● Markets started the session on a positive note following signals of progress in US–Iran negotiations.
● Vice President JD Vance pointed to the possibility of a “grand bargain,” involving Iran’s economic reintegration in exchange for nuclear concessions. The ceasefire has been holding for about a week.
● Trump stated that he does not expect the ceasefire to be extended, suggesting confidence in a quick agreement. However, his messaging remains mixed — on one hand he describes the conflict as “very close to over,” while on the other he emphasizes that operations are not yet complete. He suggested that the coming days will be decisive.
● Talks are ongoing through diplomatic channels, including with the involvement of Pakistan. Another round of negotiations with high-level US officials is expected. The timeline is tight, and the ceasefire is acting as a deadline. The coming days will be crucial for the outcome of the talks.
● Oil prices continued to decline, with OIL.WTI trading around 91.50 USD per barrel and Brent around 95.60 USD per barrel. Hopes for de-escalation have reduced the geopolitical risk premium. Although the market is pricing in an optimistic outcome of the negotiations, significant risks remain.
● The US is offering economic normalization and global integration in exchange for Iran abandoning its nuclear ambitions. This signals a shift toward a broader strategic framework rather than just a ceasefire agreement.
● Risk-on sentiment improved, supporting equity markets. US indices closed yesterday slightly below their all-time highs, highlighting optimism.
● The Reuters Tankan survey showed the largest drop in sentiment in Japan’s manufacturing sector in three years. Rising energy costs and supply disruptions are negatively affecting the sector. Domestic sectors remain more resilient, but external pressures are increasing.
● Janet Yellen suggested that the Fed may deliver one more rate cut this year despite rising inflation risks. The policy outlook remains highly uncertain.
● Satellite images show that Iran is repairing damage to underground missile bases during the ceasefire. As much as half of the missile infrastructure remains intact. This suggests preparations for potential further escalation.
● The US is offering economic normalization and global integration in exchange for Iran abandoning its nuclear ambitions. This signals a shift toward a broader strategic framework rather than just a ceasefire agreement.
