Markets:

• WTI crude up $3.52 to $91.65
• US 10-year yields up 6 bps to 4.40%
• Gold down $2 to $4403
• USD leads, NZD lags
• S&P 500 down 0.4% led by software

There was less drama in Tuesdays trading as we continue to be driven by three conflicting narratives.

1) Trump continues to talk about ending the war

He highlighted that the Iranian officials how are negotiating with him proved they are in charge of the Strait and that they pledged not to get nuclear weapons. However, reports also indicate that Iran hasn’t accepted negotiations the US hopes to have on Thursday.

2) Iran is combative online

All the messages from Iranian leadership accounts online seem to indicate a combative stance and not much willingness to discuss peace after they were attacked during the last round of negotiations.

3) The US is sending more soldiers to the Middle East

Various report highlight that more soldiers are being moved into the Middle East with one contingent arriving on Friday, just as Trump’s deadline/delay on energy infrastructure strikes ends.

Given all this, there is endless speculation about what will come next. Today’s trade mostly saw a ‘war on’ move, unwinding some of yesterday’s optimism. Treasury yields and oil were higher along with the US dollar. Stocks were more-resilient with the exception of software stocks, which were hit alongside private credit again on fears of AI disruption.

Finally, keep an eye on gold as it’s flirting with a small decline on the day. If it finishes lower, it will be the tenth consecutive day of losses.