Jobless Claims Signal Labor Market Strength as Oil Prices and Yields Rise Amid Middle East Tensions

This week’s economic data includes: (1) weekly initial jobless and continuing claims and (2) market trends across equities, oil and Treasury markets along with rate-cut expectations.

KEY SUMMARY:

Weekly jobless claims edged up but remain low, while continuing claims fell to their lowest level since May 2024—together pointing to limited layoffs and a still‑steady labor market.

Initial jobless claims rose modestly to 210,000 for the week ending March 21 but remained in line with expectations and well below year-ago levels, while the four-week average edged lower, pointing to continued limited layoffs and labor market stability. At the same time, continuing claims declined sharply to 1.819 million, below forecasts and the lowest level since May 2024, with both the headline and four-week average running below last year’s pace—reinforcing signs of a still‑resilient job market.

Markets weakened across equities, oil, and bonds as Middle East tensions and surging energy prices drove inflation concerns, pushed yields higher, pressured large‑cap stocks, and reinforced expectations that the Fed will keep rates unchanged through 2026.

Major equity markets fell for a fifth straight week, marking their weakest stretch since the conflict with Iran began, as rising oil prices fueled inflation concerns and geopolitical uncertainty weighed on sentiment. Losses were led by large‑cap technology stocks, with the Nasdaq and S&P 500 posting notable weekly and year‑to‑date declines, while the Dow proved relatively more resilient. In contrast, the Russell 2000 edged higher, signaling a modest rotation toward small‑cap stocks amid broader market weakness.

Oil prices remained volatile but trended higher, driven by the continued closure of the Strait of Hormuz and ongoing attacks on regional energy infrastructure. Brent crude reached its highest level since mid‑2022, while West Texas Intermediate crude (WTI) held near $100 per barrel, and concerns over prolonged global supply disruptions pushed the Brent–WTI spread far above prewar norms. Higher energy costs have already flowed through to consumers, with U.S. gasoline prices rising sharply since the conflict began.

Treasury yields moved higher across most maturities, reaching their highest levels since mid‑2025, as inflation fears tied to energy prices, fading ceasefire hopes, and weak Treasury auctions pressured the bond market. Since the onset of the war with Iran, yields across the curve have risen sharply, particularly in the intermediate and long tenors. Reflecting these dynamics, markets continue to price in no rate cuts for 2026 and assign only a low probability to a rate hike later in the year.

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DETAILED ANALYSIS:

Weekly Jobless Claims – Week Ending March 21:

The Labor Department reported that initial jobless claims rose by 5,000 to 210,000 for the week ending March 21, up from 205,000 the prior week and in line with market expectations. Claims have also remained well below the 224,000-level recorded during the same week last year for a sixth consecutive week. The four‑week moving average declined by 250 to 210,500 from 210,750, signaling continued limited layoffs and a stable labor market.

Continuing claims—which measure the number of individuals receiving unemployment benefits—fell by 32,000 to 1.819 million for the week ending March 14, down from a revised 1.851 million the prior week. This reading came in below market expectations of 1.849 million and marked the lowest level since May 25, 2024, when claims stood at 1.804 million. Continuing claims also remained below the 1.852 million level recorded during the same week last year. Meanwhile, the four‑week moving average of continuing claims edged down to 1.847 million from 1.849 million.

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WEEKLY MARKET ANALYSIS:

Equity Market

Major equity markets declined for a fifth consecutive week, marking their weakest performance since the onset of the conflict with Iran. The sell‑off was driven primarily by rising inflation concerns tied to higher oil prices, as well as ongoing uncertainty around ceasefire negotiations and the risk of further escalation following indications from the Trump administration that it is preparing for a prolonged conflict in the Middle East.

At the same time, markets showed signs of a broader rotation away from large‑cap technology stocks toward smaller companies, as the Russell 2000 small‑cap index posted a modest gain for the week.

Weekly and Year-To-Date (YTD) Performance Highlights:

• Nasdaq: -3.23% (weekly) & -9.87% (YTD), closing at 20,948
• S&P 500: -2.12% (weekly) & -6.96% (YTD), ending at 6,369
• Dow Jones Industrial Average: -0.90% (weekly) & -6.03% (YTD), closing at 45,167
• Russell 2000: +0.46% (weekly) & -1.30% (YTD), ending at 2,450

Oil Market

For the week ending March 27, 2026, crude oil prices remained volatile but trended higher, driven by the continued closure of the Strait of Hormuz and ongoing Iranian attacks on regional energy infrastructure. Brent crude, the global benchmark, rose modestly by $0.38 (0.4%), increasing from $112.19 to $112.57 per barrel—its highest level since July 2022.

Similarly, West Texas Intermediate (WTI), the U.S. benchmark, was little changed on the week, settling at $99.64 per barrel, up slightly from $98.32.

Persistent concerns over prolonged global supply disruptions significantly widened the Brent–WTI spread to nearly $14 last week, compared with a pre‑war range of $4 to $5, underscoring greater risks to international supply relative to U.S. production. The spread has since narrowed slightly to around $13. Reflecting higher energy costs, U.S. average gasoline prices tracked by AAA have surged 33.6%, or roughly $1 per gallon, rising from $2.98 to $3.98 since the Middle East conflict began in late February 2026.

Treasury Market

Treasury yields edged higher again this week across most maturities, with more pronounced increases at the 3‑year tenor and beyond, pushing yields to their highest levels since mid‑2025. The 10‑year Treasury yield ended the week at 4.44%, up 5 basis points, while the 5‑year yield rose 5 basis points to 4.06%.

The rise in yields was driven primarily by renewed inflation concerns tied to higher oil prices, fading hopes for a ceasefire, escalating conflict in the Middle East, and weak Treasury auctions for 2‑year, 5‑year, and 7‑year notes. Since the start of the war with Iran, Treasury yields have risen sharply across the curve, with the 2‑year, 5‑year, and 10‑year yields up approximately 50, 55, and 47 basis points, respectively.

Key Treasury Yield Movements:

• 2-year yield: 3.88% (no change)
• 5-year yield: 4.06% (+0.05%)
• 10-year yield: 4.44% (+0.05%)

Rate Cut Expectations

Similar to last week, markets continue to price in no rate cuts in 2026, with a low probability—around 23% to 24%—of a rate hike at the September, October, and December 2026 meetings.

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NEXT WEEK’S ECONOMIC CALENDAR:

Key scheduled releases include:

• 3/31 (Tuesday)
  • Job Openings and Labor Turnover Survey (JOLTS) for February
  • Consumer Confidence for March
• 4/1 (Wednesday)
  • Retail Sales for February
• 4/2 (Thursday)
  • Weekly Initial and Continuing Jobless Claims
• 4/3 (Friday)
  • Nonfarm Payrolls and Unemployment Rate for March

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For a visual representation of this week’s economic review, you can view or download the slide deck here: 03.27.2026 CBC Weekly Economic Update Slides

Mark Yoon, CFA CPA

EVP & CFO of Commercial Bank of California

Thomas McCullough

EVP of Commercial Bank of California

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