Institution interprets the US-Iraq ceasefire two weeks: the tail risk of high oil prices has temporarily disappeared, but the risk of conflict reignition still exists.

President Trump said on Tuesday that he has agreed to a two-week ceasefire with Iran. Less than two hours earlier, Trump set a deadline for Tehran to reopen the Strait of Hormuz, warning of a massive attack on its civilian infrastructure if they failed to do so. As the ceasefire is seen as paving the way for lasting peace and the resumption of Gulf oil and natural gas exports, oil prices plummeted, bond prices rose, and stock prices soared. Some professional investors and analysts shared their views on Trump's agreement to the ceasefire with Iran. Jamie Cox, managing partner of Harris Financial Group, said, "The market has been anticipating that Trump would seek an exit strategy on the Iran issue. Today, he found one and used it. Over the past week, as tough negotiations have increased, the market has been inching slightly higher, which usually signals an inevitable turning point in reaching an agreement." Besa Deda, Chief Economist at William Buck, said, "The market may show some cautious optimism as this is the first meaningful ceasefire since hostilities began. However, investors will still be aware that the ceasefire may not hold. Hopefully, the ceasefire can be maintained to reduce the risks of deeper economic impact. Even if a ceasefire ultimately leads to a solution, the damage to refineries and infrastructure will take time to repair and restore normality. But this is much better than suffering long-term impacts." Andrew Lilley, Chief Interest Rate Strategist at Australian investment bank Barrenjoey, said, "We have a long way to go before returning to pre-pandemic conditions. What is concerning now is how uncertain it is as to how much oil prices can actually return to $75. The fact that oil is still flowing and not in short supply, but balanced prices are sitting on a small cliff at $90, actually eliminates the tail risk of central banks cutting interest rates. This situation will keep yields elevated in the long run, as infrastructure damage and high oil prices in the coming months mean that inflation will worsen." George Boubouras, Research Director at K2 Asset Management, pointed out, "The key in the next week will be to replenish energy supplies, as conflict could quickly reignite. If more oil, gas, and fertilizer supplies can be obtained in the next week or so, this will reduce the likelihood of an economic recession. The market is practical, not complacent, they are looking beyond the conflict for the future, and from a one-year perspective, current valuations are still very attractive." Martin Whetton, Head of Financial Markets Strategy at The Pacific Bank in Sydney, commented, "This situation is not uncommon. But does that mean people are willing to take on new risks? No, not really. Only true lasting peace can change the status quo. In reality, people are not taking on risk. It's all algorithms at work." Brian Jacobsen, Chief Economist at Annex Wealth Management, said, "President Trump says he agreed to a two-week ceasefire. That is enough to give people hope that not only will civilization not be destroyed, but we will also see oil flowing through the Strait of Hormuz. Is this just delaying the problem, changing the rules, or, to use any metaphor we like, like a 'TACO' trade on a Tuesday, ultimately leading to both sides erupting in conflict again? Who knows? But for now, it is enough to elicit a positive response from the market."