ZeroHedge News (RSS Feed)

Futures, Bonds Tumble, Oil Soars After Trump Dashes Hopes For Early End To Iran War
Futures, Bonds Tumble, Oil Soars After Trump Dashes Hopes For Early End To Iran War
Global risk assets, including US equity futures and global markets, as well as Treasuries and precious metals, tumbled as oil soared with Brent hitting $110 this morning after Trump's late Wednesday speech refused to pivot and dashed hopes that the Hormuz Strait would reopen soon and the war in the Middle East is nearing a swift resolution. As of 8:00am ET, S&P 500 futures dropped 1.7%, reversing yesterday's short squeeze as investors refuse to add to risk positions ahead of the long weekend when many speculate a ground invasion of Iran may begin. Nasdaq 100 contracts slumped 2% amid a premarket selloff in big tech stocks and chipmakers. Tech is getting hit hard with Mag7 and Semis lagging while Cyclicals ex-Energy are underperforming Defensives with both Staples and Healthcare down in absolute terms pointing to broad-based de-risking into the holiday weekend. Energy should have a good day as investors re-gross in the sector and Integrateds are trading up ~3% pre-mkt. Brent soared 8.2% to more than $109 a barrel after Trump pledged more aggressive action against Iran and offered no concrete plans to reopen the Strait of Hormuz. European diesel futures hit $200 a barrel. Bonds tumbled as expectations that oil prices will stay higher for longer prompted traders to initiate fresh bets on tighter monetary policy. The dollar advance the most in a week while gold snapped a four-day streak of gains. US economic data calendar includes March Challenger job cuts (7:30am New York time), February trade balance and weekly jobless claims (8:30am). Fed speaker slate includes Logan (10:15am) and Bowman (12:45pm)
https://cms.zerohedge.com/s3/files/inline-images/ES%202026-04-02_8-04-35.jpg?itok=FUkOpIzm
In premarket trading, Mag 7 stocks are all sharply lower (Nvidia -2.7%, Tesla -2.4%, Meta -2.4%, Alphabet -2.3%, Amazon -2.2%, Microsoft -1.3%, Apple -1%
- Oil and gas companies rebound after Trump’s prime-time address. Movers include Chevron (CVX) +2.9% and Exxon (XOM) +3.2%.
- Travel, mining and semiconductor stocks fall as the conflict and higher energy prices weigh on investor sentiment. Among movers: United Airlines (UAL) -4%, Newmont (NEM) -4.9%.
- Globalstar (GSAT) rises 15% after a Financial Times report that Amazon.com Inc. is in talks to acquire the satellite provider.
- Immunovant (IMVT) falls 7% after the drug developer said two late-stage studies of its experimental treatment for thyroid eye disease failed to meet their main goals.
- Penguin Solutions (PENG) rises 9% after the semiconductor device company raised its full-year forecast for adjusted earnings.
- Wingstop (WING) rises 1% as Piper Sandler and Raymond James upgrade the restaurant operator’s stock following a steep selloff.
In other corporate news, Amazon is said to be in talks to acquire satellite provider Globalstar, according to the FT, in a potential deal to bolster Amazon’s effort to build out its low-orbit satellite network to compete with SpaceX’s Starlink. In AI, Alibaba released its third proprietary AI model, Qwen3.6-Plus, in as many days to focus on profiting off its flagship AI services.
Global risk sentiment was crushed after Trump talked again about leaving Iran quickly, but warned of escalation as the US continues to amass military assets in the Middle East. Understandably, global headlines continue to be dominated by the Middle East conflict, geopolitics, oil and the Strait of Hormuz. Australia is weighing using powers amid a possible gas shortfall, oil inventory stockpiles are dropping and the UAE has called on the UN to approve measures, including force, to reopen the Strait of Hormuz.
“The speech didn’t bring forward an off-ramp, it pushed the timeline out and reintroduced escalation,” said Billy Leung, an investment strategist at Global X Management. While it is not a full big bear event, “the direction of travel has clearly worsened, and that’s what markets are reacting to."
The US stock market has settled into a predictable weekly pattern since the Middle East war began. It starts the week on a strong note, drifts sideways toward the middle of the week and then collapses every Thursday and Friday, reflecting likely de-risking into a “trading blackout with unknowable risks.”
“This market just isn’t manageable,” said Laurent Lamagnere, deputy chief executive officer at Alphavalue in Paris. “We’re really concerned about second-round effects, not only on oil prices but also on oil supply, for example, airlines trimming destinations with harsh consequences for tourism.”
While markets are shut Friday, key economic data is still scheduled to be released. Bloomberg Economics expect March nonfarm payrolls rose 80k, reflecting a rebound in strike-affected payrolls, sluggish private-sector hiring and a continued drag from federal payrolls. Recent changes to the BLS’ birth-death model of business formations may continue to inject volatility into the monthly figures. As a net exporter of light, sweet crude, geopolitical risk is less concerning to US-levered energy operators relative to international peers and WTI oil-price inflation will likely be transitory, according to Bloomberg economists.
Elsewhere, the Trump administration is said to be close to announcing tariffs on drugmakers that haven’t struck deals guaranteeing low prices in the US. The US is set to roll out tiered tariffs on steel and aluminum products to simplify a process that has dogged American companies for months.
A KKR private credit fund for retail investors curbed redemptions after receiving an increase in such requests, according to a shareholder letter. Private equity sales have fallen by more than a third this year, with buyout firms selling deals valued at about $103 billion in the first quarter, roughly 36% lower than the same period a year ago. The SEC and Elon Musk said they are heading toward a trial over the regulator’s allegations that the billionaire cheated Twitter investors before his 2022 buyout.
Europe's Stoxx 600 is down 1.2% with technology and mining stocks leading the decliners, while energy and food and beverage shares are the biggest outperformers. Here are the biggest movers Thursday:
- European oil stocks gain after President Donald Trump dented hopes of a swift end to the war in Iran, sending crude prices higher. BP and Galp also benefited from analyst upgrades. Mining shares underperformed as metals prices eased
- SSE shares gain as much as 0.7% after the utility firm upgraded the lower end of its guidance range for adjusted earnings per share this year
- Fortum gains as much as 4% after Citi upgrades the Finnish utility to neutral and says its 2026 earnings may positively surprise the market on the back of higher spot power prices
- Amplifon falls as much as 4% after the stock was downgraded to neutral from outperform at BNP Paribas, which called the Italian company’s plan to acquire GN Store Nord’s hearing-aid business a “discordant deal”
- Mutares shares fell as much as 13%, the most in four months, on Germany’s Xetra exchange after the private equity firm sold shares via a private placement
Asian stocks fell after President Donald Trump’s threat to launch fresh attacks on Iran disappointed investors who were hoping for clearer signs of an end to the war. The MSCI Asia Pacific Index dropped as much as 2.6%, reversing small gains prior to Trump’s comments. South Korea, Japan and Taiwan led losses in the region. The Philippines market was closed for a holiday.  The sudden downturn in sentiment came after Trump said that military operations could escalate over the next two to three weeks. Although he said the war in Iran was “very close” to completion, the US would hit electric plants in the country if no deal was reached, dampening hopes for a quick resolution to the conflict.
In FX, the Bloomberg Dollar Spot Index gains 0.5%. The Swedish krona is the weakest of the G-10 currencies, falling 1% against the greenback. The pound and Aussie dollar also underperform. Precious metals sink with spot silver down over 5%. Bitcoin falls 2.6%.
In rates, Treasury futures are off session lows with yields higher by 4bp to 6bp across the curve. Most losses occurred during Asia session following Trump’s prime-time address pledging more aggressive action against Iran and lacking a plan to reopen the Strait of Hormuz. 10-year Treasury yield near 4.36% is about 4bp cheaper on the day after peaking at 4.384%. Curve spreads remain within a basis point of Wednesday’s close. European government bonds fall as traders boost bets on rate hikes by the Bank of England and European Central Bank this year. UK and German 10-year yields rise 7 bps and 4 bps respectively. Gilts underperform, with 2-year yields are cheaper by around 10bp on the day. IG dollar issuance slate empty so far. Three offerings were priced Wednesday, with borrowers paying about 4bps in new issue concessions on deals that were 4.1 times oversubscribed. Dealers project about $115b of April supply vs about $105b a year earlier and about half of March’s $236.5b volume
In commodities, energy prices jump with Brent crude futures for June up around 7% and above $108 a barrel as investors weigh prolonged disruptions to energy flows through the vital Strait of Hormuz. European natural gas futures climb 4.5% while European diesel futures hit $200 a barrel.
