US Futures, Global Stocks And Bonds Soar On Ceasefire Relief, Oil Plummets

US futures, global stocks and bonds are sharply higher while oil prices plunge the most in years as a wave of optimism swept through global markets after the US and Iran agreed to a two-week ceasefire in exchange for Tehran reopening the Strait of Hormuz: JPMorgan's Market Intel desk, which moves from Neutral to Tactically Bullish this morning, says to look for a re-risking in the very near-term albeit it with higher energy prices. As of 8:00am ET, S&P futures are 2.8% higher while emerging-market stocks rallied the most since 2022; Nasdaq gains 3.5% with Mag7 and Semis seeing significant bids as part of an ‘Everything Rally’ ex-Energy. Yet while the overwhelming mood in markets is relief, the same core challenges remain to find a resolution amenable to both countries and Goldman's Delta-One head says he is selling the rally. Brent plunged 16% to around $93 a barrel. Bonds surged, with 10Y tsy yields sliding 8bps to 4.23% while benchmark UK yields tumbled by 22 basis points. The dollar weakened to a one-month low. Gold and silver gain. The macro data focus today is on the Fed Minutes ahead of PCE and CPI releases later this week.

In premarket trading, Mag 7 stocks are all sharply higher: Meta +5%, Tesla +4.5%, Alphabet +4%, Nvidia +3.5%, Amazon +4%, Microsoft +3.3%, Apple +2%

• Gainers also include precious-metal miners and financial firms, while chemical and fertilizer names fall.
• Energy stocks fall due to the ceasefire: Exxon (XOM) -5.3%, Chevron (CVX) -4.3% and Venture Global (VG) -11%
• Airlines rally: United (UAL) +11%, Delta (DAL) +10%
• Aehr Test Systems (AEHR) climbs 8% after the semiconductor manufacturing company reported third-quarter results. The earnings prompted Craig-Hallum to raise its rating to buy, citing “improving business momentum and significant growth opportunities over multiple business segments.”
• Levi Strauss (LEVI) gains 9% after the apparel company boosted its adjusted earnings-per-share and revenue forecasts for the full year citing strong demand as the denim brand steers shoppers to its own stores and website.

In corporate news, Super Micro Computer launched an internal probe to investigate circumstances surrounding server sales to China. Elon Musk is seeking to have Sam Altman removed from his roles at OpenAI as part of his legal challenge to the company’s conversion to a for-profit company.

The ceasefire announcement came not long before a deadline Trump had set that threatened a major escalation of the war. “We have now stepped back off the edge of the precipice,” said Aviva’s Richard Saldanha. The rapid twists and turns of the war have led to a record intensity of stock trading, according to a measure of daily SPY ETF turnover.

Looking at overnight markets, the most dramatic moves were in oil markets. European natural gas futures posted their biggest decline in more than two years, shedding as much as 20%. Prices of refined fuels such as diesel and jet fuel — which had been the biggest threats to global inflation — also tumbled.

As part of the two-week truce, Iran said it will allow ships to sail through the Strait of Hormuz, easing the chokehold on energy supplies that have threatened to cripple the global economy and accelerate inflation. A potential snag comes from the FT which reports that Iran demands fees for ships passing through the strait and will ask payment for tolls in crypto payment. While many investors cautioned that there is still a wide gap in the negotiation demands of Iran and the US, the widespread view was that stocks have fallen so sharply in recent weeks that any de-escalation path would be enough to trigger a rebound. 

“This is also showing promising signs that we’ve dodged the worst-case scenario,” said Matthew Haupt, a fund manager at Wilson Asset Management in Sydney. “It’s a good result considering the alternatives, as it shows a willingness to get something done.”

The latest news has left the Trump Reversal Index — a gauge created by Bloomberg strategist Simon White that combines various macro indicators — back to not much higher than where it was before the war started.  Light positioning is also fueling Wednesday’s relief rally. Volatility-control funds’ allocations to US equities had recently fallen to 56%, the lowest since July, according to Barclays. 

