US and Iran agree 2-week ceasefire that will open Strait of Hormuz

Summary

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Moving Markets Podcast Summary

Episode: US and Iran agree 2-week ceasefire that will open Strait of Hormuz
Date: April 8, 2026
Host: Helen Frear, Julius Baer
Guests: Jan Bob (Market Overview), Afonso Borges (Bond Markets), Matthias Rashita (Earnings Season Preview)

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Episode Overview

This episode focuses on the financial market’s reaction to the surprise US-Iran two-week ceasefire and reopening of the Strait of Hormuz. The hosts dissect the market volatility spurred by geopolitical risk, the impact on bonds and fixed income, and set the stage for the anticipated Q1 earnings season in the US. The tone is insightful yet brisk, helping investors gauge both immediate and forward-looking implications.

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Key Discussion Points & Insights

1. Market Reaction to the US-Iran Ceasefire (00:37–05:52)

Geopolitical Shocks and Market Volatility

• Roller Coaster in Equities:
  The European session started firm, but escalated geopolitical tensions surrounding the US-Iran standoff resulted in a sudden "risk-off" mode. Stocks dropped, with the S&P 500 falling over 1% at one point.
  “It was actually a fairly solid start to the European trading session. However, investors soon switched into risk off mode, trading cautiously amid deteriorating headlines.” – Jan Bob (00:55)

• Trump’s Rhetoric:
  Donald Trump's public warning dramatically escalated risk aversion:

  "Trump's language was stark, one might even say deeply disturbing, warning that a whole civilization would die tonight if no deal was reached."
  – Jan Bob (01:26)

• Volatility Index (VIX) Spike:
  The VIX surged 10% to 27 points, reflecting the palpable market anxiety.

Shift in Sentiment After Ceasefire Announcement

• Pakistan’s Mediation and Market Relief:
  Once news emerged that Pakistan had brokered a two-week extension and Strait of Hormuz reopening, sentiment swiftly improved—even before formal US confirmation.
  “Although there was no immediate confirmation from Washington, the mere possibility of a pause in hostilities was enough to take the edge off.” – Jan Bob (01:56)

• Market Moves:

  • US equities rebounded, erasing losses.
  • Oil tumbled nearly 20% to below $100.
  • Asian equities saw a sharp rally:
    • Nikkei up over 5%
    • Kospi gained 7%
    • Chinese markets up 3%
  • Bond yields dropped sharply (lower yields), precious metals (gold, silver) spiked.
  • Dollar index fell by 1%.

• A Glass-Half-Full Market Mentality:
  "Markets have decided that the glass is half full and it might provide the off ramp Trump was looking for." – Jan Bob (02:32)

European Markets Miss Out

• Due to time zones, European equities closed before the ceasefire bounce; Stoxx 600 ended down about 1%, with broad-based declines.
• Strong futures suggest a rebound at today's open.

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2. Major Corporate News: Ackman’s Universal Music Group Bid (04:00–05:22)

• Bill Ackman Announces Bid:
  • Pershing Square offers €30.40 per share for Universal Music Group—a 78% premium.
  • The deal would merge UMG with a US SPAC and list primarily in New York.
  • Universal shares jumped over 11% but remained far below the offer price, reflecting skepticism about deal completion.

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3. Today’s Economic Data and Events to Watch (05:26–05:52)

• Eurozone: Producer price and retail sales data, France’s trade figures.
• US: March FOMC meeting minutes closely anticipated.

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4. Fixed Income & Bond Market Implications (06:02–09:46)

Investment Positioning and Outlook

• Cautious But Strategic Stance:
  "We came into yesterday's deadline advocating for an overweight duration stance… In case of a resolution, we expected core fixed income markets to unwind most of the war-led inflation concerns driven sell off." – Afonso Borges (06:25)

• Asymmetric Opportunity:
  For both escalation and detente, "the fixed income outlook appeared somewhat asymmetric… favor of holding long exposure in the intermediate sector." – Afonso Borges (06:57)

• Yields Drop:
  10-year yields fell more than 20 basis points from their highs on the easing of war risks.

Fiscal and Debt Issuance Watchpoints

• US Fiscal Trends:
  Investors should watch the Congressional Budget Office (CBO) March deficit estimate—the first to reflect war costs. The deficit prior to March was 5.1% of GDP, and war spending led to a recent $400bn budget authority request.

• Treasury Auctions:
  Auctions for 10-year (today) and 30-year (tomorrow) Treasuries follow poor demand at recent shorter-term auctions. Afonso expects better reception now that some of the uncertainty has faded but flags them as a key near-term test of sentiment. “With the uncertainty coming down, we would expect these auctions to be a bit better received. But nevertheless, we think it’s going to be important to keep track of this supply as we think about market sentiment.” – Afonso Borges (09:23)

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5. Earnings Season Preview (09:55–13:19)

Consensus Expectations

• Strong Q1 Forecast:
  S&P 500 earnings expected to grow 13.2% YoY (consensus).

