Happy Friday. Oil prices and the dollar are paring their losses this morning after dropping sharply yesterday on reports of a tentative agreement between the US and Iran. According to multiple sources, the two sides have agreed to extend their ceasefire by 60 days, schedule a fresh round of negotiations on Iranian nuclear materials, and reopen the Strait of Hormuz within a month. But Tehran has not confirmed the text, President Trump has not yet signed off, and after a series of false dawns investors are growing more cautious as the session progresses*. Although both global crude benchmarks are down almost 10% on the week, they are edging higher this morning, equity markets look set to surrender some of yesterday’s gains, and after a string of whiplash moves, the trade-weighted dollar is virtually unchanged from last Friday’s close. Measures of implied volatility have collapsed across asset classes, reflecting confidence that Washington and Tehran are aligned in wanting an...

Good morning. Oil prices and Treasury yields are easing as markets grow more confident that a deal between America and Iran could reopen the Strait of Hormuz, despite a series of military actions in recent days. The Strait, through which roughly a fifth of global oil supply passes, has been closed for almost three months. Brent crude is trading for nearly $96 a barrel and West Texas Intermediate at $90, both sharply lower than a week ago. Equity futures are pointing to a modest advance at the open, and the dollar is little changed, with the Canadian dollar, sterling, euro and yen all eking out incremental gains against a light economic data backdrop**. Central bankers are maintaining their hawkish rhetoric. The kiwi** jumped last night when the Reserve Bank of New Zealand held rates steady but warned that tightening would probably need to come sooner, and in larger increments, than previously expected. In Tokyo, the Bank of Japan’s Kazuo Ueda cautioned that even temporary shocks...

On October 19th, Albertans will answer a question no province outside Quebec has ever formally put to its voters: whether to begin the legal process toward a binding referendum on leaving Canada. The wording is deliberately indirect—this is a vote about whether to hold a future vote—and it sits alongside nine other ballot questions on immigration and the constitution. But its symbolism is potent. Under Premier Danielle Smith, a separatist impulse long confined to the fringes of her United Conservative Party has reached the mainstream, potentially impacting the broader Canadian economy and the loonie’s value. Prime Minister Mark Carney has called the vote a “dangerous bluff,” drawing comparisons with the Brexit vote that occurred under his watch at the Bank of England—a decision that hammered the pound and has likely left a permanent mark on growth—and one most Britons now regret. Alberta’s grievances are real. The province is oil-rich but landlocked, the largest foreign supplier...

Good morning. Oil prices are climbing and the dollar is trimming its losses against major peers as hopes for a near-term diplomatic resolution to reopen the Strait of Hormuz fade amid a fresh round of military escalation in the region. The US military struck targets in southern Iran and sank two Islamic Revolutionary Guard Corps vessels last night in what American officials described as defensive operations, while Israel simultaneously launched air strikes against Hezbollah in southern Lebanon. The reversal follows a long weekend that had brought a string of optimistic headlines, easing pressure across asset classes. President Trump announced on Saturday that a pact to reopen the Strait was nearing “finalisation”, though Iran contradicted this, leading him to temper expectations on Sunday—instructing his representatives not to rush and confirming the US blockade on Iranian shipping would remain in place—before posting yesterday that negotiations were “proceeding nicely”. With two sides...

• Market swings. Conflicting US/Iran reports generated volatility. US equities a bit higher. USD whipped around. Local/offshore factors push/pulled the AUD.• AU jobs. Weak jobs report in April. Employment fell. Unemployment at multi-year high. RBA rate hike expectations trimmed. Domestic headwinds growing. Global Trends The ‘will they, won’t they’ situation regarding a US/Iran peace deal continues to generate bursts of market volatility. Risk sentiment, and bellwether indicators like oil prices, swung around overnight on the back of conflicting reports. One the one hand the latest 14-point framework was reported by Iranian media as having “narrowed the gap” and US Secretary of State Rubio stated there were “good signs”. On the other, Iranian Supreme Leader Khamenei stressed that near-weapons-grade uranium must not be sent abroad. As outlined previously, the longer the current state of plays drags on and the Strait of Hormuz is effectively shut, the greater the negative impact...

Good morning. In subdued trading, oil prices are extending their decline, equities are advancing, Treasury yields are easing from recent highs, and currency markets remain dormant after President Trump said talks with Iran are in the “final stages”—leaving many investors awaiting something more conclusive. Trump warned that Washington could resume strikes within days if peace talks fail to advance, while Tehran cautioned that any renewed aggression would trigger a conflict extending “beyond the region”. Although a number of oil tankers have crossed after coordinating with Iranian authorities, the Strait of Hormuz remains largely closed to international shipping, sustaining history’s biggest disruption to worldwide energy supplies and fuelling the stagflationary pressures that are pushing up interest rates and lowering global growth expectations. The Australian and Canadian dollars, along with their safe-haven counterparts in Switzerland and Japan—currencies that would ordinarily move...