Oil Slides, Stocks Gain as Israel-Iran Ceasefire Remains in Flux
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Ready to bring your visions to life? Learn how at AmazonBusiness.com. Bloomberg Audio Studios, podcasts, radio, news. Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Krisner, and we begin with a stunning announcement earlier this evening from President Trump. In a post on Truth Social, Trump said there is a tentative ceasefire deal between Israel and Iran beginning at midnight Washington time.

Trump went on to say,

Arachi said that Tehran will stop its attacks if Israel stops its airstrikes by 4 a.m. Tehran time. Earlier in the day, to provide a bit of context, we had Iran retaliating for those U.S. airstrikes over the weekend by attacking a U.S. airbase in Qatar. Now, the Qatari government intercepted this attack. There were no casualties. That may have helped to defuse

A lot of concern about an immediate disruption of oil from the Middle East. Now, in New York trading, we had crude oil falling pretty dramatically. We were down more than 7%. Let's get to Joe Matthew. He's on the line from Washington, D.C. Joe is host of the Bloomberg Balance of Power radio and TV program. Joe, give me your perspective on what we're learning. Well, it's just fast and furious today. Pretty remarkable to think about the distance of time, just mere hours between Israel and

watching Iran respond to U.S. attacks on its nuclear sites, as you just described, Doug, to emerge with a ceasefire. We were asking just a short time ago if the tit for tat between the U.S. and Iran was over. I guess we can answer that now and, in fact, put at least a bookend on what's been going on between Israel and Iran for the better part.

of 12 days. We need to learn a lot here. We're working on very few headlines. As you know, the president likes to announce things on social media, and there's typically a lot of other news behind the headline. He's on his way to the NATO summit tomorrow. As far as we know, he's still on track with that plan. And this is going to be a fascinating conversation when he joins other world leaders in

And I suspect we'll use this as a platform to send a big message after what's happened in the last 48 hours. I guess the weekend through all day today and now we are at this moment. Crude oil prices, Joe, are just collapsing even further. We saw WTI down quite a bit today in New York. I think collectively a sigh of relief and markets, given the degree of tension that there has been, it's been palpable.

That's right. President Trump, by the way, just posted as you were speaking, trust in Trump. That's all it says with an American flag emoji. And that is the idea here that the White House is trying to reinforce. If you just had faith in the boss, you wouldn't have been nervous here in the markets to begin with. But

There has been a narrative in the markets broadly for stocks and commodities that the great existential threat that's been hanging over our heads for decades has suddenly been eliminated. Now, that's before we were talking about a ceasefire. There were still missiles in the air, Doug, and stocks were going up today. Oil was going down. This is not the scenario that we ever envisioned at a time like this. But the idea that the nuclear threat has dissipated, save all the rest of it, and there could be further conflict.

in the Middle East. But that single item was a massive risk off moment for investors in both spaces simultaneously. And I'm still struck by that moment today, sitting here in our bureau in Washington, knowing that missiles were on their way from Iran to U.S. installations suddenly intercepted and markets begin to rally without the president even speaking. I'm not sure we've seen something like that before.

Iran's foreign minister was in Russia over the weekend. I think there may have been some conversations happening early on Monday. We know that Russia was pretty critical of the U.S. move on those nuclear sites. And at the same time, Beijing seemed to be very, very disapproving. We know the relationship on the oil side between Tehran and Beijing. The Chinese are very, very dependent on crude oil coming out of Iran. And I'm wondering how...

those two countries, Russia and China, may have put a little bit of pressure on the Iranian regime to try to come to a resolution. Well, that could be. And that's a great question to ask in a narrative that we're going to be

following here or pursuing at Bloomberg. This could all take an interesting turn as well tomorrow when the president gets to the NATO summit, when, of course, Ukraine was supposed to be on the menu here. We didn't think we'd be talking about a ceasefire, never mind the U.S. striking Iran. But knowing, of course, that Russia is already deeply involved in its war against Ukraine to watch this unfold in the Middle East,