  • Tech earnings growth: Over 45%, fueled by semiconductors and related equipment.
  • Excluding Big Tech, S&P earnings growth is a modest 5%, below the long-term average.
  • Commodities sectors (oil/gas, materials) expected to report outsized gains, especially metals & mining nearly doubling earnings.

• Quote:
  “Big tech is once again responsible for the heavy lifting… Earnings for The S&P 500 is expected to grow by only around 5% [outside big tech].” – Matthias Rashita (10:48)

Early Reporting Companies

• Tone Set by Early Reporters:
  72% of reporting companies beat expectations ("above the 10-year average of 70%"), indicating robust execution despite geopolitical anxieties.

• Correlation with Macro Data:
  The US Economic Surprise Index is at its highest since October 2023—suggesting aggregate earnings could beat by 6%.

What Are Investors Watching?

• Guidance vs. Q1 Numbers:
  With geopolitics in flux, more focus falls on forward-looking company guidance than Q1 stats.

  “If everything that is going on in the Middle east, there’s a fair chance that investors will put less weight on the Q1 numbers itself, but rather focus on what companies are guiding for the remainder of the year.” – Matthias Rashita (12:31)

• EPS Guidance Strong So Far:
  Q1 has already seen the highest count of positive EPS outlooks in five years, but little impact yet from the Iran-war episode.

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Notable Quotes & Memorable Moments

• Geopolitics and Leadership:

  “Trump’s language was stark, one might even say deeply disturbing, warning that a whole civilization would die tonight if no deal was reached.”
  – Jan Bob (01:26)

• Market Sentiment Shift:

  “…the mere possibility of a pause in hostilities was enough to take the edge off. The S&P 500 managed to erase its earlier losses and even eked out a little gain.”
  – Jan Bob (01:56)

• Investor Psychology:

  "We can probably all enjoy the sea of green flashing across our screens this morning. I know I will."
  – Jan Bob (05:26)

• Fixed Income Positioning:

  “…the fixed income outlook appeared somewhat asymmetric to us in favor of holding long exposure in the intermediate sector. That’s the five to ten year point of the curve, roughly.”
  – Afonso Borges (06:57)

• Earnings Disconnect:

  “If you look at the different sectors, earnings growth at the index level is still very concentrated. So big tech is once again responsible for the heavy lifting…”
  – Matthias Rashita (10:41)

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Important Timestamps

• 00:37 – Jan Bob: Market volatility, oil shock, US escalation, VIX spike
• 01:56 – Sentiment shift after Pakistan-mediated two-week ceasefire news
• 02:32 – Market optimism on a possible off-ramp; Trump’s “big day for peace”
• 03:26 – Asian rally, precious metals jump, bond yields drop
• 04:12 – Ackman’s bid for Universal Music Group; European markets recap
• 06:02 – Afonso Borges: Fixed income new risks and strategic positioning
• 08:12 – Fiscal data/US deficit watch; upcoming Treasury auctions
• 10:03 – Matthias Rashita: Q1 earnings preview, tech sector dominance
• 12:31 – Investors shifting focus to forward guidance amid geopolitics

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Conclusion

This episode provided a timely overview of the remarkable impact that geopolitics can have across asset classes, underscoring the importance of flexibility in both equities and fixed income strategy. With robust earnings expected but uncertainty ahead, the focus for investors remains on forward guidance from companies and evolving fiscal pressures in the US.

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Transcript

[A]

Good morning everyone and welcome to Julius Bear's Moving Markets podcast. It's Wednesday 8th April, and my name is Helen Frear. I'll be speaking first of all this morning to my colleague Jan Bob, who has a roundup of what's happening in financial markets for us. Then I'll be talking to Afonso Borges for an update on bond markets and then with a preview on the upcoming earnings season, I'll speak lastly to Matia Rashita. So that is all coming up, but as usual, let's start with the market news.

[B]

Good morning, Jan. Good morning, Helen.

[A]

Yesterday really felt like a roller coaster for markets. We had escalating geopolitical tensions, sharp moves in oil, and yet by the close, US equities seem to have found their footing again. Can you tell us a bit more about this tug of war in sentiment, Jan?

[B]

Yeah, look, it was actually a fairly solid start to the European trading session. However, investors soon switched into risk off mode, trading cautiously amid deteriorating headlines. Concerns mounted that the conflict could escalate once Donald Trump's deadline for Iran to reach an agreement expired. And this quickly showed up in equities. The S&P 500 at one point fell more than 1%.

