CROSS ASSET: EUR/JPY Following Stocks Lower as Stagflationary Concerns Bed In

EUR/JPY is following the equity weakness lower, putting the cross back toward yesterday's lows and within range of support at 156.32. Clearance here puts the price at the lowest since early February and closes the gap with the bear trigger of 155.61 (which coincides with several clusters of historical support).

• Equity weakness comes on the back of poor data as both the prelim February PMI stats and the final Michigan sentiment reading continue to flash concerns over not just slowing economic activity, but also sticky inflation (evident in today's 5-10y inflation expectation, revised up to 3.5% for the highest reading since 1993 (topping even the elevated levels through COVID and the fallout of the Global Financial Crisis).
• Industrials and consumer discretionary sector underperformance are further confirmation over the stagflationary concerns, with defensive consumer staples among the sole sectors in the green.
• The NYSE Tick index shows that while several bouts of stock sales have crossed, there's little evidence of sizeable programmatic selling that can accompany sharp downticks in the index.
• The e-mini S&P is near 75 points off the weekly high, and a close at current or lower levels would confirm a bearish weekly candle in the index.