Axios reported that U.S. and Iranian negotiators have reached a draft 60-day memorandum of understanding to extend the ceasefire and begin talks on 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 recent months.
Traders, though weary of countless Middle East peace deals, nonetheless bid stocks and bonds higher and oil lower on the news. The Nasdaq swung from red to green, now up 0.6%, while WTI crude tumbled below $90 per barrel.
Crypto markets remain stuck in the doldrums. Bitcoin BTC $64,168.87 failed to hold even modest gains, slipping back below $73,000 and down 2.7% over the past 24 hours.
Treasury Secretary Warns of Sanctions Over Strait Tolls
Following the Axios story, Treasury Secretary Scott Bessent warned that the U.S. "will not tolerate" any attempt to impose tolls on shipping through the Strait of Hormuz, vowing aggressive sanctions against parties involved in disrupting commercial transit. "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," he wrote.
PCE Hits 3.8%, Highest Since 2023, Stuck Fed
The first inflation report under Fed Chair Kevin Warsh showed price pressures strengthened in April. The Personal Consumption Expenditure Index (PCE), the Fed's preferred gauge, rose to 3.8% year over year, the highest in nearly three years, up from 2.8% in February.
Olu Sonola, head of U.S. economics at Fitch Ratings, commented: "The inflation picture is becoming increasingly uncomfortable for the Fed. This is not just a headline problem: core inflation is moving the wrong way too. Price pressures are likely to persist over the next few months. The Fed is stuck — and the heat is clearly being turned up."