The first round of US-Iran peace talks concluded in Switzerland with Iranian officials led by Mohammad Bagher Ghalibaf warning Washington to be careful with its words, while Vice President JD Vance emerged with language of progress and transformation. According to Investing.com India, the negