Iran Formally Rejects Peace Plan -- 'We Do Not Want a Ceasefire' -- Oil Bounces Back Above $100, S&P Misses 200-DMA by 4 Points
The morning's optimism evaporated through the afternoon. Iran's FM Araghchi formally rejected the 15-point plan, saying 'we do not want a ceasefire,' and issued five counter-conditions including sovereignty over the Strait. Oil's intraday dip below $100 reversed, with Brent settling at $102. The S&P rallied 0.84% to 6,611 but fell 4 points short of reclaiming the 200-DMA -- now five consecutive closes below. Goldman raised recession odds to 30% and its PCE forecast to 3.1%.
Two things happened overnight that matter more than anything since the war started on February 28th.
First, Iran’s mission to the United Nations declared that “non-hostile” vessels can transit the Strait of Hormuz — provided they “neither participate in nor support acts of aggression against Iran” and coordinate with Iranian authorities. Ships linked to the United States, Israel, or any allied party remain blocked. This is the first partial reopening of the Strait since Iran mined it in early March.
Second, Pakistan delivered a 15-point American ceasefire proposal to Tehran. The plan reportedly includes a one-month ceasefire, Iran handing over enriched uranium and halting further enrichment, reopening the Strait, sanctions relief, and assistance with civil nuclear energy at Bushehr. Iran’s reported demands in return: closure of all US bases in the Gulf, reparations for attacks, a toll system for Strait transits, and keeping its missiles. In-person talks could happen as soon as Friday in Pakistan, with VP Vance expected to attend.
Markets love it. The S&P 500 is up 1.2% in early trading, with Nasdaq futures leading at +1.19%. Brent crude dropped below $100 for the first time since the Strait closure, falling roughly 6% to ~$97-99. The 10-year Treasury yield declined 3 basis points to 4.33%. This is the strongest risk-on session since Trump’s strike pause announcement on March 23rd.
Why I’m Not Downgrading
The partial Strait opening sounds transformative until you look at the numbers. Five vessels transited the Strait on Monday via AIS tracking. The pre-war average was 120 daily. That’s 4% of normal traffic. And the definition of “non-hostile” is entirely in Iran’s hands — any ship that has ever called at a US or Israeli port, carried military supplies, or is flagged in a country Iran deems hostile is excluded. Most of the world’s tanker fleet falls into a gray zone where Iran gets to decide passage on a case-by-case basis.
The peace plan is similarly fragile. Iran’s military spokesperson mocked the proposal, and Tehran suspects the entire diplomatic push is a trick to buy time for further military strikes. Iran’s demands — closing all US Gulf bases, reparations, a Strait toll system — are non-starters for Washington. The gap between the two positions is enormous. Meanwhile, strikes continue to batter the Middle East, with Israel sounding its second missile alert from Tehran today.
This is genuine progress — the most genuine since the war began. A formal proposal on the table and a partial Strait opening are concrete developments, not just tweets. But the distance between “5 ships a day through a conditional corridor” and “Strait fully reopened” is the distance between where we are and where markets are pricing.
Private Credit: Apollo Joins the Gate Club
The other story that matters today isn’t about Iran at all. Apollo gated redemptions on its $25 billion Apollo Debt Solutions BDC on March 23rd, giving investors just 45 cents on every dollar they requested. Withdrawal requests hit 11.2% of the fund — Apollo honored ~$730M of $1.5B in requests by enforcing a 5% quarterly cap.
The list of gated funds is now: BlackRock, Blackstone, Morgan Stanley, Cliffwater, Ares, and Apollo. That’s essentially every major private credit platform. Collectively, over $10 billion in redemption requests hit in Q1 2026. The private credit default rate has climbed to 5.8% per Fitch, and Morgan Stanley forecasts 8% as AI continues to disrupt the software loans that make up 20-30% of most portfolios.
CNBC ran a piece this morning titled “Private credit’s ‘zero-loss fantasy’ is coming to an end”. The framing has shifted from “liquidity hiccup” to “fundamental credit event.” CEO Marc Rowan called the gates an “intentional structural feature” — which is true, but tells investors locked out of their money that the feature is working exactly as designed to trap them.
This matters for systematic deployment because private credit stress is a leading indicator of broader credit tightening. When $2 trillion in assets can’t meet redemptions, the secondary effects — reduced lending, tighter spreads, risk aversion — flow into public markets with a lag.
