President Donald Trump warned Iran on Sunday that the “Clock is Ticking” for a peace deal, stoking fresh volatility in global markets as oil prices climbed and bond yields surged. Crude oil prices rose nearly 2% Sunday evening, with Brent crude futures trading above $110 a barrel and West Texas Intermediate futures advancing to $107.26.
Bond yields pressure stocks
The intensifying rhetoric is spilling into the credit markets, where long-term government debt has faced a sharp sell-off. The benchmark 10-year Treasury yield rose nearly 24 basis points last week to end Friday near 4.6%. Analysts warn that if the Strait of Hormuz remains closed, it could trigger a new inflation regime that equity markets have yet to fully price in.
- The S&P 500 shed 1.24% on Friday, while the Nasdaq Composite slipped 1.54% as investors pulled back from tech leaders.
- Nvidia stock dropped 4.4% on Friday, snapping a seven-session win streak ahead of its quarterly results.
- South Korea’s Kospi index fell more than 6% Friday as Samsung Electronics and SK Hynix retreated from record highs.
Supply constraints. Geopolitics expert Daleep Singh noted that the situation is becoming dire, as the Permian Basin can only add roughly 250,000 barrels per day to compensate for lost Iranian supply. With Tehran insisting on sovereignty over the Strait of Hormuz, the market is now pricing in a greater probability of a Federal Reserve rate hike than a cut this year.
The focus now shifts to whether the current ceasefire can hold as the U.S. continues its blockade of Iranian ports. Investors are also bracing for the start of an 18-day strike by 45,000 Samsung Electronics workers on May 21, which threatens to further complicate the global technology supply chain.
