Headlines:
Markets:
- WTI crude oil down 5% to $92.97 currently, after falling from $100 to $84 on the headlines
- US 10-year Treasury yields down 1 bps to 4.38% currently, after falling from 4.44% to 4.31%
- S&P 500 futures rebound strongly to be up 1.3% on the day, was as low as down 1% earlier
- European stocks turn losses to gains, DAX down 2% at the start of the day but is now up 1.1%
- EUR/USD moves up from 1.1490 to 1.1615 before falling back to 1.1560 now
- AUD/USD jumps from 0.6920 to 0.7045 before falling back to 0.6985 now
- Gold jumps from low of $4,100 to $4,383 but still down 2% on the day
You gotta love a good TACO moment, no?
The start of the day is now but a thing of the past as everything else before the last hour does not matter anymore. In fact, anything since the weekend pretty much does not really matter.
We’ve finally reached a point where US president Trump has hit the pain threshold for the Middle East conflict. He announced a five-day postponement to strikes on key Iranian facilities, that after supposed “talks” over the weekend between the two countries.
Markets saw a momentous turnaround in sentiment, after having been bleeding on all fronts earlier in the day. It was a buy dollar, sell everything else mood in returning from the weekend. And on Trump’s headline alone, we saw the complete opposite happen in stunning fashion.
However, the optimism was quick to be tempered with after Iran’s local media said that there have been no “talks” whatsoever between the two sides. And they even went as far to air that Trump has retreated because of Iran’s own “decisive threats”. So, make of that what you will.
WTI crude oil was up around $100 before all this and then fell to a low of $84.30 on Trump’s remark. However, we’re seeing price rebound back now to $93 – down just about 5% on the day.
In other markets, S&P 500 futures had a rough one and was down around 0.8% earlier in the day. That before a surging rebound to post gains of 2.8% after Trump’s comment and then now seeing those gains halved to just 1.3%. It is the same for European stocks as well, with the DAX having traded down by nearly 2% at the open before posting gains of 2% instead. But now that optimism is tempered with, the DAX is seen up 1% on the day.
The US dollar was another big mover and is still swinging around amid the volatile environment. EUR/USD jumped up from 1.1490 to 1.1615 before falling back now to 1.1560 on the day. Meanwhile, AUD/USD was also down in the dumps earlier as it was struggling at 0.6920 before a surging rebound to 0.7045. But now, it is trading back down by 0.4% to 0.6990 levels.
The wild swings continue in other markets too, with 10-year Treasury yields falling from 4.44% to 4.31% before rebounding back to 4.38% now. Meanwhile, gold was down to a low of $4,100 earlier in the day before a surging bounce to $4,463 but is now back down by over 2% to $4,383.
Whether true or not, the key thing is that Trump has put out a signal that he has arguably reached his limit on this war. And that means we might not see much material escalation like we have in the weeks prior. That as he continues to keep a close watch on markets too.
In any case, the only thing that really matters is what happens now with the Strait of Hormuz. That will have the final say on how markets should react regardless of the noise we’re seeing.
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