Deutsche Bank's Summary of Markets - FJElite

The geopolitical headlines have become slightly more positive this morning, with oil prices falling back after the US said that Israel and Lebanon agreed to a ceasefire. That ceasefire is conditional on Hezbollah also stopping fighting, but in theory, the news helps to take out a key sticking point in the US-lran talks that was holding up a deal. So that’s seen oil prices reverse a run of three consecutive gains, with Brent crude down -0.96% to $96.87/bbl. And given the news, the 10yr Treasury yield (-1.4bps) has also fallen back to 4.48%.

Nevertheless, even as the geopolitical news looks more positive, equities have taken a hit this morning after Broadcom’s forecast for AI chip revenue was beneath estimates, which pushed their share price down over -13% in overnight trading. Those concerns around AI have extended more broadly too, with S&P 500 futures down -0.37% this morning. And in Asia overnight, all the major indices have lost ground, including the Nikkei (-1.73%), the KOSPI (- 1.17%), the Hang Seng (-1.39%), the CSI 300 (-0.58%) and the Shanghai Comp (-0.43%). Moreover, there’s been a broader slide in risk assets, with Bitcoin at a 3- month low this morning of $64,593.

Before that, markets had already struggled yesterday, as growing doubt about a US-lran peace deal pushed Brent crude (+1.89%) up for a third consecutive session, closing at $97.81/bbl. And with the Strait of Hormuz still blocked and no clear sign of a resolution, there were even mounting expectations about a potential Fed rate hike this year, with market pricing for that up to 81% by the close. So that pushed bond yields higher, with a fresh dose of momentum from another round of strong US data, which added to the rate hike speculation. So it was a tough day all round, with the S&P 500 (-0.74%) finally ending a run of 9 consecutive gains, whilst the 10yr Treasury yield (+5.1 bps) was back up to 4.49%.