Barclays warns: Trump's "put option" effect weakening, policy remains volatile and swings unpredictably

LootboxPhobia · 2026-03-27T15:11:16+00:00

Barclays report indicates that Trump's market easing signals may be fading, with policy uncertainty increasing. Analyst Cau stated that market resilience is supported, but the long-term conflict risk is underestimated. It is expected that by 2026, the global economic growth rate will be 2.9%, with an inflation rate of 2.7%.

LootboxPhobia

2026-03-27 15:11:16

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Investing.com - Barclays said in a report to clients on Friday that the market resilience driven by recent calming signals issued by U.S. President Donald Trump may be starting to fade, as policy uncertainty is intensifying.

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Analyst Emmanuel Cau wrote: “Sustained flip-flopping and headline fatigue are beginning to erode the effectiveness of bearish options.”

Cau noted that, so far, the stock market has been supported by what he called Trump’s “clear willingness to de-escalate the conflict,” adding that markets have reacted sharply to the president’s shifting deadlines to reopen the Strait of Hormuz to Iran.

“When markets opened on Monday, panic in oil, rates and the stock market was clearly evident, before Trump extended the 48-hour ultimatum to Friday,” he wrote, adding that after another day of pressure, the deadline was pushed back again.

Barclays said that, as Israel steps up its strikes and the U.S. is reportedly sending more troops to the Middle East, the situation “remains fluid and fairly chaotic.”

While de-leveraging by hedge funds and CTAs could help with tactical positioning, Cau commented that resilient price action suggests that “the market wants to go higher.”

He added that bullish investors “remain optimistic,” which leaves the risk of a protracted conflict “underpriced.”

Barclays warned that the longer the conflict and the related oil shocks persist, the stronger the risk of stagflation.

“Our economists now expect that, calculated as Q4/Q4 percentages, global growth will be 2.9% in Q4/Q4 2026, while global inflation will be pushed up to 2.7% by the end of 2026. Forecasts also point to developed economies overall growing by only 1.7% in 2026 (all Q4/Q4 data), due to slower growth in the eurozone (0.7%), the UK (1.0%) and Japan (1.4%),” Cau concluded.

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