What comes next will depend on five questions, according to Jennifer Welch, chief geoeconomics analyst at Bloomberg Economics. These include whether Iran fully reopens Hormuz and whether Israel sticks to the ceasefire. Hormuz will “never go back to the way it was before,” said Vital Knowledge’s Adam Crisafulli. “Iran’s ability to shut the waterway will embed a risk premium in the price of all commodities flowing through it for the foreseeable future.” More than 800 ships are currently trapped in the Persian Gulf.

In politics, US regulators unveiled a plan to overhaul rules intended to prevent money laundering. US Trade Representative Jamieson Greer promoted the creation of a US-China board of trade, while downplaying the possibility of a similar group focused on bilateral investment.

Traders are now back to seeing a strong chance that the Federal Reserve will cut interest rates this year. Swaps are signaling a 60% likelihood of a rate cut by the year-end, compared with almost no chance seen at the start of this week. Before the war started, they had priced in more than two reductions. 

Some of the world’s largest investment firms are betting the market turbulence is past its peak and are buying bonds and artificial-intelligence stocks, while selling the dollar. Kellie Wood at Schroders Plc snapped up short-dated bonds including Treasuries on Wednesday morning. Jupiter Asset Management Ltd. is considering doing the same alongside plans to sell the greenback. Allspring Global Investments is buying tech and defense stocks that are seen as insulated from energy shocks.

European stocks are soaring: the Estoxx 50 up more than 5% and the Stoxx 600 is up 4% alongside a 14% decline in Brent crude as  markets cheer news of the US and Iran agreeing to a two-week ceasefire, even if the truce is a “fragile” one. European equity sectors are mostly higher with outperformance in travel, IT and consumer discretionary. Airline stocks, which have been pummeled by concerns of skyrocketing energy prices, lead gains in Europe. EasyJet Plc and Deutsche Lufthansa AG both jumped more than 10%. Energy stocks post material losses.Here are the biggest movers Wednesday:

• European oil stocks plunge on an otherwise broadly risk-on day, with airlines and technology shares particularly strong after the US and Iran agreed to a two-week ceasefire, sending the crude price tumbling and other asset classes soaring. Luxury-goods stocks, miners and chemicals stocks also rise strongly
• Close Brothers shares surge as much as 23%, the most since August, as the lender said the estimated cost of the FCA’s motor finance redress proposal is broadly similar to its existing provision
• Gamma Communications shares soar as much as 15%, their biggest intraday gain on record, after the telecom services company said it’s in preliminary talks with a number of potential bidders
• Redcare Pharmacy shares rise as much as 16% after the German firm’s preliminary first-quarter figures reassured analysts. Shares in Swiss peer DocMorris gain as much as 9.9%
• Polish coal miners Bogdanka and JSW slump after the US and Iran agreed to a two-week ceasefire. The move is expected to ease the energy shock, denting bets on a broader return to coal-fired power in Europe
• Shares in Norway’s Yara fall as much as 13%, while Germany’s K+S drops as much as 13%, after the US and Iran agreed to a two-week ceasefire in exchange for Tehran reopening the Strait of Hormuz

Stocks in Dubai — a key target of Iranian attacks during the conflict — jumped 8.5%, the most since Dec. 2014. Pakistan equities were also among the top gainers, after the country emerged as a key mediator in the ceasefire.

Still, there were continued reports of hostilities, underscoring the fragility of the deal. The UAE said it responded to a missile threat as of early afternoon local time, while Kuwait’s army cited “intense” attacks from Iran throughout the morning. “Markets have been moving very quickly, setting us up for a relief rally,” said Neil Birrell, chief investment officer at Premier Miton Investors. “What will happen in the next few weeks — who knows? It’s hard to believe that this is a long-term resolution.”  

Asian stocks rose for a fourth straight day to a one-month high as oil prices tumbled after a two-week US-Iran ceasefire, easing fears of supply disruptions and inflation. The MSCI Asia Pacific Index gained 4.9%, led by heavyweight chipmakers including Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. South Korea’s Kospi surged nearly 7%, leading gains in the region, while benchmarks in Japan and Taiwan advanced more than 3% each. Shares also advanced more than 3% in mainland China, Hong Kong and India. The Reserve Bank of India held key interest rates on Wednesday, striking a cautious tone as it monitors the impact of surging oil prices on the economy and pledges to curb any excessive currency moves.

