Ceasefire fuels risk-on session, though yields close nearly unchanged. Last night’s US-Iran ceasefire agreement fueled strong demand for riskier assets and a 4-6 bp decline in Treasury yields this morning amid plummeting oil prices. While the equity and crypto rally held throughout the session, yields reversed course as strikes continued in the Middle East and Iranian leaders said that the US violated the ceasefire. Yields closed nearly flat across the curve, with the 2-year yield at 3.79% and the 10-year yield at 4.29%. Brent crude prices also reversed, but still closed 11.50% lower at $96.75 per barrel, while WTI plummeted 16.41% to $94.41 per barrel. Meanwhile, the S&P 500 and NASDAQ closed 2.51% and 2.80% higher, respectively, as Bitcoin peaked above $72,500.
US–Iran to hold direct talks with fragile ceasefire in place. Vice President JD Vance will travel to Islamabad to engage in direct peace talks with Iran, according to White House Press Secretary Karoline Leavitt. The development was driven by continued Israeli attacks on the Iranian-backed Hezbollah militia in Lebanon, which Iranian Parliament Speaker Mohammad Bagher Ghalibaf said put the US in violation of the truce. The Trump Administration has said Lebanon is not covered by the ceasefire agreement, a fact disputed by Pakistani officials who mediated the truce. Additionally, Iran has continued strikes on other Gulf nations, and the Strait of Hormuz remains largely blocked, though Vice President Vance said there are “signs that the straits are starting to reopen.”
FOMC minutes highlight concern over Iran War. Today’s release of the March FOMC meeting minutes underscored Fed officials’ mixed outlook about the Iran War. Some officials expressed concern that an extended conflict could further weaken the labor market and incentivize lower policy rates, while others were worried about the oil-driven inflation risk that could necessitate rate hikes. The minutes read, “Some participants judged that there was a strong case for a two-sided description of the Committee’s future interest-rate decisions in the post-meeting statement, reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation were to remain at above-target levels.” At the March meeting, the FOMC left the policy rate unchanged, and the Dot Plot indicated a median outlook of one rate cut in 2026. Futures markets currently have no rate cuts or hikes fully priced in for the year.
