Market Minute: June 15th, 2026 - When Conventional Market Wisdom Meets Inflation
On Sunday evening, as I was grilling dinner, President Trump and authorities from Pakistan announced a peace deal between the U.S. and Iran. As the futures markets opened, stocks moved higher, oil moved lower, and the next move for bonds will be particularly telling. What gives?
Markets React
At 6:45 PM Eastern time, Nasdaq futures are up 1.3%, S&P futures are up 0.8%, and Dow futures are up about 50 basis points. Not surprisingly, with a reopened Strait of Hormuz, West Texas Intermediate oil is down 4% to about $81 per barrel. The stock move is encouraging, but we believe that much of the positive price bounce from a deal has already been priced into the market. As oil begins to flow, we expect both crude and natural gas to begin trading lower, and this should take some of the heat out of the recent bout of inflation.
What the Bond Market Will Tell Us
The conflict with Iran has been an interesting test for bonds. Generally, in times of global conflict, the U.S. Treasury market has served as a haven trade, with bond prices typically rallying (with a corresponding decline in U.S. Treasury yields) as investors around the world sought the relative safety of the U.S. bond market. That didn't happen this time, because inflation concerns muted the appeal of a flight to safety.
If the peace is viewed as durable, the next moves in the bond market will provide important clues as to whether investors believe a sustained decline in oil prices can bring a more fundamental easing of inflation. Stay tuned…we do not think this will be a straight. The bond market will ebb and flow with inflation and employment data. We also do not believe there will be a material decline in interest rates, given continued government budget pressures and the overall level of government debt. The real question is whether we begin to see a meaningful decline in inflation. More to come.
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