of geopolitics. Sometimes the best prediction is knowing which data points won't matter.

If you missed last week’s dispatch you can find it here: Week 9, 2026: Supreme Setbacks, Nvidia's Paradox, and the Bombs Before Monday | LinkedIn

This Week: Bombs Over Tehran, Jobs Below Zero, and AI's Existential Pop Quiz

Weekly Market Table

Asset	Week 10 2026 close	WoW	YTD	Comment
S&P 500	6,740	-2.02%	-2.74%	Iran war & weak NFP hammered equities; -2.0% WoW as oil spike stoked stagflation fears
Nasdaq Composite	22,387.68	-1.24%	-5.11%	Tech held up relatively well; Citrini AI fears faded as geopolitics took centre stage
Russell 2000	2,525	-4.07%	-0.36%	Small caps crushed by refinancing wall & floating-rate debt exposure; worst performer in US
FTSE 100	10,285	-5.74%	4.19%	European equities bore brunt of Iran crisis; energy costs & defence rotation dominated
STOXX Europe 600	599	-5.55%	1.71%	Record-breaking 8-month streak snapped; worst week since April 2025 tariff shock
Nikkei 225	55,621	-5.49%	9.70%	Japanese equities fell >5% WoW as Middle East conflict unsettled global risk appetite
Hang Seng Index	25,757	-3.28%	-0.24%	China set GDP target 4.5-5%; HK rebounded Friday on tech but down sharply for week
Gold ($/oz)	5,086	-1.89%	12.29%	Gold hit $5,400 intraweek on Iran safe-haven bid before pulling back on USD strength
Bitcoin (BTCUSD)	68,110.0	3.42%	-21.64%	Crypto rallied on risk diversification; BTC outperformed equities despite ETF outflows
WTI Crude ($/bbl.)	89.07	32.88%	52.65%	Oil surged +33% as Strait of Hormuz closure fears gripped markets; Brent hit $85+
US 10Y Treasury	4.15%	4.53%	0.48%	Yields rose +18bp as oil-driven inflation fears overwhelmed flight-to-safety demand
US 2Y Treasury	3.56%	5.33%	2.30%	Short-end rose +18bp; markets repriced Fed cuts lower on energy-driven inflation risk
JPY 30Y Treasury	0.0339	1.50%	-0.59%	JGB yields edged up; BoJ under pressure as global risk repricing drives bond volatility
US Dollar Index (DXY)	99	1.41%	1.12%	Dollar strengthened on risk-off flows before giving back gains on weak NFP Friday

Closing data and commentary are transcribed from the supplied Week 10 market table. A rise in a bond yield is a yield move and is not equivalent to a gain in the price of the bond.

US & Global Equities

US large caps fell broadly, with the S&P 500 down 2.0% to 6,740; its second consecutive weekly decline. Friday's session alone saw a 1.33% drop as the toxic combination of escalating Middle East hostilities and a disastrous jobs print drove investors into full risk-off mode.
The Nasdaq Composite fared relatively better at -1.2%, a paradox explained by the rotation out of cyclicals and industrials (Dow down 2.9%) and into the mega-cap tech names that serve as quasi-defensive holdings in the modern portfolio.
The Russell 2000 was the week's biggest casualty among US indices, plunging 4.1%. Small caps' disproportionate exposure to floating-rate debt (~32% vs 6% for the S&P 500) and the looming "2026 Maturity Wall" turned a bad week into a terrible one.
European equities suffered their worst week since the April 2025 tariff shock. The STOXX 600 fell 5.5%, with banking shares down 4.3% on Tuesday alone and the FTSE 100 sliding 5.7% as energy import costs surged and Maersk suspended Middle East connecting services.
Japan's Nikkei 225 dropped over 5% for the week, despite a small Friday bounce, as the Middle East conflict entered its seventh day and Gulf shipping disruptions rattled Asian supply chains.
Hong Kong's Hang Seng fell 3.3% but staged a notable Friday rally of 1.7%, boosted by JD Logistics' strong results and China's confirmation of its 4.5–5% GDP growth target at the annual parliamentary session.

Gold, Digital Assets and Other Assets

Gold spiked above $5,400 intraweek a new all-time high, as the safe-haven rush following the Iran strikes sent investors scrambling. However, the precious metal gave back gains as the US dollar strengthened and profit-taking set in, closing the week at $5,086, down 1.9% from the prior Friday.
Bitcoin was the week's unlikely outperformer among major assets, climbing 3.4% to ~$68,110. Despite persistent ETF outflows totalling over $9 billion over four months, short-covering rallies and a narrative of "digital risk diversification" lifted the price.
WTI crude oil was the undisputed star... or villain... of the week, surging 33% from $67 to $89. On Friday alone, WTI leapt 12.2% after Qatar's energy minister warned the war could "bring down the economies of the world" and predicted Gulf exporters would shut production within weeks. Brent crude hit $85.41 on Thursday

