St. Patrick’s Day rolled into Fed Day as the long holiday continues. Unfortunately equities are under pressure as oil continued its climb after hostilities in Iran escalated to hits on energy infrastructure. Yesterday US markets ended in the green. The highs were hit early in the session with the S&P 500 topping out ~6,750, where the market has run into resistance over the last few sessions. Oil prices continued to move higher with energy stocks leading to the upside. Financials outperformed helped by a bounce in many of the private credit exposed companies. Despite the continued move higher in energy markets travel-related stocks also traded well.

Futures had been moving higher throughout the overnight session with strength in Asia but turned lower after reports that Israel struck Iran’s South Pars gas field. Iran vowed to retaliate against sites that were previously thought to be safe. Futures took another leg lower after PPI came in well ahead of estimates before the Open. The headlines are stacking up in front of the Fed decision and press conference later today. The S&P 500 opened down about 0.3% and extended lower. The Dow is lagging, Russell 2000 equaling the S&P 500 and the equal-weight is outperforming slightly.

PPI came in hot with headline and core up 3.4% and 3.9% on an annual basis versus expectations of 2.9% and 3.7% respectively. Yields moved about 2bp higher after the print and the front end has added a little bit more to that, but its likely that anything else is on hold pending Fed decision. The USD Index moved to its highest levels of the day following the print, nearing 100 before pulling back a bit.

Oil prices have been moving higher with ICE Brent up 5%. With the risk-off tone, Dollar strength and potential for demand destruction from oil prices, the metals complex is selling off. Gold and silver are down 3-4%, with gold falling below its 50d ma ~4,970. It hasn’t closed below the 50d since August. Ag is higher with corn and wheat rising on updates of growing conditions and ethanol stocks.