MACRO ANALYSIS: MNI US Macro Weekly: De-Escalation Drives Dovish Drift

• Stocks continued to trade weaker late Wednesday, extending lows after the FOMC held rates steady while the Fed chair expressed oil shocks multiple times and the uncertainty it injects to forward guidance.
• Stocks retreated to the lowest levels of the week (the DJIA back to late November levels) after higher than expected PPI inflation metrics, coupled with reports that several Iranian gas fields were attacked by Israel which sapped risk sentiment as crude prices surged (WTI crude neared $100/bbl).
• Consumer Staples/Discretionary, Materials and Health Care sector shares continued to underperform.
• Despite the rise in geo-political risk, mining stocks weighed on the Materials sector as gold prices tumbled over $150 by the second half, Newmont Corp and Freeport-McMoRan trade -3-3.5% lower.
• The Health Care sector was driven by carry-over weakness in pharmaceutical shares as obesity drug expectations continued to be discounted by analysts, AbbVie down approximately 5.3%.
• Consumer stocks depressed as core PPI (ex food, energy & trade services) printed 0.53% M/M: Dollar Tree, Monster Beverage Corp, Philip Morris International and Dollar General Corp all trade -3.5 to 4.3% lower.
• On the flipside, as has been the case since the start of the war between the US/Israel and Iran - oil and gas stocks outperformed.

• SOFR futures easily more than reversed the modest rally seen after the FOMC decision and SEP, with SFRZ6 and H7 leading the day's losses at -11 ticks with the presser wrapped up press conference,
• 7.5 of the 11 tick selloff for the H7 came since Powell started speaking.
• Moves started with inflation comments including that the main thing the FOMC is looking for is progress on goods inflation and that if we don't see that progress, then you won't see the rate cut.
• There was little immediate reaction to Powell saying he would serve as Fed Chair pro-tem until his successor is confirmed and that he hasn't made a decision yet on how long he'll stay on the Board of Governors. However, it didn’t hurt selling momentum which continued through the press conference.
• FF cumulative implied cuts: 0bp Apr, 2.5bp Jun (vs 4bp pre-FOMC), 6bp Jul, 10bp Sep (vs 12bp), 17.5bp Dec (vs 21bp).
• Next Fed cut priced for Jun 2027 (25.5bp).
• The SOFR terminal yield of 3.365% (Z7, +9bp) is close to last week's fresh ytd highest close of 3.39% (when it ticked into the H8). 

• RES 4: 160.79 1.500 proj of the Jan 27 - Feb  - 12 price swing  
• RES 3: 160.26 Low Jul 8 ‘24
• RES 2: 160.00 Psychological round number
• RES 1: 159.75 High Mar 13 and 16
• PRICE: 159.47 @ 16:19 GMT Mar 18  
• SUP 1: 158.57/157.55 Low Mar 12 / 20-day EMA 
• SUP 2: 156.44 50-day EMA 
• SUP 3: 155.35/154.00 Low Feb 25 / 23 
• SUP 4: 153.06 Trendline support drawn from the Apr 22 ‘25 low 

A bullish condition in USDJPY remains intact and the pullback from Monday’s high is considered corrective. The recent clear breach of key short-term resistance at 159.45, the Jan 14 high, opens the 160.00 psychological barrier next. Note that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Initial firm support lies at 156.54, the 50-day EMA. Support at the 20-day EMA is at 157.55.