US economic data calendar includes March Challenger job cuts (7:30am New York time), February trade balance and weekly jobless claims (8:30am). Fed speaker slate includes Logan (10:15am) and Bowman (12:45pm)
Market Snapshot
- S&P 500 mini -1.6%
- Nasdaq 100 mini -2.0%,
- Russell 2000 mini -2.0%
- Stoxx Europe 600 -1%,
- DAX -1.6%,
- CAC 40 -0.9%
- 10-year Treasury yield +5 basis points at 4.37%
- VIX +2 points at 26.51
- Bloomberg Dollar Index +0.4% at 1217.6,
- euro -0.6% at $1.1524
- WTI crude +7.2% at $107.31/barrel
Top Overnight News
- Oil rose after President Trump’s prime-time address disappointed investors hoping for a quick end to the Iran war. In an address late Wednesday, Trump said he was still seeking a diplomatic agreement to end the conflict and that U.S. military aims would be completed “very shortly.” But he also vowed to hit Iran “extremely hard” in the coming weeks and pummel the country “back to the Stone Ages.” WSJ
- Trump rattled markets and heightened political tensions with an address that offered no clear timeline for ending the Iran war, while pledging more aggressive action over the next two to three weeks. Iran and Israel continued to trade strikes and the US president renewed threats against Iranian electric plants. BBG
- The Trump administration is preparing to impose tariffs of 100% on certain medicines as it pushes drugmakers to manufacture more in the US. The levies – set to be announced as soon as Thursday – would be applied to companies that have not struck deals with the White House. FT
- Congressional Democrats sued to block Trump’s executive order that would prohibit mail-in voting for anyone not on a pre-approved list compiled by the DHS. BBG
- China’s central bank withdrew cash from its financial system in March for the first time in a year, amid signs of an economic rebound. BBG
- Former BOJ chief economist Toshitaka Sekine said the central bank may raise rates as soon as April, due to the risk of supply shocks. BBG
- Swiss inflation accelerated 0.3% in March, the quickest pace in a year, as the energy supply crunch stoked the cost of heating oil. BBG
- Global private equity sales have fallen by 36% this year, as developments in AI and the war in Iran heap pressure on a subdued exit market. FT
- The US is set to outline a tiered regime for steel and aluminum, maintaining 50% duties on many products but applying lower rates to others. BBG
- Oil’s near-term outlook turned more bullish after Trump’s speech, with June futures rising more than $8.5 a barrel above July as Hormuz disruptions cut about 11 million b/d. Traders expect continued supply strain and higher prices. BBG
- Canadian PM said he spoke with US President Trump this evening to discuss Artemis II and the Middle East conflict.
- US President Trump discussed firing Attorney General Pam Bondi and replacing Bondi with EPA Chief Zeldin, although he has not yet made a decision whether to fire Bondi, according to NYT.
- US Senate may vote on DHS funding bill on Thursday, while the bill would fund DHS without ICE and CBP, according to NBC.
A more detailed look at global markets courtesy of Newsquawk
APAC stocks failed to sustain initial gains after US President Trump's primetime address disappointed those hoping for an immediate de-escalation in the Iran conflict, in which he said they will hit Iran very hard over the next 2-3 weeks and will 'bring Iran back to the stone age, where they belong', while he also threatened to hit Iran's electric plants if there is no deal and could hit their oil. ASX 200 reversed early gains as Trump's remarks soured the broad risk sentiment, and with the declines led by weakness in the tech, mining, materials and resources industries, while the latest trade data from Australia had very little influence on price action. Nikkei 225 wiped out the initial spoils and slumped beneath the 53,000 level as US President Trump's remarks triggered a broad risk-off mood and lifted oil prices. Hang Seng and Shanghai Comp were subdued amid notable weakness in the Hong Kong-listed blue chip tech stocks, and with the mainland also dampened following another paltry liquidity operation by the PBoC.
Top Asian News
- South Korean Vice Finance Minister said they are closely monitoring FX market as speculative trading is being seen; to respond sternly to excessive herd-like behaviour FX markets.
- Magnitude 7.8 earthquake strikes 119km WNW of Ternate, Indonesia, according to the USGS.
- EMSC announces a tsunami alert after earthquake in Indonesia region.
European bourses (STOXX 600 -1.1%) began the session with decent losses after US President Trump's nationwide address reignited tensions. He said that the mission in Iran will be finished very fast and the US will hit Iran very hard over the next 2–3 weeks, while warning of strikes on electric plants if there is no deal and could also target its oil facilities. Since the start of cash trade, losses have pared back slightly but indices are holding around the -1% mark. European sectors are broadly in the red. Energy is the outperformer while Food, Beverage and Tobacco follow closely behind. Technology sits at the bottom of the pile, after performing well over the past 3 sessions, while Basic Resources also suffers as precious metals slip.
Top European News
- Swiss Inflation Rate YoY (Mar) Y/Y 0.3% vs. Exp. 0.6% (Prev. 0.1%, Low. 0.1%, High. 1.0%); Core 0.4% (prev. 0.4%).
- Swiss Inflation Rate MoM (Mar) M/M 0.2% vs. Exp. 0.5% (Prev. 0.6%, Low. 0.2%, High. 0.9%).
FX
- DXY is stronger this morning, with traders flocking back to the USD after US President Trump’s address dampened hopes of de-escalation with Iran. Overnight, he stated that he will hit Iran very hard over the next two to three weeks, adding that the US could also target Iran’s oil facilities. Trump's rhetoric has seemingly shifted from a focus on the timeline for wind-down to a more aggressive military escalation within that same window. DXY jumped back above the 100 mark, to currently trade at the upper end of a 99.44-100.17 range; recent levels above this include 100.64 (high from 31 Mar).
- Focus for today remains on any geopolitical updates, but that aside, there are a few important domestic data points to keep an eye on. Weekly initial jobless claims (212k expected from 210k) and continuing claims (1.84mln expected from 1.819mln), Revelio’s public labour statistics report, Challenger job cuts (90k expected in March from 48.3k) and international trade data are due. This all precedes the March NFP report on Good Friday, which is expected at 65k.
- G10s are all losing against the stronger USD; Antipodeans underperform, given the risk tone, whilst the Loonie fares a little better than peers, given it does not rely on external energy. GBP also sits right towards the foot of the G10 pile and is underperforming vs the EUR. A Wednesday rally in Gilts and traders believing the BoE may be slower vs the ECB in containing the energy shock may explain the slight underperformance between the two. This also comes after BoE Governor Bailey suggested earlier in the week that markets were getting ahead of themselves by pricing in rate hikes. Cable currently sits at the bottom end of a 1.3195-1.3320 range.
- CHF is also amongst the worst performers against the USD, but is incrementally losing against the EUR. Earlier, a cooler-than-expected (but stronger-than-prior) Swiss inflation report spurred some modest pressure in the Franc, before then reversing soon after. In a bit more detail, headline Y/Y printed at 0.3% (exp. 0.6%, prev. 0.1%); M/M 0.2% (exp. 0.5%). Much of the upside was facilitated by stronger energy prices, leading inflation to the strongest in over a year, and back away from the lower end of the SNB’s 0-2% target. For the time being, this will help alleviate fears at the Bank of bringing back negative interest rates, though policymakers have long reiterated that there is a high bar for such a move.
Central Banks
- ECB's Panetta said leading indicators are pointing towards a slowdown in the economy; tensions in energy markets are a cause for concern not only for the immediate impact, but also on growth. Non-bank financial intermediaries in some sectors show levels of leverage and liquidity which could prove inadequate during periods of acute stress.
- ECB Economic Bulletin Issue 2, 2026: The risks to the growth outlook are tilted to the downside, especially in the near term.
- ECB's Simkus said caution is needed on rates and it is too early to say what is needed at the April meeting.
- BoE DMP (Mar): 1yr ahead CPI expectation 3.5% (prev. 3.00%), 3yr ahead CPI expectation 2.7% (prev. 2.8%).
Fixed Income
- A bearish start to the day as US President Trump's primetime address reignited geopolitical tensions (recap on the feed, 07:35BST), lifting energy and in turn fanning the inflationary flame.
