Iran’s Stocks Remain Stable as Impasse Increases Yields & Oil – Europe Market Wrap
Stocks held up despite rising oil costs and increased bond yields after the US and Iran failed to reach an agreement to stop the Middle East war.
S&P 500 futures were barely below their all-time high. Brent rose more than 2% to over $103 per barrel as the Strait of Hormuz remained closed. Prices climbed as hopes that the US and Iran will reopen the waterway were crushed after Trump called Tehran’s latest proposals “totally unacceptable.”
Bond yields rose around the world as the standoff fuelled fears of an oil-driven inflation shock and anticipation that central banks will tighten monetary policy. The 10-year Treasury rate increased 3 bps to 4.39%. The Dollar moved up 0.1%, as gold fell below $4,700 per ounce.
In the UK, gilts underperformed as PM Starmer struggled to rescue his premiership following Labour’s landslide defeat in last week’s local elections. Punters on the Polymarket prediction platform increased their bets that Starmer will be forced to quit, with a 65% chance of the premier leaving by December 31st.
Since the Middle East crisis began in late February, traders have not only priced out Fed rate cuts, but they have also begun to speculate that Warsh, Trump’s choice to succeed Powell when his term ends this week, may need to boost borrowing costs next year.
