Last week ended on a sour note as angry traders prepared for a bad commute with the LIRR strike looming. Most major US indices fell >1% as global yields moved sharply higher. The S&P 500 was able to eke out a gain for the week, but small and midcap indices fell >2%. It was a week full of hot inflation data, a continued surge in semis/memory (until Friday) and a focus on President Trump’s visit to China. Yields had held just below recent highs throughout the week but as the China meetings wrapped up markets started to get concerned that military operations in Iran could restart, yields moved through key levels and equity markets could no longer ignore the situation.

Friday’s selloff carried through as futures re-opened yesterday but we have recouped those losses this morning following Iranian press reports suggesting that the US proposed waving oil sanctions. Oil prices reversed overnight gains and then have taken another leg lower after Al Arabayi, a Saudi television channel, reports that it has seen the amended Iran proposal which includes a multi-stage truce which would include a conditional transfer of uranium to Russia and Iran backed off of previous economic compensation demands. Oil prices traded as low as $107 after hitting $112 overnight. Yields have also backed off now down 1-2bps across the curve a little over 5bps off the highs.