- Specifically, USTs dropped from 111-02 pre-Trump to a 110-24 knee-jerk low and have since hit a 110-16 trough. Lifting yields across the curve, 10yr to a 4.38% peak, though shy of Monday's 4.42% WTD peak. Similarly, the 2yr to a 3.86% peak, but shy of Monday's 3.89% WTD best. Action that has seen the implied magnitude of near-term tightening tick up by just under a bp worth. Geopols aside, Challenge Jobs, claims and import/export data; Fed speak is also due.
- EGBs and Gilts, in line with the above bearishness, Bunds hit a 125.19 trough with losses of 51 ticks at most, while Gilts got to a 87.85 low, with downside of 75 ticks. Since, they have bounced by around 20 ticks from extremes, but remain firmly in the red.
- The European docket is a light one; action will continue to be dictated by energy movements and associated inflation/central bank expectations from it. For the ECB and BoE, markets continue to price in 60bps and 41bps of 2026 tightening, respectively. Despite the recent inflation print from the EZ not yet showing second round effects, and despite Bailey pushing back on market pricing this week.
- France sold EUR 12.5bln vs exp. EUR 10.5-12.5bln 3.00% 2034, 3.50% 2035, 0.50% 2044 and 2.00% 2048 OAT.
- Japan sold JPY 1.97tln 10yr JGBs, b/c 2.57x (prev. 3.30x), average yield 2.350% (prev. 2.122%).
Commodities
- In geopolitics, President Trump’s address largely repeated recent messaging on the Middle East, offering little fresh clarity on a path to de-escalation. That being said, Trump's rhetoric has seemingly shifted from a focus on the timeline for wind-down to a more aggressive military escalation within that same window. On March 31st, Trump claimed the US could "leave" Iran within "two or three weeks" because the mission to prevent a nuclear weapon had been "attained." He framed the upcoming period as "finishing the job," asserting that the US would exit regardless of whether a formal deal was reached. On April 1st, in his televised address, he paired the same timeframe with a promise of violence, stating the US would hit Iran "extremely hard" over the next two to three weeks and bring them back to the "Stone Ages".
- WTI and Brent futures have surged after US President Trump’s televised address, which dampened hopes of a near-term end to the conflict. Brent Jun’26 currently eyes USD 109/bbl to the upside (USD 99.08-108.97/bbl range) while WTI May’26 sits around USD 107/bbl (USD 97.50-107.38/bbl range). Meanwhile, European diesel futures hit USD 200/bbl as the Iranian war curbs supply. Dutch TTF is +3.5% at the time of writing, but off its best levels, with some citing forecasts of milder weather as a drag on prices despite the ongoing geopolitics. Analysts at ING suggest that “even if shipping through the Strait of Hormuz resumes, a return to pre‑war market conditions is likely to be slow, as upstream production restarts, logistics normalisation and inventory rebuilding will take time.”
- Spot gold reversed an earlier gain after Trump’s speech offered little clarity on how the war might end. The bullion entered the European day around USD 4,600/oz after trading above USD 4,800/oz earlier in the APAC session. Spot silver briefly dipped under USD 70/oz before recovering to around USD 71.50/oz, but well off its earlier high of USD 76.42/oz.
- Industrial metals also fell after Trump repeated that the US could strike Iran “extremely hard” and target its power plants if talks fail. 3M LME copper fell under USD 12,500/t but found support at USD 12,250/t. Elsewhere, the WSJ reported Trump is expected to overhaul US steel and aluminium tariffs, with finished goods made from imported metals potentially facing a 25% duty, while the administration is also preparing tariffs on drugmakers, possibly from Thursday, that have not agreed to guarantee low US prices.
- South Korea's Blue House denies the report regarding considering fees on passing through Hormuz. This comes following earlier reports that South Korea is reportedly considering whether to pay Iran to bring in Middle Eastern oil and gas.
- The 8 members of the OPEC+ group still plan to hold their virtual meeting on the 5th of April, according to Kpler's Bakr.
- China has reportedly asked private refiners to maintain fuel output at all costs.
- Russia imposes ban on gasoline exports for producers until the end of July, IFX reported.
- Kpler's Bakr posted "At this point and under the most optimistic scenario Hormuz will remain shut till May. Now brace for impact."
- Iraq's oil ministry said it has began exporting oil through Syria.
- Reconstructing Iran's Khuzestan steel factory will take between 6-12 months, Mizan news reported.
- New Zealand associate energy minister said will enter into an agreement to support an additional 90mln litres of storage for diesel at Marsden Point in Northland.
- Colonial pipeline is reportedly down due to damage in Georgia.
- Venezuela's oil exports in March surpassed 1mln bpd for the first time n six months, according to shipping data.
Trade/tariffs
- US President Trump's administration is readying to impose tariffs of 100% on certain medicines as it pushes pharmaceutical companies to manufacture more in the US, according to FT.
- US President Trump is expected to overhaul steel and aluminium tariffs, while altered rates on finished products would simplify compliance, but could increase costs for many imports, according to WSJ. Plans to alter tariff duties to 25% on the entire value of finished products. 50% tariff will remain for commodity-grade steel and aluminium products. Executive order could come as early as this week.
- China's MOFCOM said they are to enhance communications with the US on trade.
- The EU is discussing setting up digital tech dialogue with the US and reiterates that digital legislation is not up for negotiation.
Geopolitics
- US President Trump said in his primetime address that Iran's navy is gone and its air force is in ruins, while he noted most of Iran’s leaders are dead, and its ability to launch missiles and drones has been curtailed. Trump stated they will never allow Iran to have a nuclear weapon and that US strategic objectives are nearing completion, as well as stated that the mission in Iran will be finished very fast and the US will hit Iran very hard over the next 2–3 weeks, and will bring Iran back to the stone ages, where they belong. Furthermore, he said countries reliant on Hormuz oil should take the lead and that Hormuz will reopen once the conflict ends, while he warned the US will strike Iran’s electric plants if there is no deal and could also target its oil facilities.
- US President Trump said strategic objectives are nearing completion, must complete mission in Iran and will finish the job very fast, adds Iran can never be trusted with nuclear weapons. US has plenty of gas. Countries that get oil via Hormuz must cherish it and must take the lead and suggests countries buy oil from the US. Hormuz will naturally open when conflict is over.
- US intelligence agencies assessed that Tehran is not currently willing to engage in substantial negotiations to end the conflict, while US intelligence agencies believe Iran's government thinks Trump is not serious about negotiations, according to NYT.
- US VP Vance is engaging with Pakistan mediators over Iran deal and passed a message to Iran via Pakistan on Tuesday, while US and Iran are discussing ceasefire for Hormuz reopening and Vance warned of increasing pressure without a deal, according to ABC.
- UAE reportedly preparing to help the US fight Iran and open the Strait of Hormuz by force after being repeatedly struck by Iranian drones and missiles since the war began, NY Post reported citing Arab officials.
- Senior Iran source said Tehran demands a guaranteed ceasefire to end war permanently and no talks have taken place via mediators for a temporary ceasefire, while intermediaries contacted Iran on Tuesday and discussions were about continuing diplomacy.
- Iran's military spokesperson said bigger, wider and more damaging attacks are coming soon, Tasnim reported.
- Iranian President Pezeshkian said attacking Iran’s vital infrastructure shows an inability to achieve a sustainable solution, IRNA reported.
- Faytuks Network posted on X citing Fox News that "Trump’s speech tonight will inform the public that we may require the use of ground troops to round up uranium in Iran" - UNCONFIRMED. This was later deleted.
- Israeli sources say they have not been given the green light from the US yet for Israel to target infrastructure in Lebanon, Al Hadath reported.
- US Embassy in Baghdad has told US citizens to leave Iraq with expectations of Iran-aligned militia to carry out attacks in central Baghdad within 24-48 hours.
- Iran Supreme Leader's advisor, Kamal Kharazi, was reportedly injured in US-Israeli attack on Tehran.
- Iran's atomic energy agency said US-Israeli attacks against facilities under IAEA supervision are a 'war crime'.
- Reports of strong explosions in proximity to US bases in Kuwait, N12 reported.
- Pakistan foreign ministry spokesperson said there is no confirmation so far of any US delegation arriving for talks.
- Explosion reported in Kuwait; explosions are caused by an attack on American positions, Mehr and Fars News report.