It's a very dangerous moment and a curious one as President Trump demands more spending from our European allies in NATO. And I suspect that he's going to speak to all of these. If there's a news conference where he's taking questions from reporters, we could advance all of these storylines immediately.

with a single visit to that summit. Well, you mentioned the fact that the president is on his way to the Netherlands for the NATO summit. How do you think this development is going to change the conversation there? It's a great question. I suspect that he's going to be asked a lot about this instead of Ukraine. And if you're President Zelensky, that's probably not

a winning formula for you this week. The fact of the matter is Vladimir Putin continues to bomb civilians, striking. We've seen horrifying videos of drones striking apartment buildings. And this is something that may not get the attention that it would have otherwise. The president's going to be there coming off of what he sees as a massive victory, though, and he's going to claim victory for European nations that increase spending to 5% of GDP. They're going to be lined up

to get a handshake and a photo opportunity with him about that, even though he doesn't have a lot of nice things to say about our European allies. He made this week, this whole summit was kind of orchestrated for him to celebrate the push for our NATO allies to spend more. He's going to have a lot more to talk about now when it comes to Iran. And he's going to project himself, Doug, as a peacemaker. When he goes to this military alliance and a summit of world leaders, a peacemaker who is reportedly interested in winning the Nobel Peace Prize,

which is something that Pakistan suggested might happen today. Joe, thanks for helping us break this all down. He is Joe Matthew, co-host of Balance of Power on Bloomberg Radio and TV. For more on the still evolving details of this ceasefire, we heard from our breaking news editor in Hong Kong, Jill Desis. She spoke with Bloomberg's Yvonne Mann and David Inglis.

You know, the market's been kind of in a whiplash really, but at least pricing is some sort of major de-escalation between the US and Iran. And then we have these comments from the foreign minister this morning. How do we kind of square all these together? Yes, certainly, Yvonne. So I think there's a couple of really key things to sort of pay attention to here. First of all, when you're looking at those comments out of Iran, I think the really key line there is that idea that they're saying, you know, we'll hold fire if Israel holds fire, essentially, right? So, I mean,

Again, we're still kind of leading on the presumption that it's Donald Trump that came out and he's the one that talked about announcing the ceasefire. I think as with everything Donald Trump, you have to kind of cut through the bluster and try to navigate exactly what that means. To me, the really key question here is what Bibi Netanyahu is actually thinking, what that official comment from Israel is going to be. To me, that's the big key player that we're still waiting for that official comment from.

All that being said, we're still about three hours away from when Trump has said the ceasefire is actually supposed to take place. Obviously, we've been seeing all morning headlines flying around about continued military action happening, that you're seeing Israel continue to conduct some strikes. I think that that just kind of shows you this is still a bit of an uncertain situation. But to me, I mean, when you look at

the retaliation that Iran ultimately took against those US strikes from over the weekend. I mean, targeting a US command base in Qatar, heavily telegraphed, basically telling everybody ahead of time so that they could evacuate. That's not the kind of massive escalation that you'd expect. That's really more of a symbolic move here. So it does seem like ceasefire may be on the table, but we're still waiting for some clarity there. And again, I really think we need to hear from Israel about what exactly is happening over the next couple of hours.

Right. And, you know, Jill, just to ask you as well, and, you know, is it simply a matter of looking at the clock quite literally? Because the, you know, the the timestamp that the U.S. president had attached to that announcement is still in a couple of hours. So in the meantime, to your point, we've seen explosions in parts of Iran. We've seen deflecting. Of course, they've said Iran has deflected the most intense strike so far since June 13. Do markets look at what's happening or what will potentially will happen these next few hours?

and just largely try and overlook what's going on here because there is that deadline at the end of these next few hours or so. I mean, potentially, David, but again, I think this really just comes down to waiting to hear more from what Iran and Israel are actually saying. I mean, as of right now, obviously, we've got these latest comments from Iran. Again, I do think that while there is that line about no agreement being made, to me, the much more critical piece of that is

is just saying that it sort of depends on whether Israel sort of halts its actions. So to me, I'm looking at this and thinking, we do have this Trump deadline. I mean, it sounds like Trump talked to Netanyahu. He certainly obviously is, the US is a key player in what's happening here. But again, we're really waiting to hear what Israel ultimately says. And so I think what this is showing you is a kind of, this is an

