There have been major developments in the conflict in Iran since Saturday that have contributed to the market volatility being seen Monday morning.
On Saturday, with the administration facing rising economic and political pressure from the war, President Trump issued a 48-hour ultimatum demanding Iran reopen the Strait of Hormuz or face strikes on its power plants and energy infrastructure. On Monday morning, as the deadline neared expiration, President Trump posted to Truth Social announcing a 5-day postponement of military strikes on Iran’s power plants and energy infrastructure, citing "very good and productive conversations" with Tehran.
Markets reacted immediately. Brent Crude dropped sharply from $113 to around $97 a barrel before reversing losses and settling near $103. The US2Y fell roughly 10 basis points after briefly touching 4%, the US10Y dropped around 5 basis points, and the Dow, S&P 500, and Nasdaq all moved approximately 1.5% higher on the news.
However, Mizan, Tasnim, and Fars, three of Iran's primary news agencies, all reported there have been no communications between Tehran and Washington, citing a formal Foreign Ministry statement and Iranian officials. They claim Trump is attempting to reduce energy prices and buy time.
Whether talks have occurred, and whether any progress toward ending the conflict follows, remains to be seen. Regardless, it seems likely markets will continue to experience volatility until the conflict is resolved.
Sources: CNBC, Bloomberg, WSJ
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