The main talk of the town yesterday was US president Trump looking to broker a ceasefire between Israel and Lebanon. He confirmed that by saying that “all shooting will stop”, allowing for the US to at least try and negotiate with Iran again on a broader framework agreement.
As mentioned before, the Israel-Hezbollah ceasefire is a key precondition that Iran wants as part of the terms for the memorandum of understanding. However, the key question here is whether Israel will abide by that ceasefire. And as we have seen from a few hours ago here, it may not really be the case.
If it cannot last a day, how is it expected to carry through for the next 60 days when the US-Iran deal is finalised?
As a reminder, these are the other key terms that need to be agreed upon. Otherwise, the whole deal/memorandum of understanding may fall apart at any time once signed.
For now, markets are still waiting on the US and Iran to strike a compromise on all fronts. Then, we’ll see how things go with nuclear discussions.
But as the wait continues, market players are pretty much being put on edge in the meantime. After pushing up yesterday, US futures are now pointing lower with S&P 500 futures down 0.4% on the day. Tech shares are leading declines with Nasdaq futures down 0.6%. The overnight comments by OpenAI CEO, Sam Altman here are perhaps worth looking over if anything else.
Besides that, oil prices also posted its best daily showing since late April yesterday with WTI crude nearly touching $95. That fizzled late on and we’re seeing a slight pullback now with prices down 1% to $91.20 on the day.
In other markets, the US dollar continues to remain little changed in the major currencies space. There’s no real conviction here as traders continue to wait on US-Iran developments before really committing to any moves.
That being said, USD/JPY continues to hold at 159.70 and nearby intervention strike range so that is one to keep an eye out for.
Besides that, bond yields are also being pushed down with 10-year Treasury yields now at 4.44% and 30-year yields at 4.96%. It’s a cooling sign but it won’t take much to reignite the flames, especially if any deal comes to naught between the US and Iran.
And looking to precious metals, gold is back up today by 0.5% to $4,508. The push and pull in gold continues amid a mix of US-Iran optimism and worries about inflation, with the latter signaling a more hawkish outlook for major central banks. After so much action, gold is just down 0.7% when benchmarked to close from the last two weeks i.e. 15 May.
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