The Fed, The ECB, and $100 Oil

Markets are bouncing modestly after last week's selloff, with futures up about half a percent across the board. The Strait of Hormuz has been closed for 12 days and counting, keeping crude near $100. Wednesday's FOMC decision is the week's main event - the Fed should hold at 3.75%, but Powell's tone on oil-driven inflation will matter more than the rate itself.

Futures as of 7:00 AM ET:

Rates & Commodities:

Last week ended poorly. The S&P 500 and Dow dropped 1.5%, Nasdaq fell 1.7% Thursday as the Gulf situation escalated. Monday's green is cautious - positioning into FOMC, not conviction buying.

9 of 13 positions across both systems remain risk-on. Energy leads at 16.31%. Tech, Financials, and Real Estate are still off. No positioning changes heading into FOMC week.

Three forces converge this week, and only one is in the Fed's hands.

The Strait of Hormuz has been effectively shut since March 4. Twelve days now with virtually zero tanker transits, down from 80-100 per day. The IEA announced a 400 million barrel strategic reserve release, but that oil takes weeks to reach refineries. Crude is sitting near $100 and there's no diplomatic resolution in sight. Trump demanded a seven-country coalition to police the strait over the weekend. Iran's response: selective passage for countries willing to negotiate bilaterally.

Energy is the largest allocation in the THOR Low Volatility Index at 16.31%, and has been for weeks. Materials and Industrials sit right behind it. The sectors the system has off - Technology, Financials, Real Estate - are the most rate-sensitive parts of the market. With the 10-year at 4.27% and crude-driven inflation fears building, that's where the compression risk sits.

The FOMC decision Wednesday should be a hold at 3.75%. The rate itself is priced. The question is how Powell characterizes this oil shock. Transient supply disruption? Or something that feeds into broader inflation expectations? That distinction determines whether the market prices rate cuts back in or pushes them further out.

The THOR Index Rotation has the Nasdaq 100 off and carries the Dow and S&P 500 at nearly equal weight. When rate sensitivity and geopolitical risk are both elevated, broad equity exposure without the growth premium is the cleaner trade. Growth gets punished first when the cost of capital is uncertain.

Holdings as of 3/13/26

Holdings as of 3/13/26

No positioning changes since last edition.

Powell's press conference Wednesday at 2:30 PM ET. The decision itself is priced in at a 3.75% hold. What matters is whether he frames the oil shock as transient or structural. If transient, markets exhale and the rate cut path stays intact. If he hints it could bleed into broader price expectations, the 10-year moves higher and growth takes another leg down. The ECB decides Thursday, doubling the central bank risk this week.

Brad Roth

CIO, THOR Financial Technologies

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