Wednesday markets bought diplomatic progress. Thursday markets sold diplomatic illusion. The OECD published its interim Economic Outlook, revising US 2026 headline inflation up 1.2 percentage points to 4.2% -- now 2.0 percentage points above the Federal Reserve's own estimate of 2.2%, updated last week. The OECD simultaneously cut its global GDP growth forecast, noting that the Iran war has erased the upside revision to global growth that had previously been in sight.

The ECB turned more hawkish. Bundesbank President Nagel said an April rate hike is "an option," with the ECB assessing whether the energy shock will generate persistent inflation pass-through. The market response was immediate: S&P 500 fell 1.74% to 6,477 -- worst single session since the war began. The Nasdaq dropped 2.38% to 21,408, pulling back more than 10% and entering technical correction territory. The Dow shed 469 points to 45,960.

Brent rebounded 5.66% to settle at $108.01. WTI gained 4.61% to $94.48. The diplomatic premium unwound. Energy inflation repriced. Trump's strike pause on Iranian energy infrastructure has been extended to April 6 (ET) -- the next hard deadline in this negotiation timeline.

The number that mattered Thursday was 4.2% -- the OECD's revised US inflation forecast for 2026. That is 2.0 percentage points above the Federal Reserve's own projection of 2.2%, updated last week. If the OECD is right, the Fed's policy path needs to be repriced. Markets began doing that calculation: VIX pushed back above 30, Treasury yields spiked -- not in panic, but in repricing.

The Nasdaq entering correction territory is the week's most important technical signal. Tech stocks have been the last certainty shelter of this crisis. When that shelter begins to break, capital has nowhere left to rotate -- markets are now waiting for a credible diplomatic breakthrough or a clear directional turn in oil.

Brent back at $108 reopens the other edge of Australia's double-edged position: LNG export revenues remain strong, but domestic energy cost pressures rebuild. US gasoline hit $3.98 per gallon Thursday -- near a four-year high. The OECD's 1.2pp upward revision to global inflation adds to the RBA's external pressure ahead of the May meeting. If the strike pause expires on April 6 without diplomatic progress and conflict escalates, the case for a May hike to 4.35% strengthens materially.

Brent back at $108 reverses last week's breathing room on imported inflation. The OECD maintained its China 2026 GDP forecast at 4.4% -- one of the few stable projections in the report -- but contingent on energy prices moderating from mid-2026. If the April 6 deadline passes without progress and conflict escalates, that assumption breaks. Beijing's policy space narrows with every oil price rebound.