Macro Market Monitor

Hotter-Than-Expected PPI Inflation

• 🔥 February PPI +0.7% m/m: February PPI rose 0.7% m/m vs. +0.3% est. and +0.5% prior, with core +0.5% m/m vs....

Wholesale inflation roared: PPI jumped 0.7% m/m vs +0.3% est and +0.5% prior; core +0.5% vs +0.3% est. Most in 7 months, driven by services/goods.

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• Growing stagflation concerns as Middle East conflict boosts oil prices
• David Kudla, Mainstay Capital CEO, warns of investment impacts
• Ties to Iran tensions, inflation, and global volatility

Watch for oil-driven inflation pressuring central banks.

Fed dot plot revision can support USD amid ECB preview tomorrow and weak ZEW expectations at an 11-month low, signaling G10 policy divergence.

QI Research, with Wall Street and Fed experience plus broad finance ties, triangulates institutional sentiment, central bank focus, and monetary policy impacts on stagflation risks.

US Treasury yields eased slightly after March Empire Manufacturing Index printed -0.2, far below the surveyed 3.9 expectation—highlighting softening US growth signals as the two-day FOMC meeting kicks off today with a decision due.

Global debt risks are escalating as sovereign bond issuance hit record levels in 2025 and stays near historic highs in 2026, per OECD data—intensifying fiscal pressures in a high-rate world.

Central Bank Policy Tests

• 🔥 ECB Rate Decision: ECB policy faces new test from oil surge reigniting inflation threat amid rising energy prices...

• USD eases ahead of Fed decision, boosting EUR/USD amid QT context
• Buffett: Fed rate cuts won't relieve tightness—investors miss yield curve's long...

Geopolitical oil disruptions via Strait of Hormuz reignite inflation risks for ECB:

• Rising energy prices and tensions reshape eurozone outlook
• Markets reassess ECB path amid slowing growth
• Fed divergence adds pressure on rate decisions

Geopolitical flare-up threatens energy stability:

• Iran ramps up strikes: UAE's Shah gas field suspended after fire; Fujairah port shut by drone.
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Core PCE is expected to rise 3.1% YoY through January, exceeding annual core CPI by one of the widest margins in decades despite tame CPI – signaling trouble for the Fed's favored gauge.

Central Bank Hold Expectations

• 🔥 Citi Sees BoE Pausing Cuts: Citi expects the Bank of England to hold the Bank Rate at 3.75% this week.
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Inflation stickiness dims rate-cut hopes:

• Core PCE hit 3.1% in Jan (likely higher Feb), crossing Duy's 3% red line for Fed action.
• Gold tests...

Citi expects BoE's MPC to hold the Bank Rate at 3.75% this week, removing an April cut. Key pause amid policy watch.

U.S. stock markets continued to struggle on Friday due to a precipitous increase in crude oil prices from the U.S.-Israel-Iran conflict.

Key timeline on Fed's March 17-18 meeting:

• Pre-meeting: Expected rate hold after 3 cuts end-2025, amid Middle East-driven energy spikes hitting...

Middle East war complicates Fed path:

• Rates on hold: 99% odds Fed keeps 3.5-3.75% range March 18, probabilities soar for April/June holds too.
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Key biases exposed in recent events:

• Geopolitics boosts fossil profits: Iran conflict spikes oil prices, aiding Australian LNG exporters' revenues...

Mixed open amid Iran conflict:

• US equity futures higher, S&P slightly up
• 10Y yield dips 2bps to 4.3%; dollar softer vs yen
• Oil adds to gains, gold softer as conflict hits week 3
• Kharg Island spared, but Hormuz stalled—ceasefire prospects dim