Yields rise as Trump declares ceasefire over. Treasury yields edged higher today as President Trump said on social media that the ceasefire with Iran was over, though the move was limited as he said peace talks would continue. The 2-year yield closed up 3 bps at 4.21% and the 10-year yield closed up 1bp at 4.56% (a 7-8 bp increase on the week). Meanwhile, equities drifted higher to cap out another week of gains ahead of the start of the earnings season, with the S&P 500 and NASDAQ closing 0.42% and 0.29% higher, respectively.
US-Iran tensions, uncertainty remain elevated. President Trump has again declared the US-Iran memorandum of understanding “over” today while simultaneously confirming Washington had agreed to Tehran’s request to keep negotiating. The US also announced new sanctions on Iran, following a series of strikes by both sides over the last few days. Though attacks slowed today, Mohammad Bagher Ghalibaf, Iran’s chief negotiator, said the country is “ready for an all-out defense” if it deemed the US has violated the agreement, adding “we do not trust the Americans.” Mediators from Qatar and Pakistan remain involved in efforts to deescalate tensions. The number of vessels traveling through the strait in recent days has slowed, as shipping companies are wary of escalating strikes. Brent is currently trading near $76 a barrel, a ~4% increase since attacks re-escalated last week.
Warsh moves ahead on policy task forces. Fed Chair Kevin Warsh released the names of the members who will sit on the central bank’s five newly created task forces, spanning Data, Communications, Balance Sheet Policy, Productivity and Jobs, and Inflation Frameworks. Notable appointments include former Walmart CEO Doug McMillon, who will co-lead the Data group, and venture capitalist Marc Andreessen, who will oversee the Productivity and Jobs teams. Warsh has said the goal is “to ensure the Fed is best positioned to achieve [its] objectives in this consequential time.” Each group will work independently with Fed staff support and is expected to present recommendations to the FOMC before year-end.