There's an element of sort of fog of war here where with a lot of these types of action, there's a lot of different players involved. There's a lot of different pieces on the table that you're kind of dealing with in these really, really sensitive situations. A lot of actions that have already happened, some of which have been pretty highly telegraphed. So it does kind of tell us, I think, that you need to kind of wait to see what happens

happens over the next couple of hours, what sort of official statements you get. It's easy to kind of run into something like this, see a Trump truth social post with all of that bluster and those capital letters kind of flying around, sort of projecting this idea of a ceasefire. But again, I think we have to wait to see what ultimately happens. And then ultimately, it kind of sounds like if there's a ceasefire that's actually in place, maybe we sort of reset the

clock back to where we were a couple of weeks ago, where tensions have de-escalated a little bit. We're back to looking at a situation where maybe Iran and the U.S. and such are at the negotiating table again, and we're sort of getting off of the military incursions that we've seen Israel in particular ramp up over the last several days. But again, I think this really points to a picture where there's a lot that's in action here. I think we have to kind of wait and see what some of these official comments are ultimately going to tell us.

That's Bloomberg's Jill Desus in Hong Kong, speaking to our TV colleagues Yvonne Mann and David Inglis here on the Daybreak Asia podcast.

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Welcome back to the Daybreak Asia podcast. I'm Doug Krisner. We continue with our top story. Earlier in a post on Truth Social, President Trump announced a tentative ceasefire between Israel and Iran. Trump said the two countries have agreed to a complete and total ceasefire beginning at approximately 12 midnight Wall Street time. Now, it was earlier in the day that Iran retaliated for those U.S. airstrikes over the weekend.

by attacking a U.S. air base in Qatar. Oil prices plunged, given what appears to be a lower probability of disruptions of crude from the Mideast. And crude oil is continuing to decline in the electronic session. Joining me now for a closer look at market action is Ross Mayfield. He is the investment strategist at Baird. Ross, thank you for making time to chat with me about this.

So news of the ceasefire obviously coming from the president. Reuters is now citing an unidentified senior Iranian official on this agreement. We've not yet heard from Jerusalem, but it seems like we're making progress. At least it would appear in that direction. How are you understanding all of these various components right now?

Yeah, I think it's hard to feel confident until you get confirmation from all sides. But directionally, you're headed in the right direction. And that's what really is going to matter for markets here is that rather than

Things continuing to escalate, as was the fear and concerns over the weekend. We've gotten to a point where there's de-escalation with maybe potentially minimal long-term impact. We've obviously seen oil prices drop pretty significantly. For most U.S. investors on the other side of the world, that's the primary mechanism by which these sorts of Middle Eastern tensions

can really make an impact quickly. One of the things that we've been seeing, obviously, is the charade in the crude oil price. But the other thing that has been kind of interesting, the bond market has been looking at higher oil and its inflationary implications. That seems to be being removed from the market as we speak. How do you feel about the inflation story right now?

I feel great about it. We've got core inflation down meaningfully, the biggest component of the CPI basket housing, both asking rents and home prices are moderating and even falling in many parts of the country.

So I think the case for the Fed to cut in July is strong. And we have heard from a couple of FOMC members that that's on the table. So the oil story, the Fed tends to look through some of those more volatile components, but it would have been another thorn in their side if we'd gotten oil up to $1.

you know, $90, $100 a barrel. So, the fact that we're pulling back so meaningfully here, alongside core inflation coming down, and with the tariffs paused and continuing to be paused, I think there's a real case to cut in July and be a little more aggressive, given some of the weakness in the labor market. Yeah, Fed Governor Michelle Bowman seemed to signal today support for a potential rate cut in July. That seems to echo what we heard from Fed Governor Chris Waller.