In FX, the Bloomberg Dollar Spot Index is down 0.8% with the greenback lower versus all major peers. The kiwi is one of the better G-10 performers following the hawkish hold from the RBNZ.  

In rates, global bond yields are materially lower with German and UK 2-year borrowing costs down 22bps and 25bps respectively as traders scale back ECB and BOE hike bets. The US curve is in bull-steepening mode with traders pricing a circa 50% chance of a Fed rate cut by year-end. Treasury futures trade near session highs reached following gap higher at the Asia open, with oil benchmarks down more than 10% and stocks surging after US and Iran set a two-week ceasefire and Tehran pledged to reopen the Strait of Hormuz. US yields are lower by 3bp-6bp across a steeper curve as long-end tenors lag front-end and belly; 10-year is lower by more than 6bp near 4.23%. Swap spreads leg higher as demand pours in for cash Treasuries, with long-end spreads wider by nearly 3bp. The US session includes 10-year note reopening; demand was strong for Tuesday’s 3-year new issue.  Treasury’s $39 billion 10-year note reopening has WI yield near 4.24%, about 2bp cheaper than last month’s auction, which tailed by 0.7bp; auction cycle concludes Thursday with $22 billion 30-year reopening

In commodities, WTI crude oil futures are down about 16% near session lows; their biggest drop since the covid crash; Brent crude fell as much as 16% and European natural gas futures posted their biggest decline in more than two years despite uncertainty about how quickly transit through Hormuz can resume. Precious metals are gaining, with spot gold and silver up 1.7% and 5.3% respectively. Bitcoin has added 3.2%. 

Looking at today's calendar, the US economic data calendar is blank; Fed speaker slate includes San Francisco’s Daly at 1:05pm, and FOMC releases minutes of March meeting at 2pm.

Market Snapshot

• S&P 500 mini +2.7%
• Nasdaq 100 mini +3.5%
• Russell 2000 mini +3.8%
• Stoxx Europe 600 +3.8%
• DAX +4.7%
• CAC 40 +4.2%
• 10-year Treasury yield -6 basis points at 4.23%
• VIX -5.5 points at 20.26
• Bloomberg Dollar Index -0.8% at 1200.59
• euro +0.8% at $1.1685
• WTI crude -15.9% at $95.04/barrel

Top Overnight News

• Oil headed for the biggest drop in six years and global equities surged after the US and Iran agreed to a two-week ceasefire in exchange for Tehran reopening the Strait of Hormuz. Donald Trump said the US will help relieve Hormuz traffic with more than 800 vessels still trapped in the Persian Gulf. Benjamin Netanyahu said Israel supports the ceasefire but said it doesn’t include Hezbollah in Lebanon. BBG
• Kuwait said it’s dealing with “intense” Iranian attacks this morning and some Arab states reported continued attacks. BBG
• NATO chief Mark Rutte meets Trump today, hoping to temper the president’s anger that alliance members have refused to help. But Rutte’s own allies are questioning whether his deferential approach is appropriate, or even working, according to people familiar. BBG
• Chinese imports into the US haven’t dropped as much as the headline numbers might suggest as companies slash the value of their shipments “using tactics ranging from legal accounting tricks to outright fraud.” NYT
• The RBI held rates at 5.25% in its first policy decision since the Middle East crisis erupted. The RBNZ left its benchmark rate at 2.25%. BBG
• Japanese workers’ wages adjusted for inflation rose at the fastest pace since 2021, backing the case for the Bank of Japan to consider a rate hike as soon as this month. Real wages increased 1.9% from a year earlier in February, marking a second straight monthly gain, the labor ministry reported Wednesday. Economists had forecast a 1.3% increase. BBG
• The Treasury Department wants to talk to state insurance commissioners about the private loans piling up in insurers’ portfolios. Those state regulators have been keeping some of their thoughts to themselves.
• Moody's Ratings has cut its outlook on a $36-billion Blue Owl fund to "negative" from "stable" on Tuesday, citing redemption requests that were "significantly higher" than peers in the first quarter. RTRS
• In Wisconsin’s Supreme Court election, the Democratic-backed candidate sailed to a nearly 20-point landslide victory Tuesday in a battleground Trump carried less than two years ago. Meanwhile, a Georgia Democrat slashed Trump’s margin of victory by two thirds in the state’s reddest district despite losing the election — the most significant overperformance the party has seen across all seven House special elections so far this cycle. Politico