[A]

And the political rhetoric certainly didn't help to calm anyone down.

[B]

No, not at all. Trump's language was stark, one might even say deeply disturbing, warning that a whole civilization would die tonight if no deal was reached. Against this backdrop, volatility spiked. The VIX index, Wall Street's so called fear gauge, climbed 10% to around 27 points. There was palpable nervousness across the market.

[A]

But then late in the US session, the mood shifted. So what changed?

[B]

Yes, so news broke that Pakistan had urged the US to grant a two week extension to the deadline and had also asked Iran to reopen the Strait of Hormuz. During that period, although there was no immediate confirmation from Washington, the mere possibility of a pause in hostilities was enough to take the edge off. The S&P 500 managed to erase its earlier losses and even eked out a little gain. Oil prices also eased back a little later. Helen, it was confirmed that the US and Iran indeed agreed to a two week ceasefire that would open the Strait of Hormuz. Will it hold? Well, markets have decided that the glass is half full and it might provide the off ramp Trump was looking for. In his latest post overnight, Trump appeared keen to lean into the prospects for full resolution, claiming a big day for world peace and that the US will be helping with the traffic buildup in the Strait of Hormuz. Oil prices fell hard, nearly 20%, breaking below the $100 level. And Asian stocks are seeing a sharp rally this morning. The Nikkei is up more than 5%. The Kospi gained over 7%. Chinese equities are trading roughly 3% higher. At the same time, bond yields are dropping. The dollar index is 1% lower as we speak. And precious metals also jumped higher. Gold trades now above $4,800 an ounce. And silver is up nearly 6% this morning.

[A]

Okay, some big moves. European equity markets didn't get that late reprieve though, did they?

[B]

No, just timing worked against them. European markets had already closed by the time the positive headlines crossed the wires. The pan European Stoxx 600 ended the session down almost 1% and near its session lows and losses were broad based with all major regional markets and sectors in the red. But the world changed overnight. Again, futures indicate a strong opening. DAX futures are trading. Let me check.5% higher.

[A]

Away from geopolitics now and turning to company specific news, One headline that got a lot of attention was Bill Ackman's move involving Universal Music Group.

[B]

Indeed, Ackman unveiled a proposal to acquire Universal Music Group, the world's largest record label and home to global superstars such as Taylor Swift, Billie Eilish and Drake, among many others. His hedge fund, Pershing Square, already holds a stake of more than 4.5% in the company. And the proposal involves merging universal with the U.S. based special purpose acquisition vehicle and relocating its primary listing from Amsterdam to New York. He's offering €30.40 per share, valuing the company at around 56 billion euros. And that's a hefty 78% premium to the share price before the proposal became public yesterday.

[A]

Okay, and the market reaction was positive, but not 78% positive?

[B]

No, that's right, Alan. Universal shares jumped more than 11% yesterday. But you're right, I mean, they still trade well below Ackman's proposed valuation. And the gap suggests that some skepticism about whether the deal will will ultimately succeed.

[A]

Looking to the day ahead then, what can investors expect today?

[B]

Well, first of all, we can probably all enjoy the sea of green flashing across our screens this morning. I know I will. And then after that, we'll receive February's producer price and retail sales figures for the Eurozone, along with trade data from France. But perhaps most closely watched will be the release of the March FOMC minutes later today. And with that, back to you, Helen.

[A]

Very good. Thanks very much, Jan. Great to speak to you. Again today.

[B]

Thanks for having me.

[A]

Now, let's look more closely at the fixed income space. And for that I'm joined today by Afonso. Good morning, Afonso.

[C]

Good morning, Ellen.

[A]

So with the news of a two week ceasefire that Jan's already touched on, I'm keen to hear your thoughts, Afonso, on what the implications are in the fixed income space and on our views here.

[C]

Sure. So as you'll remember, throughout the last six weeks we've made a point of not trying to predict the outcome of this war. Instead, we've been focused on trying to help investors prepare for the range of different outcomes that could come from this war. And I would say that along those lines, we came into yesterday's deadline advocating for an overweight duration stance. And the reason for that was quite simple. In case of a resolution, we expected core fixed income markets to unwind. Most of the war led inflation concerns driven sell off. But if the situation deteriorated or if the war just went on for longer, we expected negative growth risks would rise, which would be a partial offset to the inflation impacts. Fixed income yields should not rise much further from the levels that we saw in the last couple of weeks. So putting those things together, the fixed income outlook appeared somewhat asymmetric to us in favor of holding long exposure in the intermediate sector. That's the five to ten year point of the curve, roughly. We're now of course more than 20 basis points lower on 10 year yields from recent highs. But we think that overall that recommendation still makes sense here. Ultimately for us, the fact that so far yields had not priced in much in terms of growth risks were was likely explained by concerns around additional treasury issuance to finance a longer war. Adds to that higher uncertainty around monetary policy given the opposing growth and inflation risks and risk taking logically felt throughout the last month, which allowed yields to rise.