We also heard today from Austin Goolsbee. He is the head of the Chicago Fed, and he was kind of putting a caveat on that, saying that if the inflation hit from tariffs remains subdued, then he maybe could get on board with the Fed resuming rate cuts. How do you view the tariff story as a part of the inflation story?

Well, it's obviously a big part of what they're watching. Ultimately, it's not how I think about it, it's how the Fed thinks about it. They're clearly very concerned about the potential for inflation from the tariffs. Obviously, the market is more on the side that July is not a live meeting, something like 80% odds in the Fed Fund futures market that we just continue at current levels until September.

I struggle with it. I do think it's a mistake to wait for the confidence that the tariff policy hasn't resulted in some sort of issue because you know that the labor market is weakening currently. And if you wait too long, and this is a part of the Fed story for the last 50 years, is

If you wait until you kind of see the whites of the eyes, it's often too late to avoid some sort of economic downturn. So it'll be important in a couple of weeks to see that either those reciprocal tariff pauses get extended or that we announce more deals than I think the market expects to see right now. But the main thing will be, can we get those pauses extended for most countries and that the administration acknowledges that?

Yeah, most of our trading partners are negotiating in good faith. So we've talked about a few of the risks. How are you left feeling about risk assets right now, particularly equities?

Yeah, I feel pretty bullish, to be honest with you. The fact that we're dealing with all of these headwinds and noisy macro things, geopolitics, a big tax spill, and yet the market is still within a couple of percentage points of all-time highs. The resilience today was pretty astounding, given what happened over the weekend. You've had this

really aggressive momentum thrust off the April lows. Participation, not just in the US, but abroad. Cyclical leadership, tech coming back into the fold. A lot of things that really are market messages that portend strong returns if you look out six or 12 months historically. Now, the environment is rife with headwinds too, and it's not a perfect backdrop, but

But I think the message from the market is a lot more optimistic than the message from, you know, the news as it's covering the geopolitical situation. And that's the message that I think we have to pay more attention to. So how are you feeling about valuations with an S&P trading at around 24 times earnings?

They're rich. It's one of those things where, as a timing tool, it's basically useless. But you would say that if you're looking out from this starting point, and again, with the market functionally back at all-time highs, and many global markets now through all-time highs and at new records as we speak, you would say that if you're looking at the next five years or the rest of the decade, you would expect more muted returns from here.

Whether that looks like a couple more years of outsized gains and then an AI bubble having to deflate down the road, or whether it just looks like a couple years of single-digit, more muted returns. It's not something that's going to keep us out of the market, but it frames up the expectations that we would have for returns, and especially

And what we feel is going to be a higher for longer rate environment, even if the Fed starts to cut again later this year. Yeah. Thirty one times earnings. If you look at the Nasdaq 100, you talked about the possibility of maybe a bubble. Is that something that you're concerned about actively? Are you taking defensive measures in that regard?

No, it's something that we think about. I don't think we're quite there yet. The obvious corollary would be the late '90s into the early 2000s dot-com bubble. As much as some of the valuations today look frothy,

I don't think they really hold a candle to what we saw in '99 and 2000. I think we could get there. The enthusiasm around AI is clearly coming back into the market. But for one, a lot of the big companies today are much better capitalized, more cash, less debt, bigger moats.

And then past that, AI, the adoption rate of AI seems to be really aggressive. Most of the survey data we're seeing from some of the big consultant firms suggests that companies are really experimenting with these tools and trying to get more efficient at a high clip. So I think we could get there, certainly.

But I don't think the sentiment environment is there yet. People are still very kind of restrained and nervous as opposed to euphoric. And I don't think that the valuations are quite there yet. So to me, it would be more of like maybe a 2027 kind of story. OK, Ross, we'll leave it there. Thank you so much. Ross Mayfield, he is investment strategist at Baird. Joining us here on the Daybreak Asia podcast.

Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at the story shaping markets, finance, and geopolitics in the Asia Pacific. You can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere else you listen. Join us again tomorrow for insight on the market moves from Hong Kong to Singapore and Australia. I'm Doug Krisner, and this is Bloomberg.

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