Deutsche Bank: Middle East Stalemate Pushes Oil and Long-End Yields Higher - FJElite

Markets weakened as the lack of progress between the US and Iran increased expectations for a more prolonged closure of the Strait of Hormuz. Brent moved back above $90 a barrel and continued higher, while equities slipped and inflation concerns pushed long-end bond yields to fresh multi-year highs, including the US 30-year Treasury yield at its highest since 2007.

The latest headlines reinforced the sense that both sides remain far apart. Trump said he had no interest in extending the June memorandum, denied urgency around a deal, and claimed there was a back channel with Iran’s Revolutionary Guard, which Iran rejected. US officials also signalled they were prepared to play the long game. As a result, oil prices rose across the curve, with the 12-month Brent future reaching a two-month high, showing that markets are again pricing in a more prolonged period of elevated oil prices.