Markets:
- WTI crude oil down $7.95 to $86.85
- Gold up $60 to $5196
- US 10-year yields up 1.8 bps to 4.15%
- S&P 500 down 0.3%
- Bitcoin up $1013 to $70,015
- AUD leads, EUR lags
Oil is the tail that’s wagging the dog at the moment and what it mess it was today.
Crude was steadily falling and near $80, helping to sooth the nerves of markets. But then it all went sideways due to a mess of miscommunication, leaks and denials. We finished down significantly but $10 above the lows of the day.
First, US Energy Secretary Chris Wright wrote on his twitter that the US Navy had successfully escorted a tanker through the Strait of Hormuz. But about 25 minutes later — after it hit all the major wires — he deleted the post. That sent oil down to $77 then back up to $81. The White House and others confirmed that no ship had been escorted.
As that was unfolding, CBS began to report about naval mines being prepared and a short time later, CNN sources said “a few dozen” mines had been deployed. That sent oil to the US highs but a short time later, Trump said there was no intel that mines had been deployed but if they were, Iran should remove them in what would be “a giant step” towards peace.
Thankfully, the bond and FX markets are largely learning to tune out the noise and equity volatility has dampened as well. Increasingly, investors are leaning on the idea that the war will wrap up in 2-3 weeks (possibly less) and Trump will move on. Encouragingly, a message from the Iranian foreign secretary seemed to indicate they wouldn’t continue to fight in the strait once there was peace.
Outside of oil, the Australian dollar was the top performer in an encouraging sign for risk assets. It rose to the best levels since 2022, though did fade slightly late as oil rebounded.