A more detailed look at global markets courtesy of Newsquawk

APAC stocks rallied with markets euphoric and relieved after US President Trump announced a two-week ceasefire between the US and Iran in the final hours before his Tuesday evening deadline. The ceasefire was proposed by Pakistan and is subject to the opening of the Strait of Hormuz, which Iran was said to have agreed to, while the US and Iran are set to conduct talks on Friday in Islamabad. Furthermore, Israel and Lebanon were reported to be part of the ceasefire, although Israeli PM Netanyahu later denied that Lebanon was included. ASX 200 advanced with the gains led by outperformance in gold miners and tech, while energy was at the other end of the spectrum amid the slump in oil prices. Nikkei 225 rose above the 56,000 level with sentiment in Japan boosted by the lower oil prices, while participants also digested the firmer-than-expected wages data. Hang Seng and Shanghai Comp joined in on the widespread risk-on mood amid the US-Iran ceasefire and as Hong Kong participants returned to the market following a five-day closure.

Top Asian News

Top European News

• German Factory Orders MoM (Feb) M/M 0.9% vs. Exp. 2% (Prev. -11.1%).
• French Balance of Trade (Feb) -5.8B vs. Exp. -2.3B (Prev. -1.8B).
• French Imports (Feb) 57.8B (Prev. 55.3B).
• French Exports (Feb) 52.0B (Prev. 53.4B).
• EU Retail Sales MoM (Feb) M/M -0.2% vs. Exp. -0.2% (Prev. -0.1%).
• EU Retail Sales YoY (Feb) Y/Y 1.7% vs. Exp. 1.6% (Prev. 2%).

FX

• FX markets began the session firmly risk-on as the US and Iran agreed to a two-week ceasefire, clearing a path for the "re-open" of the Hormuz Strait. Unsurprisingly, the Buck has been knocked with DXY -0.7%, as it loses its favour as the preferred hedge against energy with Brent crude below the USD 100/bbl mark. In a note this morning, Jefferies set out three potential future scenarios: 1) a narrow diplomatic Off-Ramp, centred on reopening the Strait of Hormuz under a face-saving framework for Iran, 2) frozen conflict, where the ceasefire is extended or repeatedly renewed without a formal peace agreement, with oil trading below crisis peaks but above pre-war levels. 3) escalation resumes: triggering renewed disruption fears, pushing oil prices higher, and driving a sharp risk-off move in global markets.
• NZD is the clear outperformer against the USD, helped by both the positive Middle East development and remarks in RBNZ's post-meeting presser, where Governor Breman said the MPC discussed the possibility of raising rates in April and May meetings, and the "Frequency of rate hikes could be every meeting or every second meeting" Despite the Kiwi's strength, AUD/USD has also been helped alongside risk sentiment and a rebound in precious metals.
• GBP is relieved by the slump in crude prices, with Cable +1% at the time of writing. Markets are still expecting c. 30bps of hiking for the BoE, a pullback of the same magnitude since Tuesday's close. The Cable rally stalled just above the 1.3440 mark; EUR/GBP has recently fallen just below its 200 DMA, and beneath the 0.87 mark – next up, 50 DMA at 0.8687.

