Market Brief, North America

An uneasy sense of calm is settling on currency markets this morning as signs emerge that the conflict in the Middle East may be approaching a negotiated end. According to the New York Times, Iranian intelligence officials have made indirect contact with their US counterparts to “discuss terms for ending the conflict,” dovetailing with a shift in tone from president Trump, who said in a Sunday interview “What we did in Venezuela, I think, is the perfect scenario,” —suggesting that he is willing to step back from earlier demands for regime change in Tehran. Selling pressure eased in yesterday’s session...

Financial markets are becalmed after US president Donald Trump stuck to the script in his State of the Union address last night, avoiding any major policy announcements and striking a more measured tone on Iran than some investors had feared. The dollar is almost unchanged relative to the afternoon fix, benchmark Treasury yields are edging higher, and equity markets look set to extend yesterday’s recovery into a second session. Measures of implied volatility are tracking lower, with the VIX index—Wall Street’s “fear gauge”—falling back below the 20 threshold that typically signals a sense of alarm among market participants. The president...