Macro & Policy

US Treasury yields rose sharply across the curve, with the 10-year adding 18 basis points to 4.15% and the 2-year climbing 18bp to 3.56%. The move was driven by oil-linked inflation expectations overwhelming the traditional flight-to-quality bid.
The Fed finds itself in an impossible position. With the Fed Funds rate at 3.75%, rising energy costs threaten to reignite inflation while the labour market is weakening rapidly; a textbook stagflation dilemma.
The US Dollar Index rose 1.4% to 98.99, benefiting from risk-off flows early in the week, but surrendered some gains on Friday after the weak payrolls data undercut the case for a hawkish Fed.
The VIX surged 48% to close at 29.49, its highest level since the spring 2025 tariff-related volatility spike, signalling extreme near-term uncertainty

Geopolitical Analysis

The weekend of February 28 to March 1 changed everything. US and Israeli forces launched coordinated military strikes against Iran, targeting government ministries, nuclear infrastructure, and, in the most consequential development, reportedly killing Supreme Leader Ayatollah Ali Khamenei in a bunker strike. By Monday morning, the Tehran death toll had surpassed 1,000 according to the Iranian Red Crescent.
The market reaction was immediate but initially restrained. On Monday, US stocks opened sharply lower, the Dow fell 600 points intraday, before staging a remarkable intraday reversal, closing roughly flat as investors adopted a "wait and see" posture familiar from previous Middle Eastern conflicts. The S&P 500 finished Monday unchanged, while the Nasdaq eked out a 0.4% gain as software stocks bounced from the prior week's AI-driven sell-off.
But the war didn't stay contained. By Tuesday, as Iran retaliated with missile and drone strikes across the Gulf and fighting intensified, the S&P 500 plunged as much as 2.5% intraday before recovering to close down 0.9%. The STOXX 600 fell 3.1% in a single session, its worst day since April 2025. On Thursday, President Trump declared the US didn't want to negotiate, demanding "unconditional surrender", and WTI crude surged 8.5% to $81/barrel.
The Strait of Hormuz... through which roughly 20% of the world's oil transits... became the week's most consequential chokepoint. Traffic came to a halt as global shipping operators, including Maersk, suspended Middle East services. Qatar's energy minister warned of $150 oil if Gulf production shut down. By Friday's close, WTI had blasted through $89, up 33% for the week.
The transmission mechanism to broader markets was crude but effective: oil prices drove inflation expectations, which drove bond yields higher, which crushed rate-sensitive equities, particularly European exporters and small caps. The VIX's 48% weekly surge told the story in a single number.
For investors, the critical question is duration. Historical analysis of nine prior military interventions over the past two decades suggests inflation expectations typically peak within 20 trading days. But as one strategist noted, if this evolves into a prolonged "regime change effort" lasting weeks, the risk-off repricing has only just begun.

What's Pertinent This Week (Week 10)?

The Iran War: When Geopolitics Became the Only Story. For investors, the critical question is duration. Historical analysis of nine prior military interventions over the past two decades suggests inflation expectations typically peak within 20 trading days. But as one strategist noted, if this evolves into a prolonged "regime change effort" lasting weeks, the risk-off repricing has only just begun.

The February Jobs Report: Stagflation's Calling Card.

If the Iran crisis was the week's gale, the February nonfarm payrolls report was the iceberg that appeared in the fog on Friday morning. The US economy lost 92,000 jobs in February, against expectations of a 59,000 gain, marking the sixth decline since January 2025 and the second-most significant monthly drop in that span.

The unemployment rate rose to 4.4%, up from 4.3% in January. Declines were broad-based: construction fell 11,000, manufacturing shed 12,000, transportation and warehousing lost 11,000, information declined 11,000, and federal government employment dropped another 10,000. Only social assistance (up 9,000) showed meaningful gains.

Perhaps most damaging was the revision of prior months. December's already-weak figure was slashed from +48,000 to negative 17,000, and January was revised down 4,000 to +126,000. Together, the revisions wiped out 69,000 previously reported jobs. The participation rate slipped to 62.0%.

The report landed at the worst possible moment. With oil prices surging on the Iran conflict, the Fed now faces a classic stagflation trap: weakening employment argues for rate cuts, while energy-driven inflation pressure argues against them. As Fitch Ratings' head of US economics put it: "It's unfavourable news in every aspect. With renewed tariff discussions, rising energy costs, and new inflationary pressures, the Federal Reserve finds itself in a challenging position".

Markets reacted accordingly. The S&P 500 opened down 1.7% on Friday morning as the Iran war and jobs data compounded. The dollar weakened on the payroll data even as it had strengthened on risk-off flows earlier in the week. Bond yields, which had been climbing on inflation fears, briefly dipped on the employment shock before resuming their upward march; a sign that inflation anxiety was winning the tug-of-war against recession fears.

