Markets Reprice Risk as US-Iran Hostilities Resume

Hostilities between the US and Iran have resumed, including renewed attacks on shipping in the Strait of Hormuz, while President Trump has announced an end to the ceasefire during the NATO summit. The shift has weighed heavily on market sentiment, with energy prices rallying, treasury yields moving higher, and equities retreating as investors reassess political, business, and inflation risks.

As widely expected, the Reserve Bank of New Zealand raised its benchmark interest rate by 0.25% to 2.25%.

NASDAQ futures are down 1.0%, while Dow Futures are flat.

Overseas, Asia was mixed but broadly under pressure, with the Nikkei down 2.1%, India’s Nifty Fifty down 2.1%, and South Korea’s KOSPI down 5.3%, while the Hang Seng rose 3.0%. In Europe, the DAX is down 1.8%, while the FTSE is up 1.2%.

Commodities are seeing sharp moves. Crude Oil is up 5.1%, approaching $75.00/bbl, while Gasoline is up 1.8%, trading near $3.00/gallon. Gold is down 2.0%, Copper is down 2.3%, and Silver is down 3.5%.

In currencies and rates, the US 10-year treasury note yield has climbed above 4.55%, while the US 30-year treasury note yield is climbing toward 5.05%. The USD is up slightly today, the Euro is steady, the Loonie is down 0.1%, and Bitcoin is down 2.2%.

Looking ahead, earnings season kicks off with results from Levi Strauss this afternoon and Pepsico Thursday morning. China reports inflation numbers tomorrow morning.

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