US: UK: Trump Hosts State Dinner For King Charles III Shortly

The S&P(ESM6) range Friday night was 6398.00 - 6553.75, SPX closed -1.67%, Asia is currently trading around 6370. The S&P(ESM6) broke convincingly back below the 6500 and extended as risk begins to price in a drawn out conflict. US Stocks have broken some pivotal supports finally playing catch up to the move we have seen in Bonds. These breaks look to be quite significant and could potentially indicate the start of a Bear market. This morning US futures opened lower, extending these losses as boots on the ground now look imminent, E-minis(S&P) -0.70%%, NQZ5 -0.85%. On the day, the first resistance is back toward 6450-6500 and then 6650 area, the first target is 6150-6200 but a move back toward 5700-5900 looks achievable. The market has reduced its positioning, but I would still be skewed toward fading rallies as the uncertainty for markets remains and these breaks could see the pace of selling begin to accelerate. Historically April tends to be one of the most bullish months of the year and there are some looking for a catalyst from the Iran conflict to reverse sentiment but I would be sticking with the trend and the price action looks decidedly poor for now.

• Washington Post on X: "The Pentagon is preparing for weeks of ground operations in Iran, U.S. officials said. It would fall short of a full-scale invasion and could involve raids by a mixture of Special Operations forces and conventional infantry troops, said the officials.”
• MacroEdge on X: "US official: By the start of next week, there'll be enough forces to allow for a significant ground operation against Iran - i24"
• Danny cheng on X: “Bridgewater Fund, led by macro legend Ray Dalio, made its largest purchase in the latest 13F filing by dramatically increasing its stake in the SPDR S&P 500 ETF Trust (#SPY) by +73%. The move catapulted SPY into the fund’s single largest holding.” 
• Holger Zschaepitz on X: “2026 is starting to rhyme w/2025. Same painful start, same question hanging in the air: is there an "all clear" moment coming? Last time, Liberation Day flipped everything. This time, the trigger is Iran. (via GS)”
• The S&P 500 Index Average True Range(ATR) for the last 10 Trading days:  100 Points

Fig 1: S&P 500 Index Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P

JGB futures finished the post Tokyo period at 129.96, -.10 versus settlement levels. Earlier cycle lows were at 129.82. Focus today will be on whether we see any retracement higher, as risk aversion in the equity space on Friday (which has continued this morning in futures) offset some of the continued surge in oil prices for US Tsy yields (albeit more so at the front end of the curve). 

• From a technical standpoint for JGB futures, Friday price action, keeps the price well through the 50-dma and reinforces the negative outlook. Clearance back above this level is needed to highlight a stronger short-term reversal and signal scope for any recovery. Interim supports rest at 129.57 and below at 129.06.
• Cash JGBs surged through Friday trade, as inflationary concerns from surging oil prices drove sentiment. The 10yr to 2.39% (+10bps) was fresh highs back to the 1990s. The 20yr finished up at 3.27%, +14bps, the 40yr at 3.93% +22bps. The 2yr also rose to fresh multi decade highs of 1.39%.
• Focus today will be on whether we see any retracement from these sharp moves, although trends are skewed towards higher yields.
• The data calendar is quiet but we do get the March BoJ Summary of Opinions out in a little while.
• Also note, the Bank of Japan has revised up its estimate of the lower end of the natural rate of interest to -0.9% from -1.0% in the wake of updates of its calculations of the potential growth rate and output gap, the Bank of Japan said in its Review on Friday, adding that the change does not have any policy implication.

• Gold finished the week last week around where it started, consolidating below $4,500 and finishing Friday at US$4,494.09.
• Gold is up moderately Monday and has failed in its first retest  US$4,500 in early trade, falling back to US$4,487.  
• Gold is currently trapped in a counter-intuitive cycle. Whilst the Middle East conflict usually drives gold higher, oil price gains are fueling massive inflation fears.  This may force the Fed to pivot to a higher-for-longer stance, pushing Treasury yields up and making the non-yielding gold less attractive to investors.
• Investors are watching for further liquidity related selling.   Institutional investors have sold gold (particularly ETFs) to raise cash to cover losses in other sectors. This week will see if that forced selling has finished or if more stop-losses drive gold below $4,400.
• The April 6 deadline for the re-opening of the Strait of Hormuz looms large with its continued closure having the potential for oil eye $130bbl, putting further pressure on yields and downward pressure on gold.  
• US economic data will show if high oil prices are beginning to impact the US economy and provide an insight into the likely direction for US rates. Markets are looking for signs that high fuel costs are stalling the 2026 industrial recovery via the ISM. If job growth (NFP) slows significantly while gas prices flirt with $4.00/gallon, the stagflation narrative will take over as traders fear a looming recession.