Macro View - March 13, 2026 (EOD)

 ## Macro Summary Markets closed lower today as geopolitical tensions in the Middle East, particularly the ongoing Iran conflict, continued to weigh heavily on investor sentiment. The escalation in the region has driven oil prices above $100 per barrel, intensifying concerns about energy supply disruptions and inflationary pressures. This geopolitical risk premium pressured equities broadly, with the S&P 500 falling 0.55% to $662.42 and the Nasdaq 100 down 0.62% to $593.55. Defensive sectors such as utilities outperformed, reflecting a flight to safety amid uncertainty. Economic data released today painted a mixed picture of the U.S. economy. While housing starts and building permits showed resilience with January housing starts rising 7.2% to 1.487 million (above the 1.348 million forecast), building permits declined slightly to 1.376 million versus expectations of 1.41 million. The trade deficit narrowed significantly to -$54.5 billion from -$72.9 billion, indicating some improvement in external balances. However, GDP growth was revised down to a tepid 0.7% in Q4 2025, underscoring a slowing growth environment. These data points, combined with sticky inflation measures, suggest the Fed’s path remains cautious, with markets adjusting expectations accordingly. ## Economic Data Reaction - **Initial Jobless Claims:** 213K actual vs. 215K forecast – Slightly better than expected, but markets largely shrugged off the data given ongoing geopolitical concerns. - **Building Permits:** 1.376M actual vs. 1.41M forecast – Missed expectations, contributing to a cautious tone in housing-related sectors. - **Housing Starts:** 1.487M actual vs. 1.348M forecast – Stronger than expected, providing some support to the construction and materials segments. - **Goods Trade Balance:** -$80.8B actual vs. previous -$98.54B – Narrowing deficit helped ease some concerns about external demand. - **International Trade Balance:** -$54.5B actual vs. -$66.6B forecast – Better than expected, signaling some improvement in trade dynamics. - **EIA Natural Gas Change:** -38B actual vs. -44B forecast – Smaller than expected drawdown, but natural gas prices still declined amid mild weather and supply factors. Markets reacted with modest caution to the mixed economic data, focusing more on the geopolitical backdrop and its inflationary implications. ## Fed & Central Banks No new Fed commentary was released today, but market participants remain focused on the Fed’s upcoming meeting amid persistent inflation concerns and geopolitical risks. The stickiness of core PCE inflation at 3.1% year-over-year in January reinforces the Fed’s reluctance to preemptively cut rates, despite some market hopes for easing. Meanwhile, reports suggest that Fed rate cuts may be delayed as the war clouds the economic outlook. The judge’s rejection of subpoenas against Fed Chair Powell in a criminal probe adds some relief to central bank leadership stability but does not materially shift policy expectations. ## Rates & Bonds - 10-Year Treasury yield: data not explicitly provided, but 20+ Year Treasury (TLT) declined 0.45% to $86.58, indicating modest yield increases. - 2-Year yield: data not available. - Yield curve implications: The slight decline in long-term Treasury prices suggests some steepening pressure amid inflation concerns and geopolitical risk, but no explicit curve inversion or flattening noted. ## Currency & Dollar The U.S. dollar index (UUP) strengthened 1.12% to $27.99, reflecting safe-haven demand amid the Iran conflict and rising oil prices. The dollar’s strength weighed on multinational equities and commodities priced in dollars, contributing to the broad equity market pullback. The yen slid to its weakest level since July 2024, while the euro hit its lowest versus the dollar since August, pressured by the energy crisis and geopolitical uncertainty in Europe. Dollar strength is likely to persist as investors seek refuge amid global risk-off sentiment. ## Commodities Wrap - Oil: Closed at $121.33, up 2.48% – Oil prices surged above $120 as the Iran war intensified, with concerns about the Strait of Hormuz blockade and supply disruptions dominating. Brent crude also closed above $100 for the second straight session, reinforcing the energy inflation narrative. - Gold: Closed at $461.03, down 1.25% – Despite geopolitical tensions, gold declined as the stronger dollar and rising real yields diminished its appeal as a safe haven. - Silver: Fell sharply 4.48% to $73.05 – Silver’s decline outpaced gold, reflecting industrial demand concerns amid market volatility. - Natural Gas: Dropped 2.99% to $12.65 – Prices fell despite a smaller-than-expected inventory draw, pressured by mild weather and ample supply. The commodity complex remains volatile, with energy prices driving inflation fears and weighing on risk assets. ## Global Markets Close - Europe: European stocks closed lower amid oil price pressures and geopolitical risks. The FTSE 100 fell 0.44%, the OMX Stockholm 30 declined 1.45%, and the IBEX 35 dropped 0.47%. The UK economy’s stagnation in January and rising energy costs weighed on sentiment. - Asia setup for tonight: Asian markets are expected to open cautiously lower, reflecting ongoing risk-off sentiment from the Middle East conflict and elevated oil prices. The yen’s weakness and South Korea’s gasoline price cap highlight regional inflation concerns. ## Tomorrow's Macro Focus Market attention will turn to several key data releases and events: - U.S. Empire State Manufacturing Index and Industrial Production data are due Monday, providing insight into manufacturing momentum amid a slowing economy. - The Fed’s upcoming meeting remains the central macro catalyst, with investors closely watching for any shifts in rate guidance amid sticky inflation and geopolitical uncertainty. - Continued developments in the Iran conflict and any diplomatic progress or escalation will be critical for risk sentiment and commodity markets. - Earnings reports from major tech and semiconductor companies, including Micron, will be scrutinized for indications of demand trends amid AI-driven growth and supply chain pressures. Investors will navigate a complex macro environment balancing geopolitical risk, inflation dynamics, and central bank policy signals.