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By Neil Irwin, Axios, 3/23/2026
MarketMinder’s View: Does a “fiscal cliff” loom for America due to its supposedly “dire and unsustainable” public finances? (As we discuss these assertions, please keep in mind MarketMinder is politically agnostic, preferring no one party or politician over another and focusing on the potential economic and market implications only.) This short piece paints a worrisome picture based on the Congressional Budget Office’s (CBO’s) estimates, with the federal government appearing to spend more than it is bringing in: “The Trump administration is seeking $200 billion to fund the Iran war and replenish depleted weaponry. The Supreme Court struck down the administration’s use of emergency authority to impose tariffs, and legal battles are underway over refunds of import taxes already paid. For all the attention on DOGE one year ago, there has been little evidence of lasting restraint of federal spending. ... That all follows tax legislation enacted last year that the Congressional Budget Office scored as increasing cumulative deficits by $3.4 trillion over a decade, with backloaded spending cuts that are smaller than combined tax cuts.” From the market’s perspective, though, investors can narrow this down. CBO projections assume unchanged present law, which isn’t realistic given how often Congress shifts fiscal policy. Besides, markets price probabilities at most roughly three years in advance—what happens a decade out is outside their scope. So is the US likely to default over the next 3 to 30 months? Debt service relative to tax revenue (not GDP as mentioned) is the relevant metric to us: Can Uncle Sam pay its financial obligations? Federal receipts dwarf federal interest outlays more than five times over, suggesting default isn’t on the horizon any time soon, just as it wasn’t the last time interest costs were similarly high. That is a big reason why 10-year Treasurys—which would be sensitive to potential nonpayment—aren’t indicating America’s finances mean trouble, with yields at 4.39%—well below the 5.82% historical monthly average since 1962. (All data per the St. Louis Fed.)
Why Is the Iran Crisis Pummelling the Gilts Market?
By Ian Smith, Financial Times, 3/23/2026
MarketMinder’s View: With 10-year Gilt yields climbing from 4.25% pre-titular crisis and touching 5.0% Friday—an 18-year high—this article argues the UK’s “energy vulnerability” and exposure to natural gas mean it is more susceptible to “... imported inflation: UK one-year inflation expectations have risen 1.8 percentage points, since the conflict began, a bigger increase than the US or euro area.” Moreover, “investors are worried that measures to insulate UK consumers from the energy shock are going to make the [Budget] picture even worse, eroding the £22bn of wriggle room [Chancellor of the Exchequer Rachel] Reeves had in the Spring Statement against her fiscal rules.” Supposedly, this too is undermining Gilts alongside hedge funds selling their positions, exacerbating the swing. At root, we agree inflation and inflation expectations primarily drive developed market sovereign bonds’ long-term rates (which move opposite their prices). “Inflation is kryptonite to bonds as it erodes the value of the fixed cash flows they offer and pushes central banks to increase interest rates, a shift in expectations that also forces bond yields higher.” Our issue with this is rising energy prices and deficit spending aren’t inflationary per se. Inflation is always and everywhere a monetary phenomenon, i.e., too much money chasing too few goods and services. Energy prices comprise around 6% of UK CPI (per FactSet)—and this category may spike—but inflation is an economy-wide increase. (Meanwhile, UK debt remains affordable.) Without broad money supply surging, which it isn’t, higher prices in one category probably don’t spill over to others—they promote substitution instead. The takeaway for investors? Although notable, Gilt yields’ recent rise is likely sentiment driven, not fundamental. That underscores how bonds may be volatile (though usually less than stocks) and may also move for any or no reason short term. But longer term, the underlying conditions for a sustained rise in inflation—and Gilt yields—remain absent. Fears over it are false, bullish for investors.
Italyโs Meloni Loses Justice Referendum, Denting Her Political Aura
By Crispian Balmer and Angelo Amante, Reuters, 3/23/2026
MarketMinder’s View: Please note MarketMinder is nonpartisan, favoring no party nor any politician, and seeks solely to ascertain political developments’ potential market impact—or lack thereof. In this case, gridlock continues to reign in Italy as voters shot down judicial reform Prime Minister Giorgia Meloni sought: “The referendum proposed separating the careers of judges and public prosecutors, and splitting magistrates’ self-governing body into two sections, with members chosen by lot rather than elected. The government argued the changes were needed to make the judiciary more accountable for its mistakes and prevent politically motivated factions from controlling top jobs. By the government's own admission, the changes would not have addressed one of the main problems afflicting Italy—a notoriously slow legal system that weighs on the economy.” Now, as this article reports, pollsters noted many of those voting “No” are likely expressing their dissatisfaction with Meloni’s government—a protest vote—rather than engaging with the technical reform. That speaks to Meloni’s dwindling political popularity and capital, which isn’t surprising. If anything, her relative resilience since entering office has been the exception in Italy’s history, not the norm. Time will tell how big a blow this will be to her political capital, but markets are familiar with gridlock in Italy and the eurozone at large—little here is likely surprising to stocks.
