BNY’s Bob Savage describes a fragile risk backdrop, with investors tracking the Strait of Hormuz as a key barometer for energy supply relief. Despite ceasefire doubts after Iran–U.S. exchanges, risk assets are firmer, Oil is lower, Gold higher and the Dollar bid. Upcoming U.S. data, Fed speakers and political developments around Trump and Xi are seen as key drivers for policy expectations.

Risk assets firm with USD supported

"Tracking the ships going through the Strait of Hormuz continues to be the key risk barometer for investors as they watch for supply relief in energy. Ceasefire doubts rose yesterday after Iran and the U.S. exchanged fire and UAE suffered significant missile attacks, but that has not escalated today. The inherent volatility of the situation continues."

"Nevertheless, risk assets are higher, with stocks mostly up and oil lower, while USD is bid and gold is higher."

"The focus for the day will remain on the truce with Iran and the ongoing hopes that Project Freedom will deliver energy relief. On top of that, U.S. economic data will matter, with the JOLTS and trade numbers serving as important guideposts for policy."

"The Trump/Xi meetings next week are starting to matter to markets, as trade and geopolitics set the agenda. Fed speakers and their spin on policy will keep monetary policy in focus. Bonds have yet to counterbalance stocks, testing retail vs. institutional appetites for risk."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)