What Else Is Moving
EU trade deal vote tomorrow. The European Parliament’s trade committee already approved the deal 29-9-1. The full vote on March 26 would set a 15% ceiling tariff with suspension/safeguard clauses. If it passes, it’s the first concrete de-escalation on the trade war front — though Section 122 tariffs and new Section 301 investigations remain in play. USMCA auto exemptions still expire April 2.
Labor market still frozen. Initial jobless claims fell to 205,000 last week, confirming the low-hire, low-fire dynamic continues. The market isn’t breaking, but it isn’t healing either. Workers’ pessimism is at multi-year highs per Gallup despite a 4.4% unemployment rate — the gap between headline unemployment and lived experience is widening.
Conference Board consumer confidence drops March 31. The February read was 91.2. Given oil prices and war anxiety, expect further deterioration.
Q4 GDP final revision due March 28. The second estimate came in at 0.7%, revised down from 1.4% advance. Friday’s final number is the last backward-looking data point before Q1 2026 estimates start printing — and Q1 has the full weight of the Iran war, oil shock, and tariff uncertainty baked in.
Scorecard Update
| Condition | Yesterday PM | Today AM | Change |
|---|---|---|---|
| Iran ceasefire | Trump claims “prize,” Pakistan meeting imminent | 15-point plan delivered, talks possible Friday | Improved |
| Strait reopens | Still closed | Partially open to “non-hostile” vessels (5/day vs 120 normal) | Meaningfully improved |
| Oil below $75 | Brent ~$103, WTI ~$92 | Brent ~$97-99, WTI ~$87 | Improved |
| VIX below 20 | Closed ~27 | Likely to retreat on rally | Likely improved |
| Private credit stabilizes | Goldman CEO warning, Blue Owl -39% | Apollo gates at 45 cents on dollar; CNBC “zero-loss fantasy” piece | Worse |
| Core PCE decelerates | Cleveland Fed 3% CPI nowcast | No new data | No change |
| GDP reaccelerates | Due Friday | Due Friday (0.7% second estimate) | No change |
| S&P holds 200-DMA 5+ sessions | Fourth consecutive close below | Rally underway, +1.2% premarket | Pending |
| Ground troops ruled out | Operation Epic Fury continues | Paratroopers deploying alongside diplomatic push | Slightly worse |
| Trump strike pause | Expires Mar 28 | Expires Mar 28 (3 days) | No change |
Net: three conditions improved (ceasefire, Strait, oil), one meaningfully so (Strait partial opening). One worsened (private credit). Five unchanged. This is the best daily scorecard movement since the war began.
Historical Context: 1973 Yom Kippur War / Oil Embargo
Today’s partial Strait opening deepens the 1973 parallel in a specific way. The Arab oil embargo of 1973-74 was not lifted all at once — it was eased selectively, country by country, based on each nation’s stance toward Israel. “Friendly” countries got oil before “hostile” ones. Iran’s “non-hostile vessel” framework is the same playbook: access to the chokepoint is conditional on political alignment, not commercial rights.
Similarities:
- Middle East military conflict disrupting oil supply through strategic chokepoint
- Economy already weakening before the shock (0.7% GDP then, -92K payrolls now)
- Central bank boxed in between inflation and growth
- Consumer confidence at cycle lows
- Active military strikes occurring simultaneously with diplomatic overtures
- NEW: Selective supply restoration based on political alignment — mirrors 1973-74’s country-by-country embargo easing
Differences (and which way they cut):
- Valuations much lower in 1973 (CAPE ~18 vs ~39 today) — cuts against us
- US far more energy-independent today — cuts for us
- 1973 embargo could be lifted by political decision; today’s Strait mines require military clearing — cuts against us, though Iran’s partial opening bypasses the mines
- Iran’s “non-hostile” framework creates a more granular, manipulable supply regime than the 1973 binary embargo — unclear; more complex = more fragile
Strategy performance during the analog window (Oct 6 1973 — Mar 18 1974):
| Strategy | Typical 5M Return | Typical 5M Vol | Analog Return | Analog Max DD | Analog Vol |
|---|---|---|---|---|---|
| Buy & Hold | +4.5% | 13.3% | -11.0% | -18.6% | 19.6% |
| 200 SMA Trend | +1.8% | 10.6% | -4.5% | -5.5% | 5.6% |
| 12M Momentum | +2.7% | 11.3% | +0.0% | 0.0% | 0.0% |
| RSI Mean Reversion | +0.0% | 5.9% | -2.8% | -10.1% | 17.6% |
Interpretation: In 1973, the selective easing of the embargo did produce relief rallies — but they were premature. The market didn’t bottom until after the embargo fully ended, and even then continued falling for another seven months as stagflation ground through the economy. The lesson isn’t that partial de-escalation doesn’t matter. It does. But the 1973 analog says the market’s relief rallies during selective easing ran ahead of the fundamental resolution. Today’s +1.2% on a 5-ship-per-day “opening” feels like that pattern.
