A few years ago three behavioural-finance researchers put a deceptively simple question* to more than 26,000 people—academic economists, ordinary households, retail investors, financial advisers and professional fund managers alike. Suppose a piece of good news about a company’s future earnings is already four weeks old. Should you expect its shares to earn higher returns from here? Most academics said no: around 70% reckoned that month-old news was already in the price, and so told you nothing about the returns to come. Almost everyone else said yes—including about three-quarters of retail investors, two-thirds of financial advisers and, more startling, over half of professional fund managers. The authors’ more disquieting finding was why. This muddling of a company’s fundamentals with the expectations already embedded in its price was not down to laziness, a shaky grasp of returns or some quiet faith in market inefficiency. Even when respondents were paid for...

Good morning. Oil prices and currency markets are stabilising after yet another escalation in the conflict between the United States and Iran left the status quo* in the Strait of Hormuz largely intact. In the aftermath of Tuesday’s Iranian attacks on shipping, President Trump said the ceasefire was “over” and authorised American forces to launch a second wave of strikes against Iranian targets last night, prompting Tehran to strike back at US facilities in Bahrain, Kuwait and Qatar. Global crude benchmarks are almost unchanged from yesterday’s close, Treasury yields are holding steady, and equity futures are pointing to an incremental recovery at the open. Foreign-exchange traders have dusted off their early-war playbook—selling currencies associated with net energy importers and buying those of exporters—but moves have been relatively modest. This restraint likely reflects a belief that Washington and Tehran will keep talking and that oil will continue to flow through the strait,...

Good morning. The dollar is advancing and oil prices are climbing after a fragile ceasefire between the US and Iran collapsed, endangering a nascent recovery in global energy supplies. A series of Iranian missile and drone attacks on commercial shipping yesterday prompted the United States to revoke a sanctions waiver that had allowed Tehran to sell oil on international markets and to launch more than 80 airstrikes against Iranian targets, which were followed by Iranian strikes across the Middle East. At the Nato summit in Ankara, President Trump said the ceasefire was over “as far as I’m concerned”, adding “I don’t want to deal with them anymore”. He plans to let his negotiators keep talking, he said, but “I think they’re wasting their time”. Volatility is ratcheting higher once again. Both Brent and West Texas Intermediate are nearly 8% higher on the week, and energy-sensitive currencies are taking a hit as market participants hedge against a potential rise in import...

Good morning. Foreign exchange markets are enjoying a quiet, range-bound session, with most currencies little changed against the dollar amid a lack of first-tier economic data and a paucity of geopolitical catalysts. Treasury yields are inching lower, equity futures are pointing to a modest drop in the Nasdaq at the open, and all of the major currency pairs are less than 0.1% off yesterday’s close. Oil markets are refusing to rally. Brent and West Texas Intermediate prices are holding near five-month lows even after a fully-laden Qatar-owned LNG carrier was struck by a projectile near the Omani coast while exiting the Strait of Hormuz overnight, suggesting that supply-side dynamics are now playing a dominant role in driving price action. Export volumes from Saudi Arabia and the United Arab Emirates are now reportedly nearing pre-war levels, and the OPEC+ group of countries yesterday approved a quota increase beginning in August, reinforcing expectations for a normalisation in global...

• US markets. US stocks rose with the tech sector leading the way. USD Index treads water. The AUD ticked up thanks in part to strength on the crosses.• Data flow. Limited data releases in Australia & the US. RBNZ meets tomorrow. Will the RBNZ deliver its first interest rate hike of this cycle? Global Trends It has been a relatively positive start to the new week in US markets. US equities rose overnight (S&P500 +0.7%), with the tech focused NASDAQ outperforming (+1.1%). Oversold semiconductor and AI stocks rebounded after last week’s falls. Elsewhere, long end bond yields held steady (at ~4.47% the US 10yr is just above its 3-month average) and the US 2yr rate slipped back slightly (-3bps to ~4.11%). Across commodities, WTI oil (now ~US$68.68/brl) and gold (now ~US$4178/ounce) consolidated. It was a similar story for the USD with EUR treading water (now ~$1.1444), while GBP nudged up (now ~$1.3393) and USD/JPY rose (now ~162.05, just below its multi-decade peak). The NZD has...

Good morning. The dollar is holding firm even after Thursday’s disappointing non-farm payrolls report triggered a pullback in Federal Reserve tightening expectations. American employers added just 57,000 workers in June, far short of the 115,000 forecast, and revisions lopped a combined 74,000 from the previous two months. The unemployment rate fell to 4.2%, but not because of a pickup in hiring—labour-force participation dropped to 61.5%, its lowest since March 2021. With a no-hire, no-fire equilibrium persisting and wage pressures seen remaining contained, investors are placing 20% odds on a hike in July and 45% on a move by September, down modestly from levels seen last month. Bets on a hawkish pivot could re-intensify on Wednesday when the Fed releases minutes from its June meeting. How much detail the record contains is an open question—Chair Warsh’s well-documented dislike of overcommunication may produce a more terse account than markets have grown accustomed to—but...