From Marc to Market:
Overview: The latest phase of the Israel-Iran conflict continues and the impact on the markets remains minimal. Oil prices are elevated, but private insurance seems to be slowing traffic in the Straits of Hormuz more than the direct results of a blockade that Tehran appeared to have threatened. After rejecting the G7 draft statement that urged restraint on both sides of the conflict, President Trump left the G7 meeting early and returned to Washington. On the sidelines of the meeting, the US and UK signed a trade deal though key details, like when the UK will not be subject to the steel tariff, were not announced. Separately, despite talks with Japan's Prime Minister Ishiba, no trade break through was announced. The dollar is narrowly mixed in quiet turnover against the G10 currencies and is mostly firmer against emerging market currencies.
Equities were mixed in Asia Pacific activity. Japan, Taiwan, South Korea, and Singapore posted gains, but other markets were in the red. Europe's Stoxx 600 fell every day last week before gaining about 0.35% yesterday. It is off around 0.85% in late European morning turnover. US index futures are giving back a good chunk of yesterday's gains and are down around 0.65%. Japanese bond yields ticked up after the BOJ left policy on hold and announced a slower pace of tapering starting next April. European yields are mostly 2-3 bp higher, while the 10-year US Treasury yield is off almost two basis points to around 4.43%. Gold is extending yesterday's 1.4% loss, the largest pullback in a month, to trade briefly below last Friday's low (~$3380). Oil continues to trade in a wide range. August WTI initially slipped below $70 before recovering slightly above $72 and is now near $71.35....
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