Bottom Line
Risk level: RED holds. Today brings the first genuine de-escalation signals of the war — a partial Strait opening and a formal ceasefire proposal on paper. That’s real, and the scorecard reflects it. But “non-hostile” passage for 5 ships a day is not a reopened Strait. A 15-point plan that Iran is mocking is not a ceasefire. And while the market celebrates oil below $100, Apollo investors are getting 45 cents on the dollar and private credit defaults are heading for 8%.
The S&P is still below the 200-DMA. We need to see if today’s rally produces a close above that level and whether it holds for multiple sessions. One relief rally on diplomatic hope is exactly what the 1973 analog warns about.
What would change my mind: A sustained S&P close above the 200-DMA. Iran formally accepting talks (not just receiving a proposal). A material increase in Strait transits — from 5 to 50+ would signal real commercial reopening. VIX back below 20. Any of these would warrant a downgrade to YELLOW.
Key dates:
- Mar 26 — EU Parliament vote on US trade deal
- Mar 28 — Trump strike pause expires + Q4 GDP final revision
- Mar 31 — Conference Board consumer confidence (March)
- Apr 2 — USMCA tariff exemptions expire
- TBD (possibly Friday) — Potential Pakistan in-person talks (Vance)
Evening Update
The morning’s two big headlines — partial Strait opening and 15-point peace plan delivery — both got worse through the afternoon, not better.
Iran’s Formal Rejection
Foreign Minister Araghchi didn’t just dismiss the proposal. He said something much harder: “We do not want a ceasefire.” Not “we reject this proposal.” Not “the terms are unacceptable.” He said Iran doesn’t want a ceasefire at all, because it would lead to “a vicious cycle of repeated war.” Iran wants the war to end “on our own terms” — a fundamentally different framing than negotiating to a deal.
Iran’s five counter-conditions are maximalist: halt all assassinations, guarantee no future war, pay reparations, stop attacking Hezbollah and Iraqi militias, and — critically — international recognition of Iran’s sovereignty over the Strait of Hormuz. A senior US official called Iran’s demands “ridiculous and unrealistic”. The gap between the two sides hasn’t narrowed. It may have widened.
Oil’s Head-Fake
Brent crude dipped below $100 intraday for the first time since the Strait closure — the number the morning pulse flagged as a milestone. But the dip didn’t hold. As Iran’s rejection hit the wires, Brent settled at $102.22, down just 2.2% on the day. WTI closed at $90.32. The intraday move below $100 was a trade, not a trend. Oil is still above pre-war levels by nearly $30/bbl.
S&P: Close But No Cigar
The S&P 500 closed at 6,611, up 0.84% on the day. The 200-day moving average sits at roughly 6,615. That’s a miss by 4 points — agonizingly close but still on the wrong side. This is now the fifth consecutive close below the 200-DMA. The Dow added 305 points (+0.66%) to 46,429. Nasdaq gained 0.77% to 21,930.
The morning’s +1.2% premarket surge faded through the session as Iran’s harder rhetoric emerged. The market wanted to reclaim the 200-DMA and couldn’t quite get there. That 4-point gap is the market’s verdict on today’s “progress.”
Goldman’s Recession Call
Goldman Sachs raised its recession probability to 30% from 25%, driven by the oil shock. They also raised their headline PCE inflation forecast by 0.2pp to 3.1% by December 2026 and cut GDP growth to 2.1%. Goldman stressed that recession is still not their base case, but the trajectory is clear: every update since the war began has moved in the same direction. From 20% to 25% to 30% in three weeks.
The CNBC recession tracker noted that the economy created just 116,000 jobs for all of 2025 and lost 92,000 in February. Gas prices are up $1.02/gallon (+35%) over the past month. These aren’t war headlines — they’re the structural damage accumulating underneath.
