Unveiling the ‘Truth’: Morning Bid Insights
President Donald Trump’s posts on Truth Social drove dramatic market moves late March. A single message about “very good and productive” talks with Iran sent oil, stocks, the dollar, yields and gold in different directions.
Market reactions and volatility
When Mr. Trump delayed a 48-hour ultimatum for Iran, oil plunged more than 10 percent. Global equities initially rallied while the dollar weakened and yields fell.
Markets swung again later in the week. The Nasdaq fell about 2 percent and entered correction territory. Brent crude climbed roughly 6 percent above $108 per barrel.
Late-week developments
The president extended another deadline to April 6 at 8 p.m. EDT, saying talks with Tehran were going “very well.” U.S. equities trimmed losses modestly, while crude briefly stabilized.
By early Friday, Brent edged above $109 per barrel and S&P futures were trading lower.
Regional and geopolitical fallout
Asian markets were hit hard, with South Korea’s KOSPI tumbling nearly 4 percent on Friday. Energy-dependent regions remain especially exposed to supply disruptions.
Conflicting accounts have intensified uncertainty. The White House said Iran requested a reprieve, while mediators cited by the Wall Street Journal denied such a request.
Tehran reportedly rejected a 15-point U.S. proposal. U.S. officials are reportedly planning to deploy an additional 10,000 troops to the Gulf.
Where financial assets stand
Since the crisis began on February 28, both Treasuries and gold have weakened. Poor debt auctions have raised alarms across the roughly $30 trillion Treasury market.
Private credit has also come under stress. Ares Management and Apollo Global Management capped redemptions after spikes in withdrawal requests.
Some large banks are boosting S&P 500 forecasts, citing expectations of strong corporate earnings. That supports a resilient case for U.S. equities despite current turbulence.
Energy markets and longer-term implications
The oil futures curve appears to price in a quick end to disruptions. That is notable given estimates of supply shortfalls as high as 20 million barrels per day.
Investors seem to bet on a swift reopening of the Strait of Hormuz. Ironically, such pricing may increase the chance the waterway remains constrained.
U.S. gasoline prices are approaching $4 per gallon. A recent Reuters/Ipsos poll found only 29 percent of Americans approve of the president’s handling of the economy.
Regional energy consequences
Gas markets may suffer more than crude due to limited storage and rigid supply chains. Europe could face setbacks to its climate agenda.
Conversely, the crisis may accelerate the energy transition in Asia. Faster electric vehicle adoption would benefit China’s EV sector.
Mr. Trump rescheduled a planned Beijing visit to mid-May. That move signals expectations for a resolution within roughly six weeks.
Recommended reading, listening and viewing
- New York Fed research estimating global neutral rate (r*). The paper finds r* rose about one percentage point since the pandemic.
- A report on the appeal of Chinese electric vehicles to U.S. consumers, despite legal purchasing limits.
- Project Syndicate op-ed asking why U.S. strategy shifted from non-intervention to war preparations.
- Lloyd’s List analysis of Iran’s toll system in the Strait of Hormuz and implications for shipping.
- The Northern Miner podcast discussing how the Strait blockage affects metals, including tungsten used in munitions.
- A conversation featuring Paul Krugman and Robin Brooks on Iran, oil and the dollar.
Filmogaz.com’s Open Interest editor, Anna Szymanski, oversees data-driven markets commentary. She previously led Oaktree Capital Management’s insights program and holds the CFA designation.
In our Unveiling the ‘Truth’ coverage and Morning Bid briefs, readers will find concise market analysis and curated resources. Morning Bid Weekend will pause next Friday for the long holiday weekend. Happy Easter and chag sameach to those observing.
