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Let’s start with the most important info: I am currently writing this at 12.30PM Sydney time (9.30AM for me in Perth), and so this article may or may not remain relevant for the remainder of intraday trades. Got it? Okay, good.
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Late morning Aus time, we had fresh reports in the Wall Street Journal citing Trump “aides” that the US President is willing to end the war in Iran even if that means the U.S. doesn’t take control of, or re-open, the Strait of Hormuz.
In other words, we have yet another fresh claim from the White House that America might be winding down the war. Many bondwatching analysts have predicted Trump would ‘TACO’ if the U.S. 10Y bond yield got too close to around 4.6%; perhaps it’s telling that it’s since dropped to 4.326% in the last hour.
And that has rippled elsewhere. When I woke up this morning, Brent Crude was trading at US$115/bbl. Since that WSJ report came out, it’s had a pretty significant haircut. During the lunch hour on Tuesday, it’s now travelling at US$105/bbl – a loss of US$10 per barrel. Not a dip below the psychological US$100/bbl anchor, but clearly, well received. The WoW chart gives the best visual indicator of context, here.
And, yes, that means an appetite for gold has just kicked back in. The intraday (or 1D) chart is the best indicator there. For the love of graphs, here’s what that looks like.
In turn, the ASX has staged a surprise rally. At time of writing – about twenty minutes left in lunch hour heading into 1PM AEDT – the market’s up +0.8%, well and truly paring off what had been another dismal start to another trading day.
Clearly, the market wants a good news story. Why do I say that? Because as this little recovery takes place in real-time as I write this somewhat frantically, at the same time, there are fresh reports of explosions inside central Iran, and the U.S. continues to fly soldiers over to the Middle East, too.
And, of course, that WSJ report is as reliable as the “aides” they spoke to – but I don’t think anyone can expect to take anything anybody says seriously in the White House right now, especially not from the President himself; but that if the President is going to say anything, it’s better to hear it coming from him personally.
That’s not what’s happened on Tuesday, or at least not before 1PM AEDT. But it’s been enough to see Brent Crude come down rapidly; gold shoot back up, and the market’s gone green. As I write this, the NIKKEI is just now paring losses (though still red), and the Hang Seng has run hard out the gate.
Will this last? I have no idea. Sorry, that was clickbait.
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