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The Key Geopolitical Variable to Watch

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What’s in Today’s Report:

  • The Key Variable to Watch in the U.S.-Iran Conflict
  • ISM Manufacturing Index Takeaways

S&P 500 futures fell to fresh YTD lows in pre-market trade, oil prices surged, and yields jumped following an Iranian drone attack on the U.S. embassy in Riyadh, Saudi Arabia.

Economically, the EU’s Narrow Core HICP Flash figure for February spiked to 2.4% vs. (E) 2.2% which stoked inflation fears and introduced market risks of potential ECB rate hikes in 2026.

Today, there is one second-tiered economic report to watch: Motor Vehicle Sales (E: 15.3 million) and the Treasury will hold a 6-Week Bill auction at 11:30 a.m. ET that could impact Treasury yields and carryover to equity market money flows.

Additionally, there are three Fed speakers today with Williams (9:55 a.m. ET), Schmid (10:10 a.m. ET), and Kashkari (11:55 a.m. ET) all due to deliver comments.

Finally, there are a handful of noteworthy earnings releases to watch today: TGT ($2.17), BBY ($2.48), CRWD ($0.20), however the corporate results are likely to take a backseat to geopolitics until tensions between the U.S. and Iran begin to subside.

 

What the U.S./Iran Conflict Means for Markets

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What’s in Today’s Report:

  • What the U.S./Iran Conflict Means for Markets
  • Weekly Market Preview: Does the Conflict Stay Contained?
  • Weekly Economic Cheat Sheet: An Important Week for Growth (Jobs Report on Friday)

Futures are moderately lower on geopolitical concerns following the U.S./Israeli attack on Iran over the weekend.

Oil (up 7%) and gold (up 3%) are sharply higher and global stocks are lower as markets price in greater geopolitical risk.  But, the moves are in line with expectations (so no worse than feared).

Economically, the UK Manufacturing PMI slightly missed estimates (51.7 vs. 52.0) while the EU reading met forecasts (52.0) but neither number is moving markets.

Today focus will be on geopolitics and specifically whether the U.S./Iran conflict widens.  If the conflict does start to widen (and bring in other countries and expand the number of combatants on both sides) that will be an incremental market negative.

Away from geopolitics, this is an important week for economic data and the first key report comes today via the ISM Manufacturing PMI (E: 51.8).  Simply put, the stronger this number, the better as markets need solid growth more right now than they need a sooner than expected rate cut.