All about oil infrastructure
March 11, 2026
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–Markets continue to be dominated by the oil chokepoint of the Strait of Hormuz. Yesterday’s X-post by Energy Sec’y Chris Wright that the US had escorted a tanker through the strait saw oil immediately sell off a few bucks, but the post was then deleted and oil recovered. With various reports of Iran now mining the waterway, CLK6 is +4.96 at 87.06 (this morning). Stocks modestly weaker and treasuries also under pressure in front of today’s CPI and ten-yr note auction. CPI is expected m/m 0.3 with Core 0.2. Yoy 2.4 with Core 2.5%. Currently the market is leaning toward the inflationary aspects of second derivative effects of oil supply issues.
–Rate futures showed little net change; small bounce in near contracts with SFRZ6 and H7 both +3 (9669.5 & 9674.5). Two year yield eased 2 bps to 3.567% and 10s essentially unch’d at 4.134%. There continue to be a fair amount disaster insurance trades, for example a buyer yesterday of 25k SFRM6 9700/9850cs for 1.5 (settled there ref 9645). The most notable feature yesterday though was the crush in implied vol. Examples: SFRU6 9662.5^ 39 on Monday (9657.5) and 36 yesterday (9660). SFRH7 9675^ 69.0 on Monday and 63.0 yesterday. TYM6 112.5^ 2’07 to 1’61. In my opinion, rate futures are not signaling an inflationary surge.
–March midcurves expire Friday. 0QH 9675^ settled 9.0 ref 9674.5, 2QH 9675^ settled 8.0 vs 9677.5.
