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- Markets confront giant SpaceX IPO
- Monthly UK GDP declines in line with expectations
- Positive sentiment lifts Japanese assets, but haven-dollar unwinding faded quickly
- S&P upgrades Argentina’s sovereign rating to B- from CCC+
- Chinese yuan and equities rise, but liquidity tightening may continue to pressure bonds
- Peru keeps its policy rate unchanged at 4.25%, in line with expectations
Markets Seek a Break from the “Peace: Imminent” Loop
It has been another week of sentiment dominated by the now-familiar loop of geopolitical escalation followed by renewed hopes of de-escalation. After a re-escalation of hostilities earlier in the week, investors are again leaning into the possibility that a peace deal can be reached in the coming days. Yesterday, President Trump initially warned that the US would hit Iran “very hard” on Thursday, but later softened that message and said a deal was close. Reports this morning cite unnamed officials that a new two-month cease-fire agreement, including the re-opening of the Strait of Hormuz, could be signed as soon as Sunday. The latest turn in headlines leaves global equities higher on the week and sovereign bond yields mostly lower, as breakeven inflation continues to fall on expectations of reduced pressure on oil prices. The spot price of Brent crude is 3% lower this morning, falling to below 90 dollars per barrel. Beyond geopolitics, markets will be closely watching SpaceX’s trading debut after yesterday’s record-setting IPO.
