Trump on Truth Social:
Both sides, Israel and Iran, are looking to do an immediate CEASEFIRE! Final negotiations on “Peace” are proceeding, subject to ignorance or stupidity getting in its way. The Blockade will remain in place, and in full force and effect, until a “Final Deal” is reached. Things should move quickly. Thank you for your attention to this matter! President DONALD J. TRUMP
This is lifting the risk sentiment and might lead to a minor pullback. The core problem remains: “the blockade will remain in place until a final deal is reached”. This means the Strait of Hormuz will remain closed and keep oil prices persistently elevated.
It’s worth reminding that the catalyst for the selloff in markets on Friday was the very strong NFP number as it served as a wake-up call for the hawkish Fed risk. It wasn’t related to Middle East.
The focus has shifted to the Fed now.
Monetary tightening into a negative supply shock is an ugly recipe for growth and that’s going to weigh on markets if the Fed indeed tightens. If Trump doesn’t end this soon, the Fed is going to do it for him and it won’t be nice.
This article was written by Giuseppe Dellamotta at investinglive.com.