US Event Calendar
- 8:30 am: United States Feb Trade Balance, est. -60.55b, prior -54.5b
- 8:30 am: United States Mar 28 Initial Jobless Claims, est. 212k, prior 210k
- 8:30 am: United States Mar 21 Continuing Claims, est. 1836.5k, prior 1819k
- 10:15 am: United States Fed’s Logan Speaks at Dallas Fed Banking Conference
- 12:45 pm: United States Fed’s Bowman Speaks at Banking Conference (Closed event)
DB's Jim Reid concludes the overnight wrap
After rallying sharply over the previous two sessions, market sentiment has deteriorated overnight after Trump’s much anticipated address last night delivered little to nothing new on potential timelines or conditions for ending hostilities against Iran. The US President claimed that the operation against Iran was “very close” to completion but also said the US “will hit Iran extremely hard over the next 2-3 weeks”. Trump again raised the threat to hit Iran’s power plants if there is no negotiated deal and reiterated the view that shipping via the Strait of Hormuz was other countries’ problem. So while Trump sounded flexible on remaining war aims, for instance claiming that Iran is “no longer a threat”, there was no signal of the US seeking an imminent offramp out of the war.
In response, markets have reversed the continued positive momentum they’d seen yesterday amid rising hopes that an end to the conflict might be coming into view. In oil markets, Brent crude is +6.24% higher at $107.47 this morning, a level last seen on Tuesday, even as it had briefly fallen below $100/bbl yesterday evening just before Trump’s address. Equity futures are losing ground overnight, with S&P 500 futures (-1.25%) more than erasing yesterday’s +0.72% regular session gain, while STOXX 50 futures are down -1.75% after posting their best session in almost a year yesterday. In Asia, equity markets have lost ground, with the KOSPI (-4.23%) standing out as the largest underperformer this morning. The Nikkei (-2.42%), Hang Seng (-1.09%), and S&P/ASX 200 (-1.14%) are also seeing significant declines, though in mainland China the CSI (-0.75%) and the Shanghai Composite (-0.50%) are more stable.
In the rates space, 10yr Treasury yields are +5.5bps higher at 4.37% this morning after Wednesday’s stable session, while in FX, the dollar index (+0.39%) has more than reversed yesterday’s -0.31% decline. Gold (-1.89%) is similarly reversing yesterday’s +1.94% gain.
Prior to the overnight news, the continued rally yesterday appeared to be one of hope more than conviction as investors navigated a dizzying influx of competing headlines. Among those was Trump’s post early yesterday that Iran’s “New Regime President” had asked the US for a ceasefire, which Trump said he would only consider when the Strait of Hormuz is “open, free and clear”. Iran’s foreign ministry later responded, calling the ceasefire claim “false and baseless“. That response arrived amidst an Axios report that the US and Iran were negotiating a ceasefire. Meanwhile, Iran’s President Pezeshkian released an open letter, claiming that Iran harboured no enmity towards the people of America.
Another headline-drawing Trump comment yesterday was that he was strongly considering pulling out of NATO, though he then did not directly raise this topic in his overnight address. We also heard that NATO Secretary General Rutte is due to visit Washington next week. Note that the political bar for formal US withdrawal from NATO is high, as this would require a two thirds majority in the Senate or passing an act of Congress. The role of US allies has been a rising topic in its own right, with news that the UK will today convene virtual talks with some 35 countries not including the US to discuss a plan to restore shipping via the Strait of Hormuz.
In terms of yesterday’s other news, 2yr US Treasury yields (+0.9bps) inched higher as the decline in oil prices was outweighed by solid US data. The March ISM manufacturing came in at 52.7 vs 52.3 expected, with the prices paid component rising to 78.3 (vs 74.0 expected), its highest reading since mid-2022. The US ADP private employment figures for March (+62K vs +40K) were also on the stronger side.
US labour market data will remain in focus with the latest weekly claims today and then the March jobs report on Friday, even as most markets are closed for Good Friday. For Friday’s non-farm payrolls our US economists see headline gains of +50k (vs -92k previous) and private payrolls at +60k (vs -86k), reflecting a return closer to the average pace of job gains over the latter half of 2025. 01
In terms of the details of yesterday’s upbeat market moves, the +0.72% gain for the S&P 500 was again led by tech stocks, as the NASDAQ (+1.16%) and the Mag-7 (+1.37%) powered ahead for a second day. Credit also saw a strong rally, with US HY credit spreads (-16bps after -18bps Tuesday) registering their best two-day run since last May. And European equities saw a sharp surge as investors caught up to the US rally that started on Tuesday, with the STOXX 600 (+2.50%), DAX (+2.73%) and the FTSE 100 (+1.85%) all posting their largest jumps since last April.
European bonds also rallied on the prospect of lower oil prices as well as declining natural gas prices, as front month TTF futures fell by -5.49% to €47.51/MWh, their lowest level since March 10. Yields on 10yr bunds fell -1.8bps to 2.98%, while BTPs (-7.8bps) and OATs (-5.2bps) outperformed amid the risk-on mood. Gilt yields saw an even larger pullback, with the 10yr down -8.6bps as the UK manufacturing PMI for March was revised down from 51.4 to 51.0. That was in contrast to a moderate upward revision to the Euro Area manufacturing PMI (51.6 from 51.4), which showed more resilience to the energy shock.
Yesterday, I published a note looking at what the March PMIs tell us about the impact of the Iran war on the global economy. While we’ve seen a major inflation and supply shock, this has varied across countries and there are some silver linings. For instance, the behaviour of output prices across the G10 has been more akin to the pre-Covid era than the 2021-22 inflationary period, which may offer some breathing room for central banks concerned about inflationary risks. See the note here.
In data out of Asia this morning, South Korea’s consumer inflation picked up from +2.0% to +2.2% in March, though this is below consensus expectations of +2.3%. So providing some tentative relief to policymakers dealing with the spillover effects of curtailed energy supplies out of the Middle East.
To the day ahead now, we will get further US data, with the February trade balance and latest weekly jobless claims. And while we take a break on Good Friday, the US will release the March jobs report.
https://cms.zerohedge.com/users/tyler-durden
Thu, 04/02/2026 - 08:33
https://www.zerohedge.com/markets/futures-bonds-tumble-oil-soars-after-trump-dashes-hopes-early-end-iran-war

Futures, Bonds Surge On Optimism War May End, Oil Tumbles Below $100
Futures, Bonds Surge On Optimism War May End, Oil Tumbles Below $100
Futures and bonds jump and oil fell, sending Brent briefly below $100 a barrel, as the de-escalation/technical/macro led relief rally continues on hopes of the Middle East conflict reaching an end soon after Donald Trump said he expects the war in Iran to end in two to three weeks, and indicated that it was possible that Iran could still reach a deal with the US during that timeframe. Trump has a national address tonight at 9pm ET to discuss Iran, but the content is unclear, with the market is expressing the view that this will be details on a wind-down rather than an escalation. As of 8:15am ET, S&P Futures were 0.7% higher, after the cash index posted a near 3% advance on Tuesday, the best end to a quarter since September 2008. Nasdaq futures jumped 1.1% with all Mag 7 names higher premarket. European stocks jumped 2.6%, alongside a 4.9% surge in Asian shares. Final Mfg PMIs from the Europe were mixed (EU, Germany, Italy small beats/UK, France small missed) while Japan/Korea Manf PMIs were slightly better. Trump is set to address the nation tonight at 9pm EST and said he expects the war to end in two to three weeks/US would withdraw once Tehran can no longer obtain nuclear weapons. Otherwise, the US is sending a third aircraft carrier to the region, Iran said the US “isn’t serious about diplomacy”, the WSJ reported that the UAE wants to force the Strait of Hormuz open and is willing to join the fight, and attacks continued on both sides with Qatar saying Iran struck an oil tanker.  Brent fell 5.4% before paring the move as the Strait of Hormuz remained largely closed and attacks continued across the Gulf. Traders trimmed bets on tighter monetary policy, sending two-year Treasury yields three basis points lower to 3.76%. Comparable UK gilt yields dropped 10 basis points to 4.30%. Looking at today's US economic calendar, we get March ADP employment change (8:15am), February retail sales (8:30am), March final S&P Global US manufacturing PMI (9:45am), March ISM manufacturing and January business inventories (10am). Fed speaker slate includes Musalem (9:05am) and Barr (9:10am)
https://cms.zerohedge.com/s3/files/inline-images/ES%202026-04-01_8-22-02.jpg?itok=xLuqG3I6
In premarket trading, Mag 7 stocks are all higher (Tesla +2.1%, Microsoft +1.5%, Amazon +0.9%, Nvidia +1.4%, Meta +0.6%, Alphabet +0.9%, Apple +0.5%)
- Li Auto ADRs (LI) rise 4% after the Chinese EV firm reported March vehicle deliveries that surpassed its own guidance and analyst estimates.
