Mounting Middle East tensions and the risk of disruption in the Strait of Hormuz drove oil prices higher this week, reviving inflation concerns and pressuring markets. While U.S. economic data remains resilient, elevated energy prices are reducing the likelihood of Federal Reserve rate cuts later this year.
Economic Highlights:
- Consumer prices rose 0.30% in February, putting the 12-month inflation rate at 2.40%. Core CPI, which excludes food and energy, rose 0.20% month-to-month, bringing the annual rate to 2.50%. The report showed inflation remained stubbornly high for necessities such as electricity, food, apparel, medical care, and housing.
- Durable goods orders were unchanged in January, missing estimates for a 1.10% increase. However, excluding the volatile defense and transportation sectors, orders were up 0.50% M/M. This suggests healthy underlying business demand particularly for metals, computers, and machinery.
- Existing home sales rose 1.70% in February to a seasonally adjusted annualized rate of 4.09 million units. The median price of a home sold also increased slightly, up 0.30% YOY to $398,000. With the supply of homes at 3.8 months, below the six to seven months considered to be a healthy balance between supply and demand, prices could remain elevated as we enter the historically busy spring homebuying season.
Strait Talk Sinks Markets
Investors began factoring in the risk of a protracted conflict in Iran this week, sparking an energy crisis and concerns that inflationary pressures will begin to mount. West Texas Intermediate Crude broke above $100/barrel for the first time since 2022, which followed Russia’s invasion of Ukraine. The surge in prices sent the S&P 500 to its third straight losing week while the Dow Jones Industrial Average closed below the 47,000 level for the first time this year. Concerns over a drawn-out conflict intensified after reports that Middle Eastern producers were slashing output in response to the closure of the Strait of Hormuz. The passageway accounts for the transit of 20% of the world’s oil supply. With the world consuming roughly 102-105 million barrels/day, that leaves little spare capacity to meet demand. International leaders have attempted to take swift action with the International Energy Agency announcing member countries would release 400 million barrels of oil from their emergency stocks, the largest reserves distribution in history. The U.S. followed suit, announcing it would release 172 million barrels from the Strategic Petroleum Reserve. The moves at first provided some comfort to markets as oil prices fell from a peak of $119 to the $90 level. The retreat, however, was only short lived as Iran struck a defiant tone late in the week, warning it would continue attacking oil transports and spike oil prices to $200/barrel by keeping the Strait of Hormuz closed to traffic. It is not just oil that has been impacted by the transportation bottleneck. Fertilizer has been hit as well given that over one-third of the global fertilizer trade transits through the route. The disruption could hit farmers hard as the Northern Hemisphere enters the spring planting season. If Middle East tensions weren’t enough for markets to digest, tariffs were also back in focus with the Trump administration launching trade probes into more than a dozen countries. The findings from those probes are likely to provide the legal cover to replace some of the tariffs which were recently struck down by the Supreme Court. The current targets include the EU, China, Mexico, and several other major trading partners. With a lot of geopolitical developments on their plates, investors for the most part dismissed the week’s batch of economic news aside from February’s CPI report. February’s report showed persistent inflation which combined with last week’s producers’ report suggests higher costs are likely to be passed on soon to consumers.
It was the Middle East that dominated this week, however. In the past few sessions, the narrative has swung from a “short war” to an “energy crisis causing global economic harm” With the war of words heating up by the day, it’s anyone’s guess how long the conflict will last. The energy market has not been placated by the massive reserves that have been agreed upon to be released, which means that consumers will soon see the impact at the pump and at the grocery store. That will greatly complicate the economic picture for the Fed as it meets next week where it is widely expected to hold rates steady. Prior to the conflict, moderating inflation was providing an opening for the central bank to lower rates to combat a weak labor market with markets expecting a rate cut as early as this summer. Those hopes have now been dashed with Fed policymakers likely to err on the side of caution and hold rates steady. Markets are now only pricing in one rate cut this year. As we march into the third week of war, time is becoming a critical factor – politically and economically. The longer the conflict persists, the greater the risk that the oil spike slows growth. However, prematurely ending the war effectively cedes control of the global oil market to the Iranian regime.
The Week Ahead
With readers headed out for Spring Break, Week in Review is on pause for the week. Our next edition resumes on March 27th with the latest flash PMIs and trade deficit figures.
The Great Wealth Transfer
The United States is entering what economists describe as the Great Wealth Transfer—the largest intergenerational transfer of assets in the nation’s history. Over the coming decades, an estimated $124 trillion is expected to pass from older generations to heirs and charitable organizations, with most of this transfer occurring over the next five to 20 years.
This unprecedented shift is driven largely by Baby Boomers, the generation born between the mid-1940s and mid-1960s, who collectively accumulated extraordinary wealth during decades of economic expansion. Today, members of this generation are in their 60s, 70s, and 80s and many are beginning to transfer assets to their children, grandchildren, and philanthropic causes. The Silent Generation (born between the 1920s and 1940s) and Baby Boomers together represent around one quarter of the U.S. population, and as of late 2025, they held roughly 63% of all wealth in the U.S. according Federal Reserve data on household wealth by generation. The Federal Reserve data is available here.
The impact of this transition extends well beyond families. A report released by the McKinsey Institute for Economic Mobility, titled The Great Ownership Transfer: A New Era of Business Stewardship, highlights how the shift will affect business ownership across the country. Millions of older business owners are approaching retirement, creating a wave of succession opportunities. By 2035, about six million small and medium-size businesses will face transitions as baby boomers retire. The McKinsey report is available here.
Philanthropy will be a significant beneficiary of the coming transition. Of the estimated $124 trillion expected to change hands, approximately $18 trillion is projected to go to charitable organizations, representing one of the largest opportunities for charitable organizations in American history.
Implications of the Great Wealth Transfer
1. Financial literacy and preparedness
Many heirs may be unprepared for managing large inheritances, making education and structured planning essential.
2. Estate planning and family communication
Open family discussions, properly structured wills, trusts, and beneficiary designations, and tax planning can help avoid probate complications, minimize taxes, and ensure assets are distributed according to their intentions.
3. Longevity and retirement
Longer life expectancies require careful coordination of investment, tax, and estate strategies to maintain purchasing power over time.
4. Succession planning
Effective succession planning considers factors such as ownership structure, leadership development, and the right time to transition or sell a business. Insights on succession planning for business owners is available on our website.
5. A new era for philanthropy
As trillions of dollars flow into charitable giving, nonprofit organizations may see transformative levels of support.
Key Takeaways
The Great Wealth Transfer represents far more than a massive redistribution of financial assets. It is a generational shift that will have far reaching implications for families, businesses and entrepreneurs, the next generation of leadership, nonprofits, and communities. The coming decades will require thoughtful preparation, including education, planning, and open communication with loved ones. Our advisors are available if you have any questions or would like personalized advice and guidance.