Bessent Signals Iran Deal to Reopen Hormuz, Sparking Stock Rally and Oil Drop
Treasury Secretary Scott Bessent said a deal with Iran to reopen the Strait of Hormuz could come within a day, sending oil to $78 a barrel and igniting a rally in global stocks and bonds.
Financial markets rallied on Tuesday after US Treasury Secretary Scott Bessent signaled that a deal with Iran to reopen the Strait of Hormuz could be imminent. The remarks, made in a CNBC interview, pushed oil prices lower and ignited a broad rally in stocks and bonds as investors priced in lower inflation risks and a less aggressive Federal Reserve.
Diplomatic breakthrough
Bessent told CNBC that an agreement to lift the blockade of the strategic waterway could come "today or tomorrow." The Strait of Hormuz, a chokepoint for roughly a fifth of global oil flows, has been a flashpoint in the US-Iran conflict. His comments were the strongest official signal yet of progress in talks that have been underway for weeks. Oil prices, already under pressure, extended their decline, with West Texas Intermediate crude falling to $78 a barrel.
Markets rally
The prospect of a diplomatic resolution triggered a sharp repricing across asset classes. In Asia, Australia's S&P/ASX 200 index climbed 0.7% to an intraday record of 9,213.00, led by materials stocks. US equity futures pointed to a higher open, and European shares also advanced. In bond markets, the yield on the 10-year Treasury note dropped to 4.639%, according to Tradeweb, returning to levels seen before Federal Reserve Chairman Kevin Warsh's press conference last week had unsettled investors. Yields across maturities fell by three to four basis points.
- Gold futures rise 0.7% to $4,119.40 an ounce.
- Bessent signals Hormuz deal could come 'today or tomorrow'; WTI crude at $78 a barrel.
- 10-year Treasury yield falls to 4.639%.
- Gold holds near $4,070 an ounce after earlier gains.
- Australia's S&P/ASX 200 hits intraday record of 9,213.00.
Gold, which had risen 0.7% to $4,119.40 an ounce in early European trading, later gave back some gains and held near $4,070 as the dollar firmed and rate-hike expectations faded.
Inflation and Fed expectations
Falling oil prices directly eased concerns about inflation, which had been stoked by the supply disruption. Investors quickly scaled back bets on further Federal Reserve tightening. Market pricing now reflected expectations for no more than one additional rate hike in the coming year, down from earlier projections.
Markets continue to assess the outlook for US monetary policy after last week's Fed meeting.
The analysts added that uncertainty remains elevated as investors weigh persistent inflation risks against signs of slowing economic momentum.
Labor market data
The rally was also supported by US labor market data that showed job openings edged lower in June. Available positions fell to 7.36 million from 7.54 million in May, the Bureau of Labor Statistics reported. The figure was slightly below economists' median estimate of 7.5 million, signaling a gradual cooling in demand for workers. The data reinforced the view that the economy is moderating, which could further reduce pressure on the Fed to raise rates. Upcoming reports, including the ADP employment survey on Wednesday and the monthly nonfarm payrolls on Friday, will provide a fuller picture of the labor market's health.
What's next
While Bessent's comments raised hopes for a swift resolution, no deal has been finalized. Diplomats cautioned that negotiations remain delicate. Oil markets, which have been whipsawed by geopolitical headlines, are likely to remain volatile until a formal agreement is announced. For now, the prospect of reopened shipping lanes and lower energy costs has given investors a reason to buy.