- MSC Industrial (MSM) falls 6% after the distributor of metalworking products reported adjusted earnings per share for the second quarter that missed the average analyst estimate.
- NCino (NCNO) jumps 24% after the cloud-banking software company’s subscription revenue forecast for 2027 beat the average analyst estimate.
- Nike (NKE) falls 10% after the retailer gave a surprisingly gloomy outlook for the year ahead, complicating Chief Executive Officer Elliott Hill’s efforts to turn around the business.
- RH (RH) plunges 17% after the home furnishing company forecast revenue for the first quarter that missed the average analyst estimate.
- Oric Pharmaceuticals (ORIC) slides 21% after the clinical-stage oncology company gave safety and efficacy data from an early-stage trial of its drug-candidate for prostate cancer that underwhelmed Wall Street.
- Target Hospitality (TH) rises 24% after the provider of modular housing announced secured a multi-year contract worth more than $550 million. The company will construct and provide hospitality services for a hyperscaler’s data center development in North Texas.
In other corporate news, Unilever said talks to sell most of its food business to McCormick are advanced and a final deal could be announced later on Tuesday. Boeing will team up with Rheinmetall to offer drones known as the Ghost Bat to Germany’s military.
Signs of an increased desire for de-escalation from Trump may reduce anxiety over his threats to attack Iranian energy infrastructure. On the other hand, Tehran would be left in control of the key oil shipment chokepoint. Meanwhile, Iran hit a fully laden Kuwaiti oil tanker off Dubai in a drone attack.  Without a ceasefire or tangible progress in negotiations, the market will keep “fading the administration’s ‘everything is going well’ happy talk,” Vital Knowledge’s Adam Crisafulli wrote in a note. Carmignac Gestion’s Kevin Thozet observed that “Trump can’t simply turn an on/off switch on the crisis.” Other observers argue that rhetoric alone about a potential end to the conflict cannot create certainty for the market.
Equities are, nonetheless, primed to rip higher on positive news about the war following large-scale unwinding of risk by hedge funds and CTAs. The concern is that, post an initial bounce, worries about the economy and the path for interest rates will trigger further volatility episodes, setting up stocks for months of roller-coaster conditions.
In any case, traders said it would take time for oil flows to return to normal even if the war ends within Trump’s timeframe, especially given the damage to some energy facilities. Trump’s team has also suggested that reopening the Hormuz strait, which carries 20% of global crude, may not be necessary to end the hostilities.
“The correlation between Brent oil prices and global equity markets has been exceptionally strong since the conflict started,” said Wolf von Rotberg, equity strategist at Bank J Safra Sarasin. “This goes to show that a return to previous equity market highs would need the Strait of Hormuz to reopen and oil prices to drop significantly. It is probably too early for an all-clear yet.”
Trump, who will give an address at 9 p.m. Eastern Time to provide an “important update” on Iran, said the Islamic Republic could still reach a deal with the US. He added, however, that an agreement with Tehran isn’t a prerequisite to conclude the war. “We are seeing a relief rally, and with more information we may see a reversal, so we just need to be careful here,” Remi Olu-Pitan, multi-asset growth and income head at Schroders, told Bloomberg TV. “There’s still a lot of volatility, the market is still fragile.”
Oil remains in focus for traders, policy makers and consumers. WTI futures are trading above $100 a barrel, while there’s been more commentary around the risks of spikes to $200. Crucially, retail unleaded pump prices climbed above $4 a gallon, the highest since August 2022. With higher gas prices adding near-term pressure on household budgets, Tuesday’s consumer confidence print will be closely watched. Oil, and the uncertainty around the magnitude and duration of supply disruption, was cited by strategists at Morgan Stanley as they downgraded global equities to equal-weight.
The Middle East conflict has caught high-flying chip stocks in its tentacles. Citigroup’s Jim McCormick describes a market wake-up call, noting “we’re looking at a world of sustained higher yields and sustained higher energy costs and that doesn’t help the AI sector.”
Traders at Goldman Sachs Group Inc. and JPMorgan Chase & Co. suggested Tuesday’s sharp rebound in US stocks was more about the unwinding of negative positioning by market participants than a shift in sentiment over the war. “Investors have been counting on a swift off-ramp to war essentially since it began, but I think from a market or global economy perspective it’s important to define what the true clearing event to revisit risk and take down recession odds really is,” wrote JPMorgan industrials sector specialist sales Paige Hanson.
Space is also making the headlines this week, with Virgin Galactic soaring in late trading after it resumed some sales of commercial space flights. NASA is making final preparations for the Artemis II missions, while what a history-making SpaceX IPO could mean for the space economy is discussed in the Big Take podcast.
European stocks are rallying, with the Stoxx 600 up 2% as markets look toward a potential resolution to the Iran conflict. Banks as well as travel and leisure shares are leading gains, while the energy sector is the biggest laggard. Stoxx 600 rises 2.2% to 595.73 with 65 members down, 532 up, and 3 little changed. Here are the biggest movers Wednesday:
- Athens Stock Exchange Index rises as much as 4.3% at Wednesday open, following index provider MSCI’s decision to upgrade the Greek market to developed status
- Thule rises as much as 5.7% after SEB Equities upgrades to hold, removing the only sell rating on the maker of roof and bike racks, to reflect “more reasonable expectations” now baked into the stock
- Sandoz shares rise as much as 5.1%, the most in five weeks, after Goldman Sachs initiated coverage on the stock with a buy recommendation
- Inficon gains as much as 8.1%, the most since Jan. 15, as JPMorgan starts coverage at overweight, saying the vacuum instrument maker should be a beneficiary of the multiyear upcycle in wafer fabrication equipment
- Arcadis shares rise as much as 6.6%, the most in six months, after Bank Degroof Petercam upgraded the engineering services firm on expectation that the new management team will be able to drive a recovery
- Jungheinrich shares rise as much as 9.8%, their steepest ascent in around a year, as Bernstein boosts its price target on the German machinery company, citing enticing long-term prospects
- Nordex falls as much as 3.8% after Bank of America downgraded the German wind turbine manufacturer to neutral from buy following a 56% year-to-date rally that the bank says has priced in most of the bull case
- Berkeley Group shares plunge as much as 19% to hit a nine-year low, after the housebuilder’s profit goal for the FY27 to FY30 period significantly undershot expectations
- SoftwareONE shares drop as much as 8.9%, hitting a seven-month low, after an investor offloaded shares at a discount to yesterday’s closing price. Shares have fallen below the offer price this morning
- Cirsa Enterprises drops as much as 5% after one of its investors offloaded shares at a discount to Tuesday’s closing price. The stock is holding above the offer price on Wednesday
UK Prime Minister Keir Starmer said his government will coordinate a diplomatic push for the strait’s reopening, affirming Britain’s desire not to be dragged into the military conflict. “I would expect further volatility in the days to come and the market to oscillate between losses and gains for a few more sessions until we get clarity on how the crisis unfolds,” said Alexandre Baradez, chief market analyst at IG Markets. “This is likely more a temporary respite than a final game changer.”
Earlier in the session, Asian stocks jumped the most in nearly a year, tracking Wall Street’s rally on optimism that the war in Iran may end in the near future.  The MSCI Asia Pacific Index gained as much as 5.2%, the most since April 10, with shares in South Korea, Taiwan and Japan leading the gains. Technology giants Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co. and SK Hynix Inc. provided the biggest boost to the gauge’s advance. Asian markets would stand to gain more than others if the US manages to defuse the war with Iran, as investors unwind an energy‑driven risk premium that has hit the region harder than most. The conflict has pushed oil prices sharply higher, driving equity sell‑offs and currency volatility across Asia’s oil‑importing economies. Still, the regional gauge remains down about 9% from a peak in February, with investors questioning how quickly oil can fall and how credible Trump’s assurances are. Market focus will now shift to an “important update” on Iran that Trump is scheduled to deliver at 9 p.m. Washington time.