Fixed Income

• Global fixed benchmarks are soaring this morning, with upside facilitated by the announcement of a two-week ceasefire between the US and Iran, which has helped to pressure the crude complex. As a whole, bonds are stronger, and a clear curve steepening bias is seen across the complex.
• USTs are currently trading at session highs, holding at the top end of a 111-05+ to 111-21 range. US paper moved higher on the announcement itself, and then gradually strolled to peaks as the session progressed. European price action has been fairly muted, with the benchmark ultimately trading sideways. From a yield perspective, the 2yr yield now resides around 3.719% (vs Tuesday's close at 3.80%) and well below the peaks from the Iranian conflict at 4.027%. Geopols aside, focus today will turn to the FOMC Minutes of the March confab, where the Bank left rates unchanged at 3.50-3.75%, with no change to forward guidance, balance sheet plans or implementation guidance. A US 10yr auction is also due.
• Bunds and Gilts follow the above, and currently reside at highs. The former is higher by over 175 ticks and within a 125.74 to 126.45 range, whilst UK paper extends gains of over 230 ticks, in an 89.70 to 90.18 range. Europe and UK fixed income has been considerably pressured since the start of the Iranian war, given their high dependence on external energy. For now, some short term reprieve across assets – and this has been reflected in market pricing, with only 2bps worth of hikes priced in for the ECB’s April meeting (vs 12bps pre-ceasefire); however, the long-term outlook remains uncertain, with markets still pricing in 45bps worth of hikes by year-end. From a yield perspective, the UK 2yr yield sank at the open, bottoming at 4.044% (vs post-Iran war peak at 4.712%); GE 2yr yield now hovers around the 2.50% mark.

Commodities

• The US and Iran have agreed in principle to a two-week ceasefire, brokered with support from Pakistan, under which the US will suspend bombing, and Iran will allow controlled reopening of the Strait of Hormuz. President Trump described the move as a “double-sided ceasefire,” saying most major disputes have already been resolved and that a broader peace agreement is close. Iran has accepted the pause, with its leadership approving negotiations set to begin in Islamabad, where both sides aim to finalise terms based on a 10-point proposal submitted by Tehran.
• The ceasefire remains conditional and fragile. Iran stated it will halt military responses only if attacks stop, while warning it remains ready to retaliate if provoked. The arrangement includes limited safe passage through the Strait of Hormuz under Iranian coordination, a critical step given the severe disruption to global shipping and energy flows. Israel has signalled support for the temporary pause, though there is conflicting information over whether Lebanon is included.
• However, it is worth noting recent reporting suggests that explosions were heard at Iran's Lavan refinery, and other reports suggest that explosions were also heard at Iran's Siri Island - details are light at this stage. But some may begin to question whether the ceasefire has already been violated.
• Energy prices plummeted. Crude futures both tumbled beneath the USD 100/bbl level following the announcement of a two-week US-Iran ceasefire within a couple of hours prior to President Trump's deadline. WTI May'26 resides towards the bottom of a USD 91.70-96.27/bbl and Brent Jun'26 towards the foot of a USD 91.05-109.19/bbl range. Dutch TTF slipped to under EUR 45/MWh.
• Spot gold rose above USD 4,850/oz before paring gains slightly to trade around the middle of a USD 4,713-4,858/oz range. Spot silver topped its 100 DMA (USD 76.11/oz) and resides near the top of a USD 73.38-77.65/oz parameter.
• Copper climbed to a three-week high, and aluminium also advanced as easing concerns over global growth lifted sentiment. 3M LME copper trades towards the top end of a USD 12,550.00-12,743.90/t range.
• China has reportedly given additional crude import quotas to independent refiners to maintain fuel production at the mandated 2025 levels.
• Abu Dhabi's media office announces that three people were injured after debris from air defence interception sparked fires at the Habshan gas complex, operations have been suspended temporarily.
• IATA chief said if Hormuz Strait were to reopen, it will still take a period of months to get where jet fuel supply needs to be.

