Yields decline as US-Iran sign agreement. Treasury yields fell today as the US and Iran signed a memorandum of understanding last night, reopening the Strait of Hormuz and providing relief for energy prices. The 2-year yield closed 1bp lower at 4.18% (up 10 bps on the week) and the 10-year yield closed 3 bps lower at 4.45% (down 3 bps on the week). Meanwhile, equities rebounded, with the S&P 500 and NASDAQ closing 1.08% and 1.91% higher, respectively. Intel Corp. led the climb as its stock jumped over 10% after President Trump said it will work with Apple Inc. to make semiconductors in the US.
Strait of Hormuz reopens on interim US-Iran accord. The US and Iran signed a 14-point memorandum of understanding extending the ceasefire and reopening the Strait of Hormuz for 60 days while both sides continue to negotiate more complex matters. The strait reopened and the US Naval blockade was lifted hours after the signing. Key issues, including the fate of Iran’s nuclear program, remain unresolved, with details of the framework’s implementation still uncertain. Tensions between Israel and Lebanon continue to complicate matters, with Vice President JD Vance criticizing Israeli military operations in Lebanon for threatening broader negotiations. Vance said today, “If I was in the cabinet of the Israeli government, I might not be attacking the only powerful ally that I have anywhere left in the entire world.”
Initial jobless claims highlight labor market strength. Initial jobless claims fell 4k to 226k last week, showcasing labor market resiliency in light of the recent price shock from the Iran War. Despite this, the four-week moving average rose to 223k, its highest level since December. The elevated level was largely due to seasonal distortions, such as the end of the school year. Nancy Vanden Houten, lead economist at Oxford Economics, said, “We don’t expect claims to trend consistently higher from here… despite the bounce off the recent lows, the level of initial claims is still consistent with a broad range of labor market indicators that show the job market has improved…”
