- S&P 500 +0.44%
- Nasdaq Composite +0.58%
The latest catalyst for the push into new all-time highs was yesterday’s Axios report saying that US and Iranian negotiators have reached an agreement on a 60-day memorandum of understanding to extend the ceasefire and launch negotiations on Iran’s nuclear program, but President Trump has yet to give his final approval.
The most important thing in terms of economic outlook is the Strait of Hormuz. There’s still lots of confusion on how and when it’s going to reopen. Just now, Iran’s Foreign Minister Aragchi said in a post on X that he discussed the Hormuz and its future administration in line with their sovereign responsibilities and international law. Iran has been pushing for a toll system with Oman.
The main risks for the stock market at the moment are Fed rate hikes and a new US-Iran military conflict. For now, the fact that diplomacy continues to be the main driver, has been keeping the market supported as neutral Fed policy continues to indirectly ease financial conditions.
If the situation in the Strait of Hormuz doesn’t change before the June FOMC meeting, there’s a risk that the Fed delivers a more hawkish than expected decision and could trigger a nasty correction given the overstretched positioning
