On Thursday, Federal Reserve officials reiterated their priority of fighting inflation, and the market continued to price in higher interest rates for a longer period; in addition, the U.S. Senate rejected a resolution to limit Trump’s war powers against Iran by a vote of 50 to 49, meaning that the risk of continued conflict and fiscal expansion remains.
The U.S. Dollar Index ultimately closed up 0.1% at 101.24. The yield on the benchmark 10-year U.S. Treasury note rose 8.5 basis points to close at 5.207%; the yield on the 2-year U.S. Treasury note, which is sensitive to the Fed’s policy rate, rose 2.1 basis points to 4.933%.
Iran’s Supreme Leader’s military adviser warned that the conflict could spread to the Indian Ocean and stated that the Strait of Hormuz “can never return to its previous state.” Safe-haven demand partially offset the downward pressure from the strong dollar and high real interest rates, and precious metals closed slightly lower.Spot gold extended Wednesday’s decline, eventually closing down 0.28% at $4,274.62 per ounce; spot silver closed down 0.92% at $63.85 per ounce.
According to sources close to the negotiations, the U.S. and Iran discussed a phased plan in New York, which includes Iran reopening the Strait of Hormuz and the U.S. lifting economic sanctions. International oil prices closed higher, but intraday movements showed significant divergence.WTI crude oil ultimately closed up 1.85% at $93.82 per barrel; Brent crude oil ultimately closed up 3.5% at $107.04 per barrel.
U.S. stocks: The Dow Jones Industrial Average closed down 0.31%, the S&P 500 index fell 0.02%,while the Nasdaq rose 0.01%. Arm (ARM.O) fell 7.88%, SanDisk (SNDK.O) fell 3.47%, and Oracle (ORCL.N) fell 3.49%; Meta Platforms (META.O) rose 4.5%,and Intel (INTC.O) rose 3.91%. The Nasdaq Golden Dragon China Index fell 0.67%, with Baidu (BIDU.O) down 1.89% and Alibaba (BABA.N) down 0.14%.