THE STRAIT JACKET
THE STRAIT JACKET
March 6, 2026
Twenty percent of the world's oil. Gone. Not disrupted, not delayed — gone, at least on paper, at least for now. The Strait of Hormuz, that 21-mile-wide chokepoint that geopolitical textbooks have been warning about since the Carter Doctrine, is doing exactly what every war-game simulation predicted it would. Tanker traffic through the Strait has dropped roughly 90% since U.S. and Israeli forces launched operations against Iran. And markets, which spent years pricing in a world where such scenarios were tail risks for someone else's portfolio, are now staring at the actual tail.
So here's the week you actually lived through, stripped of the noise.
WTI touched $78.70 on Thursday. It had peaked earlier at $77.05 before pulling back slightly after the Treasury Secretary signaled the Navy would escort tankers through the Strait. A gunboat solution to an oil crisis. Bold. The 10-year Treasury, meanwhile, settled at 4.09% — its third consecutive session of gains — as ceasefire back-channels and escort announcements halted but did not reverse the bond sell-off. Translation: the bond market isn't panicking, but it's also not relaxing.
The ISM Services PMI blew through the roof. The print came in at 56.1 against a consensus of 53.5, with Business Activity surging to 59.9 and New Orders jumping to 58.6 — both multi-year highs — signaling consumer demand remains remarkably robust even with missiles arcing over the Gulf. ADP private payrolls added 63,000 for February, beating a 50,000 estimate. The American consumer, apparently, did not get the memo about the war.
This is the cruelest joke of the current macro environment: the data keeps being too good. Strong services, decent jobs, sticky inflation at roughly 3% — already a full percentage point above the Fed's target, compounded now by Trump-era tariffs and an oil shock that hasn't fully filtered through yet. The Fed wanted a clean off-ramp. Instead it got a burning highway.
Rate traders at the CME now see an 88% chance the Fed holds at both the March and April meetings. A month ago, that probability sat at 59%. That shift is enormous. Every basis point of that move is a message: the easing cycle isn't dead, but it has been indefinitely postponed. Bessent confirmed the 15% global tariff takes effect this week — then added, almost gently, that he expects the levies to revert within five months. Markets heard that and were not entirely comforted.
Now let's talk about Bitcoin, because the Bitcoin story this week is genuinely interesting and the hot takes are missing it.
BTC challenged $74,000 in early Thursday trading before fading to around $71,000 as U.S. markets opened and the Dow dropped 1.4%. The question that's been circulating — "Is Bitcoin a safe-haven asset or not?" — is the wrong question. It's a leveraged bet on global liquidity conditions that occasionally behaves like a safe haven when the alternative is a clearly broken system. Right now, neither condition fully applies.
The relevant comparison being floated is 2022, when Russia invaded Ukraine and Bitcoin initially bounced before rolling over hard through Q1 and Q2. But the policy backdrop then was fundamentally different — inflation was running at 7.9% and real rates were around -7.5% when the war started, meaning the Fed was catastrophically behind the curve and had no choice but to bludgeon risk assets into submission. Today, real rates are around +1.2%. The Fed has actual room to maneuver, even if it chooses not to use it yet.
Spot Bitcoin ETFs recorded nearly $2 billion in inflows over the past week, which is not something that happens in a pure risk-off panic. Institutions are buying the dip, carefully, with one eye on the Hormuz situation and another on Friday's nonfarm payrolls. Futures open interest dropped to $24 billion from $45 billion at Monday's peak — the leverage is being wrung out. What's left is more structural.
The US crypto Clarity Act, meanwhile, quietly imploded. Negotiations hit a deadlock after banks declared they would not support the White House compromise, casting serious doubt on the bill's ability to pass this year. The banks killing the crypto bill while simultaneously sitting on their own tokenization projects is exactly the kind of institutional behavior that would have triggered a thousand "DeFi fixes this" tweets in 2021. Nobody's laughing as hard now.
Elsewhere, Qatar's temporary halt to LNG exports caused fuel prices in Europe and Asia to skyrocket, with analysts identifying Shell, TotalEnergies, ExxonMobil, and Cheniere as the primary beneficiaries — one of those grimly funny situations where the companies best positioned to profit from an energy crisis are the ones that have spent years arguing energy transitions are too expensive. Life imitates irony.
Gold climbed above $5,317 per ounce earlier this week and has been trading even higher since. At some point, gold above $5,000 stops being a "safe-haven trade" and starts being a verdict on something deeper — on the durability of the post-WWII financial architecture, on the credibility of paper instruments during a shooting war, on the quiet panic of sovereign wealth funds that don't want to say they're panicking.
South Korea's Kospi has been hitting circuit-breaker territory, absorbing a war premium through its chipmaker-heavy index. The Kospi as a geopolitical thermometer is underappreciated. When it breaks, it usually breaks before the rest of the world figures out how serious the situation actually is.
The real story underneath all of this isn't oil, or Bitcoin, or even the Fed. It's that the global economy is being asked to process a genuine military conflict, a new tariff regime, sticky inflation, and a frozen rate environment simultaneously — while the ISM prints expansion and mortgage applications jump 11%. The system is, somehow, still running. That's either a testament to its resilience or a sign that something important hasn't broken yet.
The Strait of Hormuz will reopen, or it won't. Iran will negotiate, or it won't. The Fed will hold, until it can't. Friday's payrolls number will either confirm that the labor market is genuinely immune to geopolitical chaos, or it will give the bears their first clean data point.
Until then: the world's most important shipping lane is a war zone, the world's most important central bank is paralyzed, and the ISM says everything is fine.
Believe whatever helps you sleep.
Upvoted! Thank you for supporting witness @jswit.