By Neil Irwin, Axios, 3/23/2026
MarketMinder’s View: Does a “fiscal cliff” loom for America due to its supposedly “dire and unsustainable” public finances? (As we discuss these assertions, please keep in mind MarketMinder is politically agnostic, preferring no one party or politician over another and focusing on the potential economic and market implications only.) This short piece paints a worrisome picture based on the Congressional Budget Office’s (CBO’s) estimates, with the federal government appearing to spend more than it is bringing in: “The Trump administration is seeking $200 billion to fund the Iran war and replenish depleted weaponry. The Supreme Court struck down the administration’s use of emergency authority to impose tariffs, and legal battles are underway over refunds of import taxes already paid. For all the attention on DOGE one year ago, there has been little evidence of lasting restraint of federal spending. ... That all follows tax legislation enacted last year that the Congressional Budget Office scored as increasing cumulative deficits by $3.4 trillion over a decade, with backloaded spending cuts that are smaller than combined tax cuts.” From the market’s perspective, though, investors can narrow this down. CBO projections assume unchanged present law, which isn’t realistic given how often Congress shifts fiscal policy. Besides, markets price probabilities at most roughly three years in advance—what happens a decade out is outside their scope. So is the US likely to default over the next 3 to 30 months? Debt service relative to tax revenue (not GDP as mentioned) is the relevant metric to us: Can Uncle Sam pay its financial obligations? Federal receipts dwarf federal interest outlays more than five times over, suggesting default isn’t on the horizon any time soon, just as it wasn’t the last time interest costs were similarly high. That is a big reason why 10-year Treasurys—which would be sensitive to potential nonpayment—aren’t indicating America’s finances mean trouble, with yields at 4.39%—well below the 5.82% historical monthly average since 1962. (All data per the St. Louis Fed.)
Why Is the Iran Crisis Pummelling the Gilts Market?
By Ian Smith, Financial Times, 3/23/2026
MarketMinder’s View: With 10-year Gilt yields climbing from 4.25% pre-titular crisis and touching 5.0% Friday—an 18-year high—this article argues the UK’s “energy vulnerability” and exposure to natural gas mean it is more susceptible to “... imported inflation: UK one-year inflation expectations have risen 1.8 percentage points, since the conflict began, a bigger increase than the US or euro area.” Moreover, “investors are worried that measures to insulate UK consumers from the energy shock are going to make the [Budget] picture even worse, eroding the £22bn of wriggle room [Chancellor of the Exchequer Rachel] Reeves had in the Spring Statement against her fiscal rules.” Supposedly, this too is undermining Gilts alongside hedge funds selling their positions, exacerbating the swing. At root, we agree inflation and inflation expectations primarily drive developed market sovereign bonds’ long-term rates (which move opposite their prices). “Inflation is kryptonite to bonds as it erodes the value of the fixed cash flows they offer and pushes central banks to increase interest rates, a shift in expectations that also forces bond yields higher.” Our issue with this is rising energy prices and deficit spending aren’t inflationary per se. Inflation is always and everywhere a monetary phenomenon, i.e., too much money chasing too few goods and services. Energy prices comprise around 6% of UK CPI (per FactSet)—and this category may spike—but inflation is an economy-wide increase. (Meanwhile, UK debt remains affordable.) Without broad money supply surging, which it isn’t, higher prices in one category probably don’t spill over to others—they promote substitution instead. The takeaway for investors? Although notable, Gilt yields’ recent rise is likely sentiment driven, not fundamental. That underscores how bonds may be volatile (though usually less than stocks) and may also move for any or no reason short term. But longer term, the underlying conditions for a sustained rise in inflation—and Gilt yields—remain absent. Fears over it are false, bullish for investors.
Eurozone Consumer Confidence Plunges at Sharpest Rate in Four Years
By Don Nico Forbes and Ed Frankl, The Wall Street Journal, 3/23/2026
MarketMinder’s View: European moods entering the year were dourer than in America and now, almost a quarter into 2026, that pattern appears to be holding. “The European Commission’s flash consumer-confidence indicator for the eurozone stood at minus 16.3, its lowest point since October 2023, compared with minus 12.3 in February. A consensus of economists polled by The Wall Street Journal expected a smaller fall to minus 14.1. The decline was the largest drop in the indicator since March 2022, when consumers were taking in the shock of Russia’s full-scale invasion of Ukraine. ... That meant the initial hit from the Iran war was more serious for eurozone sentiment than for President [Donald] Trump’s tariffs last year, Ankita Amajuri, Europe economist at Pantheon Macroeconomics, said in a note to clients.” While the downgrade in sentiment is understandable, a couple caveats. Surveys like this are backward-looking snapshots in time. While they may reflect people’s feelings “between March 1 and March 22, after the first U.S.-Israeli strikes on Feb. 28,” they say nothing about tomorrow or whether attitudes dictate actions. They don’t predict consumption or overall economic growth. Moreover, most household expenditures are nondiscretionary (think rent and utilities), so while moods might affect some spending decisions, the bulk of consumption generally carries on. Record-low European sentiment after Russia’s Ukraine invasion didn’t result in recession after all. Although surveys’ forward-looking relevance for stocks is limited, they are worth noting based on how they may shape investor expectations. And with the gap between reality and expectations wider in the eurozone than in America, upside surprise appears likelier in the former.