Good morning. Yesterday early morning news of growing optimism from Pakistan on talks with Iran helped push oil and yields lower, providing a tailwind for equities. Later in the day, reports of an emerging agreement between Iran and Oman for a temporary shipping route through the Strait of Hormuz added to those moves. That helped mitigate deteriorating US-Canada trade relations (aka Loonie Toons). Equity gains were modest, however. Despite crude falling 4% the S&P 500 rose only 0.3% and the equal-weight had a slight loss. The Russell 2000 outperformed, gaining 0.5%. Yields fell ~5bp across the curve. Tech and the AI trade led, bouncing after declines on Monday. Energy, Staples, and Industrials were the only sectors lower.

A quiet start to the week gets punctuated this morning with PCE data, along with revised GDP, Income/Spending and Durable goods ahead of the Open. S&P futures traded flat for most of the overnight session. Core PCE was on the screws while the headline was a bit hotter than expectations. Futures rose modestly right after the print but have retreated and are now slightly lower. The GDP 2nd estimate was unchanged from the initial estimate, at 1.5%.

Oil continues to fall while precious metals weakened as yields rose. There were reports that Iran reached a revenue sharing deal with Oman on the Strait, though that looks to still be in discussion.