Central Banks

• RBNZ keeps the OCR at 2.25%, as expected, while it stated in the near term inflation, is expected to increase and economic recovery to weaken, while committee is focused on ensuring that inflation returns at a 2% target midpoint over the medium-term.
• RBNZ Governor Breman said in online post-meeting press conference that the decision to hold rates was a consensus, adds discussed raising rates at today's meeting but were not close to hiking. We were not close to hiking rates today and there were no strong advocates for a hike today. If oil prices keep falling our inflation forecast would be on the high side. Frequency of rate hikes could be every meeting or every second meeting, it depends.
• Fed Vice Chair Jefferson (voter) said sees downside risks to employment and upside risks to inflation, while he is cautious on the economic outlook and noted uncertainty is elevated. Current policy rate is well-positioned to respond and rate is broadly in range of neutral. US labour market is roughly in balance and susceptible to adverse shocks. US inflation remains above the central bank's targets and warns that persistent elevated energy prices can weigh in consumer and business spending.
• ECB's Dolenc said that if the Iran war drags on, it will be very bad for inflation and growth.
• RBI keeps Repurchase Rate unchanged at 5.25%, as expected, with the decision unanimous and it maintains a neutral stance.
• ASB Bank now sees RBNZ raising rates in September and December of this year vs prev. forecast of a December hike.

Geopolitics

• US President Trump announced he is to suspend the bombing of Iran for two weeks, subject to Iran opening up the Strait of Hormuz, while he stated that this will be a double-sided ceasefire. Trump said the reason for doing so is that they have already met and exceeded all military objectives, and are very far along with a definitive agreement concerning long-term peace with Iran, and peace in the Middle East. Furthermore, he confirmed they received a 10-point proposal from Iran, and believe it is a workable basis on which to negotiate, while he stated that almost all of the various points of past contention have been agreed to between the US and Iran, although a two-week period will allow the agreement to be finalised and consummated.
• US President Trump posted "A big day for World Peace! Iran wants it to happen, they’ve had enough! Likewise, so has everyone else! The United States of America will be helping with the traffic buildup in the Strait of Hormuz. There will be lots of positive action! Big money will be made. Iran can start the reconstruction process...this could be the Golden Age of the Middle East!!!"
• US President Trump tells AFP that Iran deal is complete and comprehensive victory for the US, also said Iran uranium will be perfectly taken care of and that he believes China got Iran to negotiate.
• Iranian Press SNN notes of a potential ceasefire violation, highlighting several explosions that occurred in Siri and Lavan islands. Furthermore, Iran’s National Security Council says within a few hours, if firing does not stop in southern Lebanon, the air and missile unit will bomb Tel Aviv.
• Iran said negotiations with the US will be held in Islamabad to finalise details, with the aim of confirming Iran's battlefield achievements politically within maximum of 15 days, with talks to begin April 10th and may be extended if both sides agree. Talks with the US do not mean of the war, according to Iranian media. The safe passage through Hormuz is possible for two weeks and Foreign Minister Araghchi said their forces will halt operations if attacks on Iran cease.
• Pakistan's President invites US and Iran delegates to Islamabad on Friday, while reported also noted that EU envoys Witkoff, Kushner and VP Vance is expected to attend US-Iran talks.
• US official said ceasefire will begin this evening, but they believe it may take some time for orders to reach Revolutionary Guard units at the field level.
• Iran and Oman reportedly will be allowed to charge for passage in the Strait of Hormuz as part of a ceasefire.
• Israel's Ynet cites security sources stating that Iran ceasefire will also include Lebanon.
• Iran's Supreme Leader instructed negotiators to seek a truce, according to Axios.
• Iran's permanent ambassador to the UN said Iran categorically rejects any temporary ceasefire, while he stated that any solution to the end of the conflict must guarantee a definitive and irreversible anti-aggression and establish a just and lasting peace.
• The US will insist on removing nuclear materials from Iran, Al Hadath reported citing Israeli officials via Haaretz.
• White House official said Iran ceasefire takes effect once the Strait of Hormuz is reopened.
• Senior White House official said Israel is part of the 2-week ceasefire, according to CNN. Israel agrees to suspend bombing while talks are ongoing.
• Omani Transport Minister said no fees can be imposed on the Strait of Hormuz according to the signed agreements.
• Iraq's Islamic Resistance suspends operations for two weeks.
• Hezbollah will announce formal position on ceasefire and response to Israeli PM's assertion that Lebanon is not included, according to sources.
• New wave of Iranian missiles fired towards Israel.
• Israeli military official said Israel is still striking Iran, according to CNN.
• Several explosions reported at Iran’s Sirri Island on Wednesday morning; source of explosions unknown, Mehr News reported.
• Explosions heard at the Lavan oil refinery (50k BPD) in Iran, Mehr reported; origin of the explosion is not known.
• Bahrain sounds missile alert hours after the US and Iran ceasefire agreement, according to AP.
• N12 noted reported of explosion in Kermanshah northwestern Iran.
• IDF said it identified missiles launched from Iran towards Israel.
• Iran's Supreme Security Council said fingers are on the trigger and as soon as the enemy makes the slightest mistake, it will be answered with full force.
• Maritime Shipping Data shows traffic in the Strait of Hormuz remains light and limited, Arab News reported.

