Trump's 80th birthday came with a gift for global markets!
On Sunday, the US and Iran reached a peace deal to end the war and reopen the Strait of Hormuz, after more than 15 weeks of conflict.
Markets are poised to open the new week in risk-on mode with sharp gaps from Friday’s close already telling the story:
• Brent slipped than 3% toward $84 a barrel
• Nasdaq 100 futures up 1.3%, S&P 500 futures climb 0.8%
• European natural gas futures declined as much as 5.8%
• Gold gapped up almost $100 higher
• G10 majors welcomed a broadly weaker dollar
To be clear, the official signing is set for June 19 in Switzerland.
Iran's Deputy FM confirmed the agreement on state TV but said Tehran won't begin implementing it until then. So essentially, treat this as “agreed” not “done”.
In a nutshell = Peace deal -> BAU Strait of Hormuz -> Lower oil prices -> cooling inflation fears -> reduced Fed hike bets -> weaker dollar
Reality check: Mines in the Strait need clearing, shut-in fields could take months to restart, and damaged energy infrastructure needs repairing. Don't be surprised if oil stays stubbornly higher in the short to medium term even with peace on paper.