Axios reported that U.S. and Iranian negotiators reached a draft 60-day memorandum of understanding to extend the ceasefire and begin talks around Iran’s nuclear program, though President Donald Trump has yet to approve the agreement.
The report followed overnight U.S. airstrikes on an Iranian military site near the Strait of Hormuz, the critical energy shipping route that has dominated macro traders’ attention over the past months.
Though traders at this point have lost count of the number of imminent Middle East peace deals, they nevertheless bid stocks and bonds higher and oil lower on the Axios report. In the red earlier in the session, the Nasdaq is now up 0.6%, while WTI crude oil has tumbled below $90 per barrel.
Crypto markets, however, remain stuck in the doldrums, with bitcoin failing to hold even the modest of bumps higher, now having sunk back below 73,000, down 2.7% over the past 24 hours.
Following the Axios story, Treasury Secretary Scott Bessent warned the U.S. would “not tolerate” any attempt to impose tolls on shipping through the Strait of Hormuz, vowing aggressive sanctions against parties involved in disrupting commercial transit through the key waterway. “Oman, in particular, should know that the U.S. Treasury will aggressively target any actors involved – directly or indirectly – in facilitating tolls for the Strait and any willing partners will be penalized,” he wrote.
Fed’s preferred inflation gauge hits highest level since 2023
The first inflation report released under Federal Reserve Chair Kevin Warsh showed price pressures strengthened in April, with the Fed’s preferred inflation gauge, the Personal Consumption Expenditure Index (PCE), rising to its highest level in nearly three years to 3.8% year over year, up from 2.8% in February.
“The inflation picture is becoming increasingly uncomfortable for the Fed. This is not just a headline inflation problem: core inflation is moving the wrong way too,” said Olu Sonola, head of US economics at Fitch Ratings. “Price pressures are likely to persist over the next few months, and while the Fed cannot fix a supply shock, it cannot ignore one that is feeding into underlying inflation. The Fed is stuck — and the heat is clearly being turned up.”