As investors wake up Tuesday morning, President Donald Trump has declared an end to the 12-day war in the Middle East, and Israel and Iran had agreed to a cease-fire.
If that feels like whiplash, it’s for good reason. The conflict seemed to be getting a whole lot hotter after the U.S. bombed Iran’s nuclear sites over the weekend. And that came only days after Trump said he might need up to two weeks to make a decision over wading into the war. The ups and downs make the Rocky Mountains look like Iowa by comparison.
Of course, the peace may prove fragile, and the truce got off to a shaky start early Tuesday. But for now, the conflict looks like one less thing to worry about. And the most surprising part is how calm markets appeared to stay through it all. Sure, oil prices added $10 and shed it again. Stocks went up and down a little over the past two weeks, but the S&P 500 finished Monday within 2% of the record high reached earlier this year.
The episode may leave investors scratching their heads about how to interpret Trump. After the display of force with bombs, the takeaway surely isn’t to count on TACO trades—that Trump Always Chickens Out of delivering on his threats. Nor is it that Trump will always do what’s best for markets or that he’s about to crash them—traders who banked too hard on the initial post-election optimism or April’s post-tariff pessimism will have been burned.
The next flashpoint is the Federal Reserve. Trump renewed his call for lower interest rates hours before Fed Chair Jerome Powell’s evidence session on Capitol Hill. And he appears a little closer to getting what he wants. Fed Vice Chair Michelle Bowman said Monday she could support a July cut. That follows Governor Christopher Waller saying much the same last week.
Tariffs are the next worry after that as the end of the 90-day pause approaches in early July. If anything, the only constant in this extraordinary cycle of news is Trump’s capacity to surprise everyone.
—Brian Swint
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CONTENT FROM: Columbia Threadneedle Investments
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With markets in flux, fixed income is providing important diversification. We explore the key market drivers and how investors can navigate the evolving landscape.
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Iran, Israel Cease-Fire Gets Off to Fragile Start
Israel and Iran agreed to a cease-fire overnight, but the truce looked fragile to say the least early Tuesday. Both sides accused the other of violating the deal just hours after it was agreed to, while Israel vowed to respond forcefully. Iranian state media denied the claims. President Donald Trump heralded an end to what he called the 12-day war.
- Trump said the cease-fire had taken effect in a post on Truth Social shortly after 1 a.m. Eastern time. Iran had earlier confirmed it would halt its attack if Israel did the same. The Israeli government said it also agreed to the cease-fire and that it had achieved its war aims shortly after 2 a.m.
- However, less than two hours later the Israeli military reported sirens in the north of the country due to missile fire from Iran and said it was operating to intercept the strikes. “In light of the severe violation of the cease-fire carried out by the Iranian regime, we will respond with force,” Chief of the General Staff Eyal Zamir said in a statement.
- Iran then accused Israel of attacking it three times at around 9 a.m. local time, or 2 a.m. Eastern, after Trump had announced the truce, The Wall Street Journal reported.
- Trump urged the two parties to respect the agreement in a post early Tuesday. “THE CEASEFIRE IS NOW
IN EFFECT. PLEASE DO NOT VIOLATE IT!,” he said.
What’s Next: Peace between Iran and Israel was always going to be hard to achieve. Both sides seem willing to bring the conflict to an end, but the situation
remains delicate and renewed escalation is a possibility.
—Callum Keown, Brian Swint and Elsa Ohlen
China Is Top Iranian Oil Buyer But It’s Not Most Vulnerable
China imports about a fifth of Iran’s oil—more than any other country—but it may not be the hardest hit if Tehran’s daily exports of one to two million barrels a day are disrupted. The immediate conflict appeared to
have ended early Tuesday after President Donald Trump announced a cease-fire for Israel and Iran.
- That was after Iran launched a missile barrage on the U.S.’s largest air base in Qatar and the region. Trump called that move “weak” and “effectively countered.” Iran gave advance notice on the attack, and Trump cast it as a
way for Iran to “get it out of its system.” The cease-fire will take place in stages and end the 12-day war, Trump said.
- Brent crude oil futures dropped more than 7%, their biggest drop since 2022, after Iran’s countermove against the U.S. strike on Iran’s nuclear program on Saturday. Traders believed it was a better scenario than a possible disruption or closure of the Strait of Hormuz, a key energy transport region.
- China was seeking negotiations following earlier calls on the international community to help de-escalate the conflict, calling the Persian Gulf and its adjacent waters, which include the Strait, vital international passages for goods and energy products. China imported $320 billion of crude last year.
- That’s a smaller share of its gross domestic product than other countries. India, South Korea, Thailand, and Singapore are more exposed in terms of the damage that disruptions to oil imports could wreak on their economies, according to Gerard DiPippo, associate director of the RAND China Research Center.
What’s Next: China has built up strategic oil reserves, DiPippo notes. Its energy system is more adaptable, with big refiners able to handle a wide mix of grades of crude, giving it the ability to process oil from other sources, potentially limiting the damage to an economy still trying to recover.
—Reshma Kapadia and Liz Moyer
Compass Sues Zillow In Widening Real Estate Market Rift
A widening rift between real estate listings portal Zillow and the brokerage Compass could change the way the housing market works. In the latest escalation, Compass has filed an antitrust complaint against Zillow over recent changes it made to its listing rules.
- Compass alleges that Zillow is using anticompetitive
tactics to protect its monopoly and revenue through the rules, which say new listings have to be available on the multiple listing service, a national network, and syndicated to data feeds within a day or be blocked from Zillow and its Trulia platforms.
- A Zillow spokesperson said the company believes the claims are unfounded and it will vigorously defend against them. Generally, when a home lists for sale, the agent puts it on the MLS and syndicates it. Compass recently moved to a three-phased strategy that starts with private listings on its own platform.
- Compass says the strategy is a way for sellers to test pricing and market dynamics without having
to accrue days on the market—but listing portals like Zillow and others have pushed back. Consumer advocates say private listings result in limited access for buyers and lower sale prices for sellers.
- The buying and selling experience could change further if holding a listing off the market becomes more common in the future. Choosing a brokerage could become more important for both buyers and sellers who want to secure the widest choice of homes or biggest pool of buyers.