[A]

Okay, and what in particular have you been looking at on the fiscal side? Is there anything fixed income investors should be paying particular attention to?

[C]

Yeah, there's a couple of things here. Starting more macro and then getting a bit more micro, if I May. So first, CBO, that's the Congressional Budget Office, basically the U.S. agency of the government that provides budget information to Congress. They will publish an estimate of the March deficits tonight. Why does this matter? Well, because it's going to be the first month where we're going to see the cost of the war. So given all the focus on on that, I think that's going to be an important first measure. And as a reminder, in the 12 months through the end of February, US federal deficit was tracking at minus 5.1% of GDP. And recently the US administration had asked Congress for a large $400 billion increase in budget authority to the Department of War. So I would expect this publication to get some attention tonight. And then turning to something a bit more micro, we get long end treasury supply this week. That's 10 year auctions today and 30 year auctions tomorrow. And why am I even talking about treasury auctions in this podcast? Well, because two weeks ago when we saw the front end auctions, they were received very poorly, meaning that auctions failed, meaning that yields were higher than before the auctions and that helped push yields higher during the month of March. So now with the uncertainty coming down, we would expect these auctions to be a bit better received. But nevertheless, we think it's going to be important to keep track of this supply as we think about market sentiment.

[A]

Wonderful. Thanks very much, Afonso for the interesting update this morning.

[C]

Thank you, Alan.

[A]

And now finally, let's finish with a preview of the upcoming earnings season. Good morning, Matthias.

[D]

Good morning, Helen.

[A]

So the Q1 earnings season kicks off next week. Mattia, with some of the large US Banks scheduled to report results, could you maybe firstly take us through the consensus expectations for the first quarter?

[D]

Sure. So overall consensus is pointing to a fairly solid first quarter with S&P 500 earnings expected to grow by around 13.2% year over year. If you look at the different sectors, earnings growth at the index level is still very concentrated. So big tech is once again responsible for the heavy lifting with earnings growth of more than 45% expected, driven by semiconductor and semi equipment stocks which are projected to almost double earnings compared to the same quarter last year. So excluding the big tech stocks, earnings for The S&P 500 is expected to grow by only around 5%, which is slightly below the historical average. Also worth noting is the high earnings growth expected for the commodity rate sectors such as oil and gas and materials. So higher energy prices in the first quarter are bumping up earnings for gas companies, while within materials, metals and mining are expected to almost double earnings compared to the same quarter last year. So overall, quite a solid earnings season expected, which will actually mark the sixth straight quarter of double digit earnings growth for the S&P 500.

[A]

Some companies obviously report earlier than others. What are you seeing so far from the early reporters? What sort of tone are they setting?

[D]

So the early report is, you know, which usually gives us a good indication about the strength of the earnings season overall. They have so far showed quite good and quite reassuring signs. So around 72% of companies that have reported from this cohort have beaten earnings expectations, which is above the 10 year average of 70%. That suggests analysts were not overly optimistic heading into the quarter that corporate execution remains robust despite a more uncertain geopolitical backdrop. This is further supported by strong above consensus economic releases in the first quarter. So the US Economic Surprise Index has moved up in the first quarter to actually the highest level since October 2023 and that suggests an aggregate earnings speed of around 6% for the S&P 500. So taking everything together, the backdrop for a solid Q1 earnings season looks supportive in our view.

[A]

And for investors then what are they focusing on in this earnings season?

[D]

So as you know, equity markets are forward looking and if everything that is going on in the Middle east, there's a fair chance that investors will put less weight on the Q1 numbers itself, but rather focus on what companies are guiding for the remainder of the year. And so far, you know, from the companies in the S and P that issued quarterly EPS guidance, we have actually seen the highest number of companies issuing positive EPS guidance for the quarter in five years. But that only concerns Q1 where we haven't seen much of the impact related to the war in Iran. So again, you know, if everything that we're seeing in the Middle east, there's really a fair chance that investors will put less weight on the Q number itself, but rather focus of our companies are guiding for the remainder of the year during the upcoming earnings releases.

[A]

Very good. Thank you Matthew. Great to speak to you this morning.

[D]

Thanks for having me, Helen.

[A]

So that's it for today. Thanks again to today's guests and to you, our listeners, for tuning in. I hope you enjoyed the show. If you did and you haven't subscribed yet, then don't forget to do that. And please join us again tomorrow when I'll be back with more colleagues and I'll be getting their thoughts on what's moving markets. So have a great day everyone and bye for now. The information and opinions expressed in this podcast constitute marketing material and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal information.