In FX, the Bloomberg Dollar Spot Index fell as much as 0.4%, while Treasury yields dropped four basis across the curve. Swaps imply 11 basis points of Federal Reserve rate reductions by year-end, compared to 5bps on Tuesday. EUR/USD up as much as 0.5% to 1.1611, while GBP/USD up as much as 0.6% to 1.3301. USD/CHF drops 0.8% to 0.7928, EUR/CHF down 0.5% to 0.9190; leveraged desks seen unwinding franc shorts, a Europe-based trader says
In rates, fixed income markets have rallied but lost a bit of steam in recent trade. US yields are around 3bps lower across the curve as markets assign a 40% chance of a Fed rate cut by year-end versus a 64% chance of a hike last week. Treasury futures are off session highs in early US session, although yields remain 2bp-4bp lower across a steeper curve. US 10-year is about 3bp richer on the day near 4.29%, while 5s30s spread is steeper by ~1bp. Gilts outperform, with UK front-end yields richer by 8bp as oil broadly holds losses. Investors face the prospect that US President Trump, slated to speak at 9 p.m. in Washington, will soon declare an end to the war in Iran.
In commodities, despite the optimism in stocks, crude prices have faded declines in the European session. Brent is now back above $100 per barrel having earlier dropped below the key level. WTI crude oil contract has pared a 4.8% slump to about 2.5%, and was last trading just around $99. Precious metals are diverging, with spot gold up 1.4% and silver down 0.5%. Bitcoin has added 0.5%.
Looking at today's US economic calendar, we get March ADP employment change (8:15am), February retail sales (8:30am), March final S&P Global US manufacturing PMI (9:45am), March ISM manufacturing and January business inventories (10am). Fed speaker slate includes Musalem (9:05am) and Barr (9:10am)
Market Snapshot
- S&P 500 mini +0.9%
- Nasdaq 100 mini +0.8%
- Russell 2000 mini +1.4%
- Stoxx Europe 600 +0.7%
- DAX +0.7%
- CAC 40 +0.5%
- 10-year Treasury yield -3 basis points at 4.32%
- VIX -1.7 points at 28.87
- Bloomberg Dollar Index little changed at 1221.56
- euro little changed at $1.147
- WTI crude -0.9% at $101.92/barrel
Top Overnight News
- Trump will deliver a speech on Wednesday at 9 p.m. Washington time to give an update about the war in Iran: BBG
- Oil fell, sending Brent briefly below $100 a barrel, after Donald Trump said he expects the war in Iran to end in two to three weeks. The US would withdraw once Tehran can no longer obtain nuclear weapons, he said. Attacks continued across the Middle East. Qatar said a cruise missile from Iran struck an oil tanker. BBG
- The United Arab Emirates is preparing to help the U.S. and other allies open the Strait of Hormuz by force, Arab officials said, a move that would make it the first Persian Gulf country to become a combatant, after being hit by Iranian attacks. WSJ
- Trump said he’s strongly considering pulling the US out of NATO after it didn’t join the war on Iran. He told the Telegraph that leaving the block was now “beyond reconsideration.” BBG
- California is confronting sky-high petrol prices and the threat of jet fuel shortages because of disruption caused by the Iran war, exposing US energy insecurity as the Strait of Hormuz remains closed. The most populous US state is vulnerable to the turmoil in world energy markets because it relies on imports of refined products such as petrol and jet fuel from Asia after introducing ambitious plans to phase out fossil fuels and significantly reduce refining capacity in favor of renewables. Californians pay the most for petrol in the country, with a gallon averaging $5.88 — the highest level since the pandemic — compared to $4.01 in the rest of the US, according to the American Automobile Association. FT
- Russia exported more liquefied natural gas in the first quarter of 2026 than it did a year earlier, with shipments to Europe increasing despite Moscow's push to redirect supply away from the region. RTRS
- China’s factory activity slowed in March for export-oriented firms as their costs surged, according to RatingDog’s PMI. That contrasts with an official gauge that showed manufacturing improving despite the Iran war. BBG
- Chinese government bonds have sidestepped a global debt sell-off since the start of the Iran war, as the world’s second-biggest economy emerges as a haven from soaring energy prices and rising global inflation. Investors are betting that whereas major central banks in the US and Europe will be forced to keep interest rates at higher levels than previously expected to counter inflation triggered by rising oil and gas prices, China will be relatively insulated thanks to its energy mix and very low inflation before the conflict. FT
- Japan may face stagflation risks from the Iran war that would be challenging to deal with using monetary policy, new Bank of Japan board member Toichiro Asada said on Wednesday. RTRS
- Trump signs executive order related to mail-in voting, said working on proof of citizenship and that voter ID and citizenship proof are subjects for another time.
- OpenAI raised $122 billion at an $852 billion valuation in its largest funding round yet. BBG
- Since the start of the Iran war, market pricing for the fed funds rate has swung sharply, and it now implies a roughly 45% chance that the FOMC will hike in 2026. While some of this reflects changing demand for insurance against the tail risk of more hikes, the market-implied probability that the FOMC delivers 1-2 cuts—the modal case before the war—has declined from 35-40% to about 18%. Expectations for other central banks have moved even more, and market pricing now implies about 70bp of hikes from the ECB in 2026, compared to 8bp of cuts before the war
- Trump asks CPA for lists of insurers who were good to clients, and list who were bad in response to California fires.
A more detailed look at global markets courtesy of Newsquawk
APAC stocks mostly rallied with global risk sentiment buoyed by hopes for an end to the Iran conflict following encouraging comments from the US and Iran, while President Trump also suggested that the war could end in 2 or 3 weeks, and he will deliver a nationwide address on Wednesday evening to give an important update regarding Iran. ASX 200 gained at the open and was led by outperformance in mining, materials, resources and tech, with nearly all sectors in the green aside from some defensives, while the index also shrugged off weak PMIs. Nikkei 225 surged back above the 53,000 level amid hopes of a nearing end to the conflict and after the latest BoJ Tankan survey mostly topped forecasts, with the headline large manufacturing index at its highest in more than five years. Hang Seng and Shanghai Comp conformed to the broad upbeat mood across the region with notable strength seen in mining, tech and biopharmaceuticals, while a miss on Chinese RatingDog Manufacturing PMI and the smallest PBoC injection in more than a decade failed to derail the momentum.
Top Asian News
- Chinese RatingDog Manufacturing PMI (Mar) 50.8 vs. Exp. 51.6 (Prev. 52.1, Low. 50.5, High. 53).
- Japanese Tankan Large Manufacturers Index (Q1) 17 vs. Exp. 16 (Prev. 15, Low. 8, High. 18).
- Japanese Tankan Large Non-Manufacturing Index (Q1) 36 vs. Exp. 33 (Prev. 34, Low. 28, High. 36)
- Japanese Tankan Small Manufacturers Index (Q1) 7 vs. Exp. 7 (Prev. 6, Low. -1, High. 9)
- Japanese Tankan Large Manufacturing Outlook (Q1) 14 vs. Exp. 13 (Prev. 15, Low. 5, High. 15)
- Japanese Tankan Large Non-Manufacturing Outlook (Q1) 29 vs. Exp. 28 (Prev. 28, Low. 24, High. 34)
- Japanese Tankan Large All Industry Capex (Q1) 3.3% vs. Exp. 13% (Prev. 12.6%)
European bourses (STOXX 600 +2.1%) continue to rebound, printing a third straight day of gains thus far. The positive was helped following reports that Iranian officials are leaning towards dialogue, while President Trump said that the war is coming to an end. European sectors are entirely in the green, ex. Energy. Banks and Travel and Leisure top the sector pile. Oil prices have been the main driver for airlines, with the drop in energy prices making jet fuel cheaper. Banks have been hit throughout the Iran war, so the prospects of it coming to an end have boosted the sector. To add, HSBC was added to Goldman Sachs' European conviction list.
Top European News
- Germany's VDMA said German Engineering Orders -8% in Dec-Feb Y/Y (Domestic Orders -6%, Foreign Orders -8%).
- German Economic Institutes confirm cutting 2026 and 2027 GDP growth forecasts.
- UK government said new measures to ease cost of living pressure to come into force on April 1st. Increasing national living wage to £12.71. Energy bills are to be cut by average £117 a year for millions across the UK and locked in until end of June.