AI's Existential Pop Quiz: The Citrini Report and the Labour Apocalypse Debate.

Before bombs fell on Tehran, the market's primary anxiety was artificial intelligence, specifically, whether it was about to destroy the white-collar labour market. The catalyst was a research note from Citrini Research, published on Substack in late February, which depicted a scenario where 50% of white-collar workers faced exposure to AI displacement, unemployment soared to 10.2%, and stock markets experienced a prolonged selloff.

The note landed like a grenade in a library. Shares in Uber, Mastercard, and American Express fell immediately as the report's scenarios of AI-disintermediated payment systems and gig-economy collapse went viral across trading floors. The Guardian described it as "a feedback loop with no brake". Software and cybersecurity stocks bore the brunt of the early-week selloff, with the technology sector falling 2.2% in Week 9.

By Week 10, the academic cavalry had arrived. Evercore analysts published a detailed rebuttal calling the Citrini scenario "thought-provoking but implausible," highlighting three key objections: human engagement remains critical in many functions; AI may encounter cognitive and energy limits; and the paper assumed zero policy response and no Schumpeterian creative destruction. Anthropic's own research showed that while hiring into AI-exposed occupations had slowed 14% for workers aged 22–25, there was no measurable impact on overall unemployment rates.

A Forbes contributor even published a forward-looking piece imagining 2030 and concluding the Citrini crisis never materialised, noting that "the same AI that reduced labour costs also lowered the expenses associated with starting a company". The net effect on firm formation was neutral to positive.

The market response evolved through the week. By Tuesday, the AI anxiety had been largely overtaken by the Iran crisis. Tech stocks actually outperformed on several sessions as investors rotated into mega-cap names as defensive holdings, and the Nasdaq's -1.2% weekly decline was the mildest among major indices. The Citrini report, while no longer the primary driver, has permanently shifted the market's framing of AI risk from a "when will it boost earnings?" question to a "when will it destroy them?" debate, a narrative shift with long-term portfolio implications.

What Will Week 11 Bring?

The week ahead will be dominated by the evolving Iran situation. Any ceasefire signals, Strait of Hormuz reopening, or escalation to neighbouring states will drive oil, equities, and volatility in real time. Investors should watch for:

Other catalysts:

Iran's next retaliatory move: missile and drone strikes across the Gulf continue, and the risk of a direct attack on energy infrastructure remains elevated.
US CPI data: February's Consumer Price Index will arrive into a market already pricing in an oil-driven inflation surge; any upside surprise could be explosive.
Fed commentary: with the stagflation dilemma now acute, every FOMC member's public remarks will be parsed for signals on whether the Fed prioritises inflation or employment.
China's NPC fallout: the GDP target of 4.5–5% was broadly in line, but the detail on fiscal stimulus and "emerging pillar industries" (including biopharmaceuticals) may drive Asia-Pacific flows.
Small-cap earnings season: April's reporting cycle will be a "prove-it" moment for Russell 2000 companies trying to demonstrate profitability amid higher borrowing costs.

Strategic positioning:

The VIX at 29.5 tells you all you need to know: the market is bracing for more volatility, not less. Position accordingly.

Ed's Closing Bell

Week 10 was the kind of week that strips away every comfortable assumption and reminds you why risk management isn't a department; it's a discipline. The Iran strikes shattered the market's fragile calm, the jobs report kicked away the employment pillar that bulls were leaning on, and the AI debate ensured that even the sectors not hit by bombs or payrolls data had something to worry about.

From my garden on the Rock, watching the ferries cross the strait, our strait, the one still open, the parallels are hard to miss. Markets, like shipping lanes, depend on the free passage of goods, capital, and confidence. Close one chokepoint, and the entire system reroutes, reprices, and recalibrates. This week, that's precisely what happened.

For those of us who've spent the past year watching AI enthusiasm, rate cut expectations, and geopolitical complacency inflate simultaneously, the correction feels overdue if not entirely welcome. The good news, if there is any, is that clarity, even unpleasant clarity, is always preferable to the fog of uncertainty. We now know the risks. What we do with that knowledge defines the next chapter.

So, keep your seatbelt fastened, your allocation balanced, and your coffee strong. The Rock has watched empires rise and fall across this strait for centuries, and its lesson is always the same: patience, preparation, and the nerve to hold steady when the wind shifts.

Final Words

As ever, these reflections are solely my own and neither those of Quay Financials (Gibraltar) Limited nor anyone else wise enough to keep their sharpest insights confined to the breakfast table. Do your own homework, consult someone you trust, and never forget: the market can stay irrational, but it cannot stay indifferent to a real war.

From Gibraltar

Week 10, 2026: When bombs, bad jobs, and algorithmic anxiety collided over the Strait, even Gibraltar's espresso tasted a little more bitter. Stay sharp, stay hedged, and keep the price of oil in view.