Headlines:
Iran says continued US strikes are violations of the ceasefire
Iran maintains its position that all frozen assets must be released without conditions
Gold continues to slide amid the absence of a US-Iran breakthrough and hawkish Fed risks
Mild dollar selling expected going into the month-end fix — Credit Agricole
ECB policymaker Lane says second-round effects would persist even after a shock reversal
ECB policymaker Stournaras confirms a rate hike in June is the most likely development
ECB April meeting account notes that upside risks to inflation had intensified
Euro area economic sentiment picks back up slightly in May but headwinds linger
Markets:
WTI crude up 3% to $91.37
Stocks move lower, with the DAX and CAC 40 both down 0.5% on the day
S&P 500 futures down 0.3%, Nasdaq futures down 0.7%
US dollar holds steadier across the board
US 10-year yields up 2.5 bps to 4.506%
Gold down 1.7% to $4,381
It was a relatively subdued session, but one that saw markets move with caution as US-Iran tensions continued to linger.
There is still no official word on a framework agreement or memorandum of understanding, with hopes of an "imminent" deal now fading.
Iran continues to maintain a firm stance on its red lines, and it remains to be seen how both sides will look to move forward from here.
In the meantime, strikes are continuing between Israel and Lebanon, and the US hit Iranian targets for the second time in three days.
Oil prices crept higher again as a result, with WTI crude climbing over 3% to $91.37.
Meanwhile, equities eased lower, with major European indices falling. The DAX and CAC 40 were both down 0.5% on the day.
US futures followed suit, with chipmakers among the laggards. S&P 500 futures fell 0.3% while Nasdaq futures declined 0.7%.
As risk sentiment deteriorated, bond yields also pushed higher. Ten-year Treasury yields rose 2.5 basis points to move back above 4.50%, while 30-year yields climbed roughly 2 bps to sit near 5.03% on the day.
In the major currencies space, the dollar held firmer for the most part but gave back some early gains. EUR/USD was down 0.1% to 1.1617, having traded as low as 1.1585 earlier in the session. USD/JPY continued to hover around the 159.40–159.50 range, with intervention risks looming large as the pair edges closer to the 160.00 mark. AUD/USD was down 0.3% to 0.7117 on the day.
Precious metals were also under significant pressure, with gold falling 1.7% to $4,381 and silver dropping 2.1% to $73.03. A pullback in recent optimism and renewed concerns over a more hawkish Federal Reserve stance are weighing on precious metals this week.
Why it matters
With no framework agreement or memorandum of understanding in sight, the absence of a diplomatic off-ramp keeps energy markets on edge — oil prices tend to reflect geopolitical risk premiums quickly when conflict involving major producers or transit regions escalates.
As USD/JPY edges closer to the 160.00 level, the article notes that intervention risks are looming large — meaning currency traders must factor in the possibility that Japanese authorities could act to support the yen, adding an extra layer of volatility to dollar-denominated assets.
Rising bond yields and a more hawkish Federal Reserve outlook create a dual headwind: higher yields increase the opportunity cost of holding non-yielding assets like gold, while also raising the discount rate applied to future corporate earnings, putting downward pressure on equities at the same time.