FX
- DXY is on the backfoot this morning with markets pricing in a “de-escalation” trade, after US President Trump said to NBC News regarding the Iran war that "it is coming to an end", with a White House official suggesting Trump is confident an agreement will be reached soon. Interestingly, from the Iranian side, President Pezeshkian noted that Iran seeks to end the war with guarantees against further attacks. DXY currently holds at the lower end of a 99.41-99.88 range. It is worth highlighting that the index saw some strength after the Iranian Deputy Speaker of Parliament said that the "Strait of Hormuz will never be opened, there has been no negotiation and there will be no negotiation”.
- G10s are entirely stronger against the USD, albeit to varying degrees. The CHF outperforms, benefiting from lower energy prices – the likes of GBP and EUR also benefit. For the GBP specifically, the UK government confirmed new measures to ease the cost of living pressure are to come into force today, including an increase in the national living wage to GBP 12.71 and with energy bills to be cut by an average GBP 117 a year for millions across the UK, which will be locked in until end of June.
- JPY also gains vs USD, albeit to a lesser degree vs peers. The seemingly easing Iran tensions has benefited the JPY, which builds on the strength seen in recent sessions, facilitated by jawboning and a hawkish-leaning BoJ SOO earlier this week. As for today, Japan’s Tankan survey was mostly stronger-than-expected, which supports the case for an April BoJ rate hike. USD/JPY currently trades within a narrow 158.27-159.01 range.
Central Banks
- BoJ new Board Member Asada does not comment on any specific stance. Rising oil prices put upward pressure on inflation while weighing on growth, creating a stagflationary trend.
- ECB's Stournaras said if oil prices rise over USD 150/bbl Europe could face a recession.
- ECB's Dolenc said ECB's adverse scenario is more likely to be the next baseline and current baseline is more like the best-case scenario.
Fixed Income
- An overall positive start in the fixed income benchmarks, with energy prices falling and higher hopes of a potential end to the Iran conflict. President Trump stated that the war is coming to an end, while a White House official said that the President is confident that an agreement will be reached soon.
- USTs are trading at the upper end of a 111-10 to 111-14+ range, albeit off best levels, as energy prices rebound slightly. Price action is set to remain rangebound ahead of a flurry of data and Fed speak, while Trump is set to speak at 21:00EDT/02:00BST.
- Bunds, in tandem with its peers, are gaining and currently holding above the 126 handle. The 10yr yield extends further below 3.0%, printing a trough at 2.933% before bouncing slightly. EZ final manufacturing PMI ticked slightly higher above the prelim. Figure but failed to drive any move in EGBs. In addition, ECB speakers reiterated the impact higher energy prices have on the European economy.
- Gilts outperform, continuing to be the beneficiary of lower energy prices, as BoE pricing remains sensitive to oil prices. Pricing for rate hikes have pulled back, now price in 44bps of hikes in 2026.
- Germany sells EUR 3.025bln vs exp. EUR 4.0bln 2.50% 2032 Bund: b/c 1.11x (prev. 1.51x), average yield 2.78% (prev. 2.60%), retention 24.3% (prev. 20.1%).
Commodities
- In geopolitics, optimism was seen on Tuesday over a potential end to the war, particularly following Trump’s overnight comments that the US could leave Iran in two to three weeks. This follows reports that the US could exit Iran without reopening the Strait of Hormuz, with Trump calling on users of the strait to secure it themselves. Trump is due to make an announcement tonight at 21:00 EDT/02:00 BST. Some of yesterday’s optimism waned after commentary from the Iranian Deputy Speaker of Parliament, who said: “Strait of Hormuz will never be opened, there has been no negotiation, and there will be no negotiation.”
- WTI and Brent initially dipped to lows of USD 96.50/bbl and USD 98.35/bbl respectively as markets initially continued the move from yesterday, although a floor was later found on the Iranian deputy speaker comments, with Brent back above USD 100/bbl and WTI near USD 99/bbl at the time of writing, both still lower intraday by over USD 2/bbl apiece. Dutch TTF prices are softer once again after slipping over 7% in the prior session, with desks citing favourable weather alongside hopes of an Iranian war de-escalation.
- Spot gold is slightly firmer amid the softer USD and lower oil prices, with the yellow metal back above its 100 DMA (4,642.48/oz) in a current USD 4,661.61-4,747.77/oz parameter. Conversely, spot silver is softer on the day following yesterday’s +7% gains, with the metal today finding resistance near its 100 DMA (USD 75.22/oz).
- Base metals mostly eke out mild gains in what is seemingly a function of the USD alongside recent positive sentiment amid hopes of a de-escalation of the Iranian situation. 3M LME copper resides in a current USD 12,380.00- 12,499.75/t range after finding resistance around USD 12,500/t.
- IEA Chief Birol says more than 12mln BPD of oil supply has been lost so far due to the Middle East crisis; the current crisis is worse than the 1970s oil shocks and the loss of Russian gas in 2022 combined. Oil supply losses in April are expected to be twice as high as in March. Biggest problem is a lack of jet fuel and diesel, already affecting Asia and coming to Europe in April–May.
- UK PM Starmer said the fuel duty will remain where it is until September.
- South Korea has raised its energy disruption alert to the second-highest level due to the possible crude oil supply crisis, via Yonhap.
- US extended a Russian oil transit license via Kazakhstan to China until March 2027, according to IFX cites Kazakh Energy Ministry.
- US Private Inventory Data (bbls): Crude +10.3mln (exp. -1.3mln), Distillate -10.4mln (exp. -1.3mln), Gasoline -3.2mln (exp. -2.2mln), Cushing +0.8mln.
Trade/Tariffs
- India grants one-time customs duty relief for goods made in special economic zone and sold into domestic market.
- US is rushing to put in place a system to pay back USD 166bln it collected now after Trump tariffs were ruled to be unconstitutional, according to Nikkei.
Geopolitics
- US President Trump said he is strongly considering pulling the US out of NATO after it failed to join his war on Iran, The Telegraph reported.
- US President Trump tells NBC News on Iran war "it is coming to an end".
- US advisers who speak regularly with the US President are reportedly uncertain about the mixed signals from Trump, according to Axios. "Some Trump aides and allies say he's mostly improvising rather than following any clear plan". "Aides have been convinced at various points that Trump was leaning toward a major escalation, and at others that he was eager for a swift resolution. "Nobody knows in the end what he's really thinking," a senior adviser said.".
- US Secretary of State Rubio said have largely destroyed Iran's air force and can see the finish line with Iran objectives, adds end to Iran war is not today, not tomorrow but it is coming. said:. There’s nothing any country is doing to help Iran that is in any way impeding our mission. There is potential for a direct meeting with Iran at some point. US is to re-examine NATO ties post-Iran war.
- Iranian Foreign Minister, when asked about the status of negotiations with the US, said "No decision has been made yet. We have many considerations. Our conditions for ending the war are very clear. We do not accept the ceasefire; We seek a complete end".
- Iranian Foreign Minister Araghchi reiterates Strait of Hormuz is closed to countries at war with Iran and said the US President must change his approach, also noted that a guarantee from 1-2 countries or from the UN Security Council is not enough. Iran has no plans for negotiations with the US. We are ready for any ground threat and are ready for at least six months of war.
- Iran's Foreign Minister Araghchi said Iran has zero trust in the US and dismisses the effectiveness of any potential ground operation targeting Iran.
- Iranian Deputy Speaker of Parliament said "Strait of Hormuz will never be opened, there has been no negotiation and there will be no negotiation", Fars reported.
- Iran began a new round of missile attacks against Israeli positions, according to SNN.
- Yemeni Houthi spokesperson claims a joint attack with Hezbollah against Israel, said the escalations will only drive Yemen "to further escalation in the coming period until the aggression stops and the blockade is lifted".
- Daily Mail columnist Andrew Neil posted "I am told by White House sources that Trump is seriously considering taking Kharg Island".
- Iran began a new round of missile attacks against Israeli positions, according to SNN.
- Iranian drone reportedly strikes US Victoria base in Baghdad, according to Fars news agency.
- Israeli military identified launch of missile from Yemen towards Israel.
- US and Israel attacked weather facilities of Bushehr again, via ISNA.
- Reports of a drone attack on an oil field in the "Chamanke" region, located in the north of Dohuk province in Iraqi Kurdistan; attack caused a fire in this oil field. The field is managed by an American company, Fars News reported.
- Reports of explosions in Saudi Arabia; reporting in proximity to Saudi announcing the interception of two drones in the last few hours.
