This was the week the market stopped pricing the war itself and started pricing something more specific: the credibility of the exit. Trump claimed Iran requested a ceasefire. Iran denied it. Markets surged. Then Trump's own speech promised more strikes, and the rally evaporated overnight. The IEA confirmed what energy analysts had been warning for weeks: the physical oil buffer that softened March is exhausted, and April's supply crunch will be materially worse. Meanwhile, the bond market quietly repriced Canadian rate expectations without waiting for the Bank of Canada to act. Five charts tell the story of a week that rewarded patience and punished every investor who traded the headlines.
Chart 1: Brent Crude — The Rollercoaster That Defines the Conflict
March 28 to April 2, 2026 (USD/barrel)
Brent crude opened the week above $114 per barrel as the Houthis entered the conflict and Trump threatened to destroy Iranian oil wells. By Wednesday, with ceasefire hopes building, it had pulled back to approximately $101, the lowest level in nearly two weeks. Then Trump's prime-time address promised to "hit Iran extremely hard" for another two to three weeks. By Thursday morning, Brent had surged back above $108 and touched $113 intraday before settling near $107.
The range itself tells the story. A $13 swing in Brent crude within a single week is not a market responding to new fundamental information about supply and demand. It is a market responding to the perceived credibility of a ceasefire that has been promised, denied, and re-promised multiple times since the war began on February 28. The physical supply picture did not change between Wednesday and Thursday. What changed was the narrative, and narrative-driven oil trades are the most dangerous kind for investors to act on.
The deeper issue is what happens when the narrative buffer runs out alongside the physical buffer. IEA Executive Director Fatih Birol confirmed this week that the pre-war cargo shipments that softened March's supply shock have now been fully delivered. April's crunch will be materially worse regardless of what any politician says about ceasefire progress.
Chart 2: The Divergence That Matters — TSX vs. S&P 500 in Q1
January 2 to March 31, 2026 (indexed to 100)
Q1 2026 closed Tuesday with the starkest divergence between the TSX and the S&P 500 in years. The S&P 500 finished the quarter down approximately 9.4% from its January 27 all-time high, its worst quarter since the Federal Reserve's rate-shock year of 2022. The Nasdaq fell 13.4% from its peak. The S&P/TSX Composite Index, by contrast, closed the quarter up roughly 0.7% year to date, ranking third globally behind Japan's Nikkei and the UK's FTSE 100.
The explanation is structural, not mysterious. The TSX's 16-17% energy weighting acts as a natural hedge against the very oil shock that is punishing U.S. equities. Suncor is up more than 50% over the trailing twelve months. The S&P/TSX Capped Energy Index gained nearly 3% in a single session this week. The same oil price that is compressing U.S. consumer spending and threatening global growth is expanding Canadian energy producer margins and lifting the TSX's commodity-heavy composition.
But the divergence carries a subtler lesson. The TSX's resilience in Q1 was not free. It came at the cost of concentrated sector exposure. When oil pulled back mid-week on ceasefire hopes, the TSX energy capped index actually fell 0.77% on Wednesday even as the broader TSX rallied 2.3%, driven by financials and technology rotating back in on de-escalation hope. The same energy weighting that protected the TSX through March becomes a vulnerability the moment a credible ceasefire is reached. Canadian portfolios are not diversified away from the war. They are diversified into the right side of it, for now.
Chart 3: The Bond Yield That Moved Without the Bank of Canada
March 2 to April 2, 2026 (%)
The Bank of Canada held its overnight rate at 2.25% on March 18 and is widely expected to hold again on April 29. Most major bank economists, including CIBC, Oxford Economics, and BMO, forecast no rate change through 2026. And yet the 5-year Government of Canada bond yield rose from approximately 2.67% to 3.20% in the span of a single month, a 53-basis-point move that has already flowed through to fixed-rate mortgage pricing at major lenders.
Fixed-rate mortgages are priced off bond yields, not the Bank of Canada's overnight rate. A homeowner renewing a 5-year fixed mortgage today is facing a meaningfully different rate environment than one who renewed in January, even though the BoC has not moved. The bond market is repricing inflation expectations driven by the oil shock independently of what Governing Council decides. At one point this week, markets briefly priced in three BoC rate hikes starting July, a dramatic shift from the consensus hold that existed before the war.