US Event Calendar

• 7:00 am: United States Apr 3 MBA Mortgage Applications, prior -10.4%
• 1:05 pm: United States Fed’s Daly Gives Keynote Remarks
• 2:00 pm: United States FOMC Meeting Minutes

DB's Jim Reid concludes the overnight wrap

Markets are seeing a sharp rebound overnight following news that the US and Iran agreed to a two-week ceasefire. Trump posted that following a request by Pakistan, he agreed to suspend attacks against Iran for two weeks subject to Iran agreeing to “the COMPLETE, IMMEDIATE and SAFE OPENING of the Strait of Hormuz”. He claimed that the US had already met its military objectives and called the 10-point proposal received from Iran a “workable basis on which to negotiate”. Tehran accepted the ceasefire proposal “if attacks against Iran are halted”. Foreign Minister Araghchi also announced that, in response to Trump’s “acceptance of the general framework of Iran’s 10-point proposal”, safe passage through the Strait of Hormuz will be possible for two weeks “via coordination with Iran’s armed forces and with due consideration to technical limitations”. The AP has reported that the plan will allow Iran and Oman to charge fees for transits through the Strait. Meanwhile, Pakistan’s Prime Minister Sharif has invited US and Iran for talks in Islamabad on Friday (April 10) to negotiate a “conclusive agreement”.

Investors will be breathing a big sigh of relief that an offramp out of the war is being taken even as there’ll be various elements to watch to see whether this leads to sustained de-escalation. Will the ceasefire hold? We saw some strikes by Israel and Iran overnight though these may have been in the works before the conditional ceasefire. We’ve also seen conflicting commentary on whether the ceasefire will extend to Israel’s action in Lebanon. Can talks lead to a permanent cessation of hostilities? Trump’s comment last night that “Almost all of the various points of past contention have been agreed to” suggests a lower bar for agreement, but Iran’s reported 10-point plan includes elements such as the lifting of all sanctions and Iran controlling the Strait of Hormuz that have previously been unacceptable to the US and allies. Those points also do not restrict Iran’s enriched uranium, which Trump suggested would be "perfectly taken care of" as he claimed a “total and complete victory" in an interview to AFP late last night. And in his latest post overnight, Trump appeared keen to lean into the prospects for full resolution, claiming “a big day for World Peace” and that the US “will be helping with the traffic buildup in the Strait of Hormuz”.

Indeed, the most important question for markets will be to what extent does shipping via Hormuz pick up in the coming days. For now, oil prices have plunged on the ceasefire news, with Brent crude down -13.51% to $94.51/bbl this morning as I type, its lowest intra-day level in four weeks. It had been at nearly $110/bbl before the news of Pakistan’s ceasefire proposal began to emerge but then fell as low as $91/bbl as the ceasefire was confirmed early in the Asian session before recovering slightly. WTI is similarly down -14.92% to $96.10/bbl.