- Qatari Defence said a cruise missile struck an oil tanker chartered for QatarEnergy in the economic waters, Al Arabiya reported.
- United Arab Emirates is preparing to help the US and other allies open the Strait of Hormuz by force, according to WSJ.
- Powerful explosion rocks American base in Erbil, according to Press TV.
- Iran's Mobarakeh steel plant hit in US-Israel strike and Khuzestan steel plant also targeted, Mehr News reported.
- UK PM Starmer reaffirmed that the war in the Middle East is not our war and will not be dragged into the conflict. Exploring every diplomatic avenue to reopen Hormuz.
- Russia's Deputy Foreign Minister Galuzin told TASS that talks on Ukraine are on pause.
US Event Calendar
- 9:00 am: United States Jan FHFA House Price Index MoM, est. 0.1%, prior 0.1%
- 9:45 am: United States Mar MNI Chicago PMI, est. 55, prior 57.7
- 10:00 am: United States Mar Conf. Board Consumer Confidence, est. 87.9, prior 91.2
- 10:00 am: United States Feb JOLTS Job Openings, est. 6890k, prior 6946k
- 12:00 pm: United States Fed’s Goolsbee Gives Opening Remarks at Eco Mobility Project
- 1:10 pm: United States Fed’s Schmid Speaks on Monetary Policy and Economic Outlook
- 3:00 pm: United States Fed’s Barr Discusses Stablecoin Regulation
- 5:10 pm: United States Fed’s Bowman Speaks on Small Business
DB's Jim Reid concludes the overnight wrap
What had been a torrid month of March for markets ended on a positive note yesterday, as the S&P 500 (+2.91%) posted its best day since last May as comments by US and Iranian officials drove hopes that an end to the Iran war could be coming closer into view. The increased optimism boosted a variety of asset classes including credit (-18bps for US HY spreads) and gold (+3.48%). Oil markets themselves saw more modest relief given still very uncertain prospects for the Strait of Hormuz, with Brent crude falling -3.18% yesterday but trading +1.36% higher at $105.21/bbl this morning. Meanwhile, US officials have joined in suggesting that the US may look for an offramp before long, with Secretary of State Rubio saying last night that the US “can see the finish line” on Iran objectives. And the White House posted last night that Trump will address the nation at 9pm EST today “to provide an important update on Iran”. S&P 500 futures (+0.20%) have solidified yesterday’s gains, while those on the Europe’s STOXX 50 (+1.80%) are catching up to yesterday’s US rally, having risen by a more modest +0.50% yesterday.
The biggest trigger for yesterday’s rally came shortly after the European close as Iran’s state news agency reported Iranian President Pezeshkian saying that Iran is willing to end the war but only if there are guarantees “to prevent the recurrence of aggression”. While it wasn’t clear if these comments represented a material change in Iran’s position – indeed, in large part they reiterated demands floated by Tehran last week – they helped drive an extension of the rally that emerged amid signals that the US may be looking for offramps out of the war.
The latest US comments then saw Trump say last night that he foresees ending the war “within two weeks, maybe three” and that while a deal with Iran was possible, such an agreement was not necessary for the US to end the conflict. Trump also suggested that “we’re not going to have anything to do with” what happens in the Strait of Hormuz, adding to a cacophony of signals that the US did not see reopening Hormuz as necessary to end the war. These ranged from the WSJ report we mentioned yesterday morning to Trump’s post earlier yesterday that countries who are reliant on energy from the Gulf should “go to the Strait and just TAKE IT” as well as his comments to the New York Post that the waterway would open “automatically” after the US leaves.
Oil prices moved lower following the Pezeshkian comments but are a little higher again this morning. WTI crude in particular saw modest moves in aggregate, down -1.46% yesterday to $101.38/bbl, after almost reaching $107/bbl in Asia trading yesterday, but edging back up to $103.19/bbl this morning as Trump’s comments overnight left plenty of uncertainty over Hormuz, especially if there isn’t a negotiated settlement. When it comes to talks, Iran’s Foreign Minister told Aljazeera yesterday that while there has been an exchange of messages with the US, these were not “negotiations”.
By contrast, US equities delivered a stunning rebound as the S&P 500 rose by +2.91%, its best day since May 12 last year, the day that US and China agreed to defuse their post-Liberation Day tariff escalation. The NASDAQ (+3.83%) and the Mag-7 (+4.48%) outperformed as tech stocks led the gains, while the S&P 500 airlines sector rebounded by +5.77%. The rally was also a broad one, with 421 advancers in the S&P 500, the most year-to-date, while the VIX index (-5.36pts to 25.25) saw its biggest daily decline since last April.
The positive mood has fed into Asian hours overnight, with key Asia indices also rebounding strongly. The KOSPI (+7.73%) is leading the way, also boosted by strong export data, while the Nikkei is up +4.58%. The Hang Seng (+1.97%), CSI (+1.43%), Shanghai Composite (+1.36%) and the S&P/ASX 200 +1.90% are also visibly higher.
The risk-on mood has also been visible across other asset classes, with US HY credit spreads tightening by -18bps yesterday, also their best day since last May’s US-China trade truce. Elsewhere, gold rose +3.48% to $4,668/oz in its best day since early February, while the dollar index fell -0.55% and is another -0.17% overnight.
In the rates space, Treasuries extended Monday’s rally, with the 2yr yield down -3.4bps to 3.80% and the 10yr down -3.1bps to 4.32%. 10yr yields are another -2.7bps lower overnight, which leaves them almost 20bps down from their 4.48% intra-day peak on Friday. Meanwhile, this morning in Asia, 10yr JGBs are -2.8bps lower at 2.32%.
European bonds also rallied yesterday, with yields on 10yr bunds down -3.0bps to 3.00%, while OATs (-4.5bps) and BTPs (-7.6bps) outperformed amid the risk on moves. The bond rally was also aided by the March euro area HICP print which saw both headline (+2.5% yoy) core inflation (+2.3%) come in a tenth below consensus. Gilts were a relative underperformer, with 10yr yields down a modest -1.7bps as the final Q4 GDP release saw 2025 real GDP growth revised up from +1.3% to +1.4%.
Yesterday’s cross-asset rally came at the end of what has been a pretty torrid month and quarter for markets, as you can see in our regular performance review that Henry will be publishing shortly. Clearly the Iran conflict dominated the agenda, with Q1 seeing the biggest quarterly rise in Brent crude oil since Q3 1990 when the Gulf War began. It also triggered a major cross-asset selloff, and March saw Europe’s STOXX 50 post its biggest monthly decline since the first Covid lockdowns in March 2020, whilst 10yr Treasury yields had their biggest monthly jump since December 2024. So nearly all the major assets struggled, and there were plenty of other stories to look out for too. In fact, the software component of the S&P 500 saw its biggest quarterly decline since the height of the GFC in 2008, whilst March saw gold's biggest monthly decline since 2008 as well. See the full review in your inboxes shortly.
Recapping yesterday’s other news, we saw mixed data out of the US. On the positive side, the Conference Board consumer confidence unexpectedly improved in in March to 91.8 (versus 91.0 previous, 87.9 expected). So US consumer sentiment is proving relatively resilient in the face of the Iran shock, even if the expectations series did deteriorate from 72.6 to 70.9 (vs. 68.4 expected). However, the February JOLTS employment survey was on the softer side, with job openings largely in line with expectations but the quits rate edging down from 2.0% to 1.9% and layoffs rising to a 4-month high of 1,721k (vs 1,668k expected).
Turning to the data out of Asia this morning, in China the RatingDog manufacturing PMI came in at 50.8 in March, down from 52.1 in February and below the expected 51.6. Rising oil prices contributed to increased cost pressures, dragging from the strong momentum in February. Meanwhile in Japan, the BoJ’s Tankan survey improved for a fourth consecutive quarter, with sentiment among large manufacturers rising to +17 from +16 in December. Companies are also signaling a larger-than-expected increase in capital expenditure though they are more cautious about the future.
Finally, turning to the day ahead, the final manufacturing PMIs for March will be the highlight on the data side. In the US, we’ll also have the latest weekly ADP employment figures and the February retail sales data. Among central banks, the Fed’s Musalem and Barr and ECB’s Cipollone are due to speak.
https://cms.zerohedge.com/users/tyler-durden
Wed, 04/01/2026 - 08:30
https://www.zerohedge.com/markets/futures-bonds-surge-optimism-war-may-end-oil-tumbles-below-100