The BoC's March 18 deliberations, released Wednesday, confirmed the governing council's awareness of the dilemma. Governor Macklem said the Bank would "look through" the immediate gasoline price spike, but added a conditional sentence that has rarely appeared in the current cycle: if energy prices stay elevated and begin generalizing into broader inflation, the Bank can raise rates. BMO's Douglas Porter expects CPI to breach 3% in April. University of Calgary economist Trevor Tombe estimates each sustained month of $100-plus oil adds approximately one full percentage point to Canadian headline inflation.
Chart 4: The Empty Pipeline — Why the IEA Says April Will Be Worse
February 27 to mid-April 2026, millions of barrels per day
IEA Executive Director Fatih Birol said it plainly this week: "In April, there is nothing." The statement refers to the physical pipeline of oil that had been loaded onto ships before the Strait of Hormuz effectively closed on March 4. Those cargoes took weeks to reach their destinations. They have now arrived. The next wave never loaded. Asian refineries, which receive 75% of Gulf oil exports, are now operating on pre-war inventories with no resupply in sight.
BCA Research geopolitical strategist Marko Papic put a specific number on it: total lost supply will roughly double by mid-April, from 4.5-5 million barrels per day to approximately 9-10 million. Chevron CEO Mike Wirth described "very real, physical manifestations of the closure" spreading from South Asia to Southeast Asia, Northeast Asia, and now Europe. Rystad Energy analyst Matt Bernstein warned that even if the conflict wound down in the next few weeks, "there is no going back to pre-war normal."
A ceasefire announcement, even a credible one, does not produce tanker traffic through Hormuz for days to weeks afterward. The IEA has described the current disruption as the largest in the history of the global oil market, exceeding both the 1973 Arab oil embargo and the 1979 Iranian Revolution.
Chart 5: The Ceasefire Trap — Three Cycles, One Pattern
Three cycles since February 28, 2026
Since February 28, the ceasefire hope-and-reversal cycle has run three complete times. Each time follows the same pattern: a diplomatic signal or Trump statement triggers a sharp equity rally and oil pullback; the rally lasts one to two sessions; the underlying positions of both sides prove unchanged; the rally reverses. Each cycle catches a different group of reactive investors on the wrong side.
This week's cycle was the most dramatic. Tuesday's S&P 500 rally added 2.45%. Wednesday extended the gains. Trump posted on Truth Social that Iran's president asked for a ceasefire. Iran denied it within hours. Then Trump's prime-time address promised continued strikes for two to three more weeks. Thursday opened with S&P futures down 1.6% before clawing back to nearly flat after reports of an Iran-Oman protocol for monitoring Hormuz ship traffic.
The behavioural research on this pattern is unambiguous. Hartford Funds found that missing the market's 10 best days over a 30-year period cuts cumulative returns in half, and 78% of those best days occur during bear markets or the first two months of recovery. The investors who sold in March and sat on the sidelines through this week's rally missed exactly the kind of days that compound into long-term wealth. The pattern rewards one behaviour and one behaviour only: staying invested through the noise.
What to Watch Monday
March U.S. jobs report (released Friday, April 3): Nonfarm payrolls consensus is +57,000, a modest rebound from February's -92,000. Markets are closed for Good Friday. Monday's open will be the first opportunity to react. A strong number could ease recession fears; a weak number adds to the stagflation narrative heading into the BoC's April 29 decision.
Trump's April 6 deadline on energy plant strikes: Trump extended his self-imposed deadline to April 6 for Iran to reopen the Strait of Hormuz or face strikes on Iranian power and energy infrastructure. Whether he extends again, proceeds, or announces a new framework will be the dominant market catalyst next week.
GCC push for UN Security Council authorization on Hormuz: The Gulf Cooperation Council's secretary-general called Thursday for the Security Council to authorize the use of force to protect the Strait. Bahrain has a draft resolution. Russia and China are expected to resist. This is a new diplomatic track that did not exist last week.
Iran-Oman Hormuz monitoring protocol: Thursday's late-session report that Iran is drafting a protocol with Oman to monitor ship traffic through the Strait was the catalyst that pulled U.S. equities off their intraday lows. Whether this develops into a credible framework or another false signal will be visible early next week.
The Close
Quote that aged badly: "Talks are ongoing and, despite erroneous statements to the contrary by the Fake News Media, and others, they are going very well." President Donald Trump, Truth Social, March 26, 2026. Six days later, Trump addressed the nation in prime time and promised to "hit Iran extremely hard over the next two to three weeks." Iran's foreign ministry simultaneously stated that no negotiations were taking place. Brent crude surged above $108 overnight.