1042 ET - The coming weeks will see whether the U.S.-Iran cease-fire rally is justified, but "markets are clearly operating on the assumption that the agreement to have a cessation of hostilities is a positive step," PGIM's Robert Tipp says. He thinks markets were already "aggressively priced" before the first U.S.-Israel strikes in Iran, and the hostilities triggered anxious sell-offs now reversed for fear of missing out on the "big trade." Tipp says a resilient U.S. economy and upcoming monetary easing will be the main drivers of investment decisions for the time being. The 10-year yield is at 4.266%, off early lows. (paulo.trevisani@wsj.com; @ptrevisani)

1016 ET - A key question about the Middle East war has been whether it will cause a temporary inflation shock affecting prices or a permanent growth scare with effect on valuation, and "it seems like it is going to just be a price shock," Morgan Stanley Investment Management's CIO Jim Caron says. A price shock means that the market is going to look through it and is going to start to think about the coming months, he says in a webinar. That said, activity data in March is going to be softer "for sure," he says. If the war and the closing of the Strait of Hormuz existed for a long period of time, it could destroy demand and growth expectations significantly, he says. That would reduce earnings and valuations, he adds. (emese.bartha@wsj.com)

1011 ET - U.K. two-year government bond yields fall sharply as investors cut back expectations of the Bank of England raising interest rates following the U.S.-Iran cease-fire deal. The two-week agreement brought relief to markets, pushing oil prices down and easing concerns about energy-driven inflation. Markets price in an 18% chance of a BOE interest-rate rise in April, down from 32% probability priced in prior to the cease-fire agreement. Two-year gilt yields fall 16 basis points to last trade at 4.176%, having hit a three-week low of 4.142% earlier, Tradeweb data show. (miriam.mukuru@wsj.com)

1006 ET - European banks' direct exposure to private credit is tiny, with lending that does exist protected by senior claims to debt and higher-than-typical levels of collateral, Barclays analysts say in a note. Deutsche Bank is the most exposed bank, with private credit accounting for around 5% of its loan book, the analysts calculate. However, the exposure is across a broad mix of well-collateralized loans, the analysts say. The analysts exclude Barclays's exposure to the asset class. Banks will benefit from easing tensions in the Middle East and lower valuation levels, though some investors are wary of buying into banks' dip, the analysts write. A basket of the sector surges 7%. (josephmichael.stonor@wsj.com)

0939 ET - Cryptocurrencies are surging in reaction to the two-week ceasefire between the U.S. and Iran, but the upside may be limited unless bitcoin can push through its resistance level of around $70,000 to $75,000, says Nic Puckrin of Coin Bureau. "If it manages, we could see a rally toward the $90k mark over the coming months," says Puckrin. However, he notes, bitcoin's ability to push through that resistance is linked to the outcome of the ceasefire--if it leads to a reopening to the Strait of Hormuz. "For now, it's a fragile truce at best," says Puckrin. Bitcoin is up 4.8% to around $72,600, while Ethereum rises 7% to $2,263, and XRP climbs 5.2% to $1.39, according to LSEG. (kirk.maltais@wsj.com)

0935 ET - Slowing global business activity metrics show how badly a ceasefire with Iran was needed, according to Scotiabank in a report. The analysts say World PMI Manufacturing & Services weakened sharply in March during the war in Iran. Emerging Asian economies were hit hardest because of the Strait of Hormuz closure. "Moreover, the Input Prices component of the Global Composite PMI has risen to its highest level since late 2022/early 2023, suggesting that the surge in prices paid is not confined to the U.S. but is being felt globally," the analysts say. Markets are rebounding on news of a ceasefire, but Scotiabank says "sentiment and new orders will likely remain capped until assurances that the Strait will remain open beyond those two weeks." (adriano.marchese@wsj.com)

0929 ET - Investors will cheer the improvement in energy supply that will ease pricing pressure, LPL Financial's Jeffrey Roach says as global markets rally after U.S. President Trump's announcement of a temporary cease-fire with Iran. "However, we cannot ignore the lingering second order effects on the global economy so investors should continue to watch how geopolitical risks may affect wholesale prices, growth, and financing conditions," the chief economist says. Inflation is expected to run a bit "hotter" this month, but the outlook has clearly improved with this cease-fire, he says. U.S. CPI data for March are due on Friday, and analysts surveyed by The Wall Street Journal expect higher prints in both the headline and core inflation figures. (emese.bartha@wsj.com)

0923 ET - The dollar's price performance so far this year shows de-dollarization, or the reduced use of the U.S. currency globally, will take time, Unicredit's Roberto Mialich says in a note. Sentiment was overall negative on the dollar before the Iran war due to uncertainty about the U.S. economy, the Federal Reserve's next policy moves and Trump's policies, he says. The conflict has overshadowed these factors, strengthening the dollar due to its safe-haven status. This makes it clear that de-dollarization is a slow process and requires a stable or low volatile environment to continue, he says. "This also reflects the still-substantial difference in the use of dollar in the international monetary system at present." (renae.dyer@wsj.com)

0909 ET - The two-week U.S.-Iran cease-fire deal is a clear negative for the dollar due to its safe-haven role and could also reignite doubts over confidence in U.S. assets, MUFG Bank's Derek Halpenny says. "The regime staying in power will be portrayed in Iran as victory and investors may question this whole episode from a U.S. strategic perspective and reinforce longer-term doubts in U.S. decision-making," he says in a note. The dollar could suffer further losses in the short term, although uncertainties are high, he says. Markets are likely to remain highly sensitive to any incoming news on progress in the negotiations starting Friday, he says. The DXY dollar index falls to a one-month low of 98.554.(renae.dyer@wsj.com)

0855 ET - Bond markets could remain reluctant to price in too many interest rate cuts in the U.S. following the U.S.-Iran cease-fire deal, Natixis' John Briggs writes. Despite the significant de-escalation, the impact of the war on inflation remains unclear. "In addition, we may need some signaling from the Fed they are also comfortable and confident in the progress of that [inflation] pass-through," Briggs says. "So while we will look to buy dips as we still see two rate cuts this year, we will be patient." Briggs expects long-term yields to float higher than the short end. He recommends "scaling into steepeners." (paulo.trevisani@wsj.com; @ptrevisani)

0834 ET - Demand for Treasurys spikes on the two-weak U.S.-Iran cease-fire agreement, sending yields to their lowest level in three weeks. A plunge in crude to below $100 a barrel eases inflation fears and futures markets reduce bets on a Fed hike. The WSJ Dollar Index hits the lowest level in a month. But "the situation remains fragile," as it is unclear "whether the agreement is politically sustainable, particularly for Israel and the US," Capital.com's Daniela Hathorn writes. "As a result, markets are likely to treat this as a pause rather than a resolution," she says. The 10-year yield is at 4.238%, down from 4.342% yesterday. The two-year falls to 3.738% from 3.832%. (paulo.trevisani@wsj.com; @ptrevisani)
source: https://www.tradingview.com/news/DJN_DN20260408005595:0/