Yesterday, overnight as commodities continued to move higher, sparking “war-flation” concerns tied to the Strait of Hormuz closure equity future were under pressure at the jump. The S&P 500 extended to the downside after the open trading down ~2.5% at the lows. The index retested the December low after breaking the 100d ma, before bouncing back to opening levels as Treasury yields moved about 10bps off the overnight highs. Reports that the administration was considering providing military support to tankers moving through the Strait of Hormuz and potentially backstopping shipping insurance provided another boost. The index couldn’t quite hold a move back above the 100d and finished down ~1% with all sectors lower. Financials and Comm Services outperformed while Materials and Industrials lagged.

US futures were modestly lower overnight after sharp declines across Asia but improved as European markets opened. They have since turned positive after a NYT story suggesting that Iranian operatives have reached out through back channels to discuss terms of ending the war. S&P futures are near session highs up just under 0.5%. This morning Treasury Secretary Bessent said that the Section 122 tariffs would move up to 15% this week. In addition, he said that the administration will make a series of announcements to mitigate the rise in oil prices. ICE Brent is trading ~$81 about $3 off the overnight high.