Good morning. The S&P 500 started the week by falling 0.7% yesterday, though tech was mostly to blame. The equal-weight was only slightly negative but the Russell 2000 also slipped 0.8%. Semis/memory got hit. Oil rose sharply as US-Iran hostilities reignited over the weekend, leading to President Trump reinstating the blockade and launching the GOTHS (“Guardians of the Hormuz Strait”). Yields and the Dollar followed oil higher, and hawkish comments from Fed Governor Waller added to the yield move and to today’s focus on CPI. Energy was the leading sector with crude’s strength, followed by Utilities, Financials and Staples.

The US continued to strike Iranian targets overnight, met with Iranian attacks across the region. As the financial heavyweights begin to report this morning and ahead of the CPI print S&P futures were slightly lower. Tech names were bouncing in the pre-market before IBM (-20%) negatively pre-announced, taking a lot of the attention from the big banks. The news is weighing on the software group as well.

The inflation data came in cooler than expected. That immediately reversed the hiking bias priced in yesterday after Waller’s comments. Yields are now down around 10bp on the 2y and 6 on the 30y. Fed Chair Warsh testifies before Congress this morning in what should be a Fed Speak highlight, off of the CPI data. S&P futures spiked on the cool print but have come off their best levels. The index is looking to open up ~0.2%, and the Russell 2000 up 0.6%. Bank earnings are one of the major storylines today. The group had solid results, beating top and bottom estimates, with no signs of credit stress and healthy views on the economy.

Brent crude is up ~4%. Metals were modestly higher into the CPI data, and took a leg up as yields fell. Gold and silver are now up ~3%, with gold back above $4K. Copper is also higher and above its 50d ma ~$6.30.