On Sunday night, the NYT ran a story that the U.S. and Iran had concurred in concept to end the war and resume the Strait of Hormuz. The essential difference versus previous rumors/reports is that the problem of nuclear product is being left as “TBD.” Subsequent headlines mentioned several military strikes, but the marketplace didn’t respond (it’s been relatively common to see those sorts of “yeah however” headlines right away following possible breakthroughs towards peace). Market response is the best judge of heading credibility and the reaction is clear. Oil dropped about $5/bbl and 10yr yields are staring out 7bps lower at 4.489– the lowest levels given that May 14th. MBS are up more than 3/8ths of a point in early trading.
In the broader context, this recovery gets us back to the upper boundary of the variety that had actually been undamaged before recently.
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