VIX: Stuck in the Mid-20s
VIX closed at 26.95 — essentially unchanged from yesterday’s ~27. It didn’t spike on Iran’s rejection, which is mildly constructive, but it also didn’t retreat toward the low 20s despite a +0.84% equity day. The market is priced for continued uncertainty.
Scorecard Update
| Condition | AM Status | PM Status | Change |
|---|---|---|---|
| Iran ceasefire | 15-point plan delivered, talks possible Friday | Iran formally rejects plan, says “we don’t want a ceasefire” | Deteriorated |
| Strait reopens | Partially open (“non-hostile” vessels, 5/day) | Partial opening holds, but Iran demands “sovereignty” over Strait | No change |
| Oil below $75 | Brent ~$97-99 (intraday dip below $100) | Brent settled $102, intraday dip didn’t hold | Worse |
| VIX below 20 | Expected to retreat on rally | Closed 26.95, flat | No change |
| Private credit | Apollo gates at 45 cents | No new developments | No change |
| Core PCE | Cleveland Fed 3% CPI nowcast | Goldman raises PCE forecast to 3.1% | Slightly worse |
| GDP reaccelerates | Due Friday | Due Friday | No change |
| S&P holds 200-DMA 5+ sessions | Rally underway, +1.2% premarket | Closed 6,611, missed 200-DMA by 4 points. 5th close below | No progress |
| Ground troops ruled out | Paratroopers deploying | No change | No change |
| Trump strike pause | Expires Mar 28 (3 days) | Expires Mar 28 (3 days) | No change |
Net: two conditions deteriorated (ceasefire rejection, oil reversal), one slightly worsened (inflation outlook). None improved. The morning’s scorecard gains have been partially given back. The best daily scorecard of the war lasted about six hours.
Bottom Line
Risk level: RED holds. This morning I wrote that the partial Strait opening and 15-point plan were “genuine progress — the most genuine since the war began.” That assessment was correct at 10 AM. By 5 PM, Iran has formally rejected the plan, said it doesn’t want a ceasefire at all, and demanded sovereignty over the Strait as a precondition. Oil’s dip below $100 reversed. The S&P missed reclaiming the 200-DMA by 4 points. Goldman is now at 30% recession odds.
The 1973 analog continues to play out in real time. Diplomatic overtures met with maximalist counter-demands while fighting continues. Relief rallies that fade before the fundamental picture changes. The market wanted today to be the inflection point. It wasn’t.
What would change my mind: Same conditions as this morning. Iran’s formal rejection actually makes the next catalyst clearer: the potential Pakistan in-person meeting. If Vance sits across from Iranian representatives this week, that would be a genuine escalation in diplomatic seriousness — Iran’s words say “no talks” but Pakistan is still preparing to host. Watch for that, and watch whether the S&P can close above 6,615 on Thursday.
Key dates:
- Mar 26 — EU Parliament vote on US trade deal
- Mar 28 — Trump strike pause expires + Q4 GDP final revision
- Mar 31 — Conference Board consumer confidence (March)
- Apr 2 — USMCA tariff exemptions expire
- TBD — Potential Pakistan in-person talks (Vance)
Updated sources: CNBC — Iran rejects US ceasefire, demands Strait sovereignty, NPR — Iran rejects Trump proposal, lays out 5 conditions, Bloomberg — Trump faces fresh Iran demands, Al Jazeera — What are each side’s demands, CNBC — Oil prices settle, Brent $102, Fortune — Oil price today March 25, CNBC — Recession odds climb to 30%, Fortune — Goldman raises recession odds, 247 Wall St — S&P 500 roller coaster
Sources: Al Jazeera — Iran says non-hostile ships can pass through Strait of Hormuz, France 24 — US proposes 15-point plan as Iran opens Hormuz, Time — Trump admin sends peace proposal to Iran, Chicago Tribune — Iran receives US ceasefire plan, Axios — Iran suspects Trump peace push is a trick, CNBC — Oil prices fall on Trump Iran talks, Fortune — Oil price today March 25, Bloomberg — Stock market today March 25, 247 Wall St — S&P 500 roller coaster continues, CNBC — Apollo gives investors 45% of requested withdrawals, CNBC — Private credit zero-loss fantasy ending, Bloomberg — Private credit default rates to reach 8%, Euronews — EU Parliament ready to vote on trade deal, Marketplace — Weekly jobless claims holding up, US News — Workers job market gloom, India TV — Iran-Israel war live updates March 25