Stocks and fixed-income assets from virtually every corner of the planet are rallying ferociously following the ceasefire deal between Washington and Tehran. José Torres, Senior Economist at Interactive Brokers, shares his insights.
The two-week agreement is serving to sideline recession fears, raise global growth projections and chop inflation expectations, developments that are providing a substantial boost for shareholders and bond investors alike. The surge in optimism occurs as it becomes increasingly clear that the White House wants cheap oil any way it can get it, which has been a key feature of the Trump administration’s policy mix.
Indeed, subdued energy costs were a meaningful component limiting tariff-tied price increases that helped the Fed deliver three rate cuts last year. Monetary policy easing prospects have increased Wednesday as WTI traded at a trough of $91 per barrel, the lowest price since late March, but the odds of just one 25-bp reduction by Christmas remain weak at just 34%.
In trading, equities and commodities are all advancing broadly with the exception of energy-related items, with almost every sector and subcomponent benefiting the bulls. Cryptocurrencies aren’t being supported by animal spirits, however, and are experiencing lower demand alongside the greenback and volatility protection instruments, which are declining due to risk-on attitudes on Wall Street that are weighing on demand for safe-havens. Elsewhere, prediction markets are catching bids.
Not Out of the Woods Yet
Wall Street isn’t out of the woods yet as the ceasefire deal occurs while Tehran and Washington remain deeply divided on the most significant issues. Meanwhile, there are reports of continued attacks occurring in the region that may comprise the agreement. It’s precisely the lack of clarity amongst the stakeholders that has crude oil prices still elevated at $96.45 per barrel, as there’s a chance of a reescalation between the US and Iran. But stock investors aren’t worrying about risks Wednesday because when speculative enthusiasms get going, they are incredibly hard to stop. Indeed, equities are back near their highs of the day and above their pivotal 50- and 200-day moving averages as the bulls make a ferocious attempt to regain the uptrend on the major indices. Finally, President Trump’s desire for peace in the Middle East amidst weakening prospects for the GOP during the upcoming midterm elections as a result of a constituency that generally opposes the war is enough to reassure investors that the peak of the fighting is most likely behind us.
International Roundup
Euro Area Retail Sales Weaken
February retail sales in the euro area sank 0.2% month over month (m/m) and were only 1.7% higher than in the year-ago period following January’s flat monthly print and 2.1% year-over-year (y/y) growth, according to Eurostat. The m/m contraction matched the economist consensus estimate while the y/y expansion was 0.1 percentage point above expectations. For the m/m print, shoppers spent 0.5% more on auto fuel at specialized stores, but the strong showing didn’t offset the impact of a 0.5% drop in purchases of food, drinks and tobacco. The total value of purchases of non-food products ex auto fuel was unchanged.
And Wholesale Prices Fall
Wholesale prices in the euro area sank 3% y/y and 0.7% m/m in February after falling in January 2% relative to the year-ago period and climbing 0.8% compared to December, according to the Producer Price Index. The 12-month change matched the economist consensus estimate but the m/m result was marginally less than the forecast for a 0.6% drop. Price declines were limited to the energy category and the non-durable consumer goods group, which sank 2.4% and 0.2%. Conversely, intermediate goods, capital goods and durable consumer goods fetched prices that were 0.3%, 0.3% and 0.2% higher than during January, but the strength in those categories only partially offset the impact of weakness in energy and non-durable consumer goods.
Japan Wage Pressures Exceed Expectations
The Bank of Japan’s (BoJ) recent concerns about strengthening wage pressures received validation yesterday with new data showing that compensation on a real basis, or after inflation, climbed 1.9% y/y in February, exceeding the economist forecast for a 1.3% jump. The BoJ has been closely watching wage increases that could rev up domestic demand and contribute to inflation. The February growth of paychecks was the largest since 2021 and is likely to strengthen monetary policymakers’ outlook for an acceleration in domestic demand that could lead to higher prices.
On a nominal basis, which doesn’t include the impact of inflation, overall wages and average cash earnings were both up 3.3% y/y. Economists anticipated 2.7% ascents for both metrics after the two data points depicted 2.5% increases in the first month of 2026. Meanwhile, overtime pay was 3.3% higher than in the year-ago period, an acceleration from 3.2% in January.
Japan Services Industry Sentiment Dips
The Japan Economy Watchers Current Index, which measures sentiment among client facing service workers in industries including hospitality, taxis and restaurants, plunged from 48.9 in February to 42.2 in March. Economists anticipated that the gauge would fall to 48.
House Price Gains in the UK Miss Expectations
Sales prices of UK homes slipped 0.5% m/m in March, a reversal from February’s 0.3% advance and considerably below the economist consensus estimate for a 0.2% lift. Relative to February 2025, prices were 0.8% higher, decelerating from the 1.2% y/y climb in the preceding month. Economists anticipated prices to head north by 1.5%.
