Traders are desperate for more news, but the status quo is positive

Global financial markets are on edge as traders wait for clear details about the new US-Iran peace plan.

After two months of intense tension and repeated ceasefire extensions, a concrete framework is finally being discussed.

Both sides know what is at stake: the US wants the Strait of Hormuz reopened without conditions and Iran’s nuclear program dismantled, while Iran wants a full regional ceasefire and a withdrawal of US troops.

The big question for markets now is whether negotiators can bring some still contradicting demands together in the next 60 days.

Even with uncertainty still in the air, the current situation is giving strong support to risk assets.

The fact that tensions are not turning into a wider war is a major positive change. This relief has pushed the tech-focused Nasdaq to new record highs above 30,000 this morning, up 4% since last week.

The Dow Jones Industrial Average also broke records on Monday’s holiday and is trying to move higher, though today’s trading has been slower and more steady.

This particularly reflects the large change seen in Crude Oil prices, down just shy of 10% since the weekly open.

Still, there is some caution in the market because the White House has not shown much excitement about the final details of the deal.

President Trump made it clear that Iran will not get immediate sanctions relief for giving up its highly enriched uranium.

This firm position shows that, even though there is a Memorandum of Understanding, reaching a full treaty is still very complicated and faces many diplomatic challenges.

Even if the risk of re-escalation has eased, many details are still unclear and traders are turning their attention back to economic data awaiting for the headlines.

With few major events early this week, big investors are waiting for tomorrow’s important Core PCE report.

This key inflation number will show if the recent oil-driven supply shocks have hurt the US economy more than expected, which could make things harder for the Federal Reserve’s next moves (the next FOMC meeting is on June 17).

These are my final pieces on MarketPulse, so thank you for all who enjoyed the posts since a bit more than a year – I wish you success in the World of Trading and a long life in Markets.

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