In turn, risk assets are seeing a sharp rally. S&P 500 futures are up +2.48%, which leaves them less than 2% below the levels on February 27 before the Iran strikes began and +6.8% up from their closing low on Mach 30. NASDAQ futures are +3.15%, while those on Euro STOXX 50 are +5.42% higher after a weak session yesterday. Asian equities are also rallying strongly, with the KOSPI (+7.26%) and the Nikkei (+5.26%) at the forefront. The Hang Seng (+2.82%) is advancing after the holiday, while the CSI (+2.76%) and the Shanghai Composite (+1.92%) are also seeing solid gains in mainland China, as is the S&P/ASX 200 (+2.71%) in Australia.

On the fixed income side, 2yr (-6.8bps to 3.72%) and 10yr (-5.2bps to 4.24%) Treasuries are seeing a sizeable rally, with 10yr JGBs (-4.9bps) posting a similar advance. Fed funds futures are now pricing 14bps of Fed cuts by December, up from zero when Europe went home yesterday. And in FX, the dollar index is down -0.92%, while gold is +2.00% higher.

Earlier yesterday, markets had traded cautiously amidst worsening headlines, including Trump’s social media post that a “whole civilization will die tonight” unless “something revolutionarily” happens on Iran’s side, as well as news of increased strikes by the US, Israel and Iran across the Middle East. US markets then saw a recovery late in yesterday’s session as news broke that the US and Iran were considering Pakistan’s ceasefire proposal. That helped the S&P 500 recover to +0.08% by the close, having been -1.2% down earlier in the session, while 2yr (-6.1bps) and 10yr (-3.8bps) Treasury yields rallied late yesterday, having been a few basis points higher on the day at the European close.

European markets had closed near the session lows yesterday, with the STOXX 600 falling back -1.01%. The more externally-sensitive DAX (-1.06%) led the declines, while the FTSE 100 (-0.84%), CAC 40 (-0.67%) and FTSEMIB (-0.47%) were also all in the red. European bonds also saw a significant sell-off with yields on 10yr bunds rising +9.1bps to 3.08%, just 1bps below the post-2011 high they had reached on March 27. Yields on 10yr BTPs (+11.6bps) and OATs (+10.0bps) saw a larger sell-off amid the risk-off mood.

Over in the UK, 10yr gilts (+7.1bps to 4.90%) saw a slightly more modest sell-off as the final UK March services PMI was revised down from 51.2 to 50.5. That marked a sharper decline than seen in the euro area, where the final services PMI was revised a touch higher, from 50.1 to 50.2. Within the euro area data, there was a notable divergence between resilience in Spain (53.3 vs 51.9 previous, 50.6 expected) and a marked decline in Italy (48.8 vs 52.3 prev., 50.9 exp), which might reflect the fact that while both countries have adopted fiscal measures to reduce the costs of the energy shock, the scale of the Spanish response has been significantly larger.

When it comes to yesterday’s US data, the highlight was the latest weekly ADP employment numbers, which showed private job gains pick up to +26k on average for the four weeks ending on March 21. That marked the strongest print since ADP started publishing the weekly data last year and equates to over 100k in monthly job gains. So that added to the easing labour market concerns after the strong March payrolls reports on Friday. US February durable goods orders also looked solid, with ex-transport orders up +0.8% MoM (vs. +0.5% expected) and core shipments up +0.9% (vs. +0.4% exp.). Meanwhile, NY Fed 1-yr inflation expectations series jumped from +3.00% to +3.42% in March, though this was a touch below consensus (+3.50%) and below the levels it reached after the Liberation Day tariffs last spring (3.63%). We also got comments from NY Fed President Williams, who was relatively sanguine yesterday when he said that that the war might add a tenth or two to core inflation, and that the story around underlying inflation was not much changed.

Finally, in other overnight news the Reserve Bank of New Zealand (RBNZ) maintained its cash rate at 2.25% as expected. The RBNZ’s Monetary Policy Committee noted a significant shift in the economic outlook amid higher energy prices, which are expected to push short-term inflation up while slowing economic activity. The yield on the 2yr government note is -4.2bps lower this morning, though this is mostly matching the move in Treasuries.

To the day ahead now, we’ll have UK March Construction PMI, Germany February factory orders, March construction PMI, France February trade balance, current account balance, Eurozone February PPI and retail sales. We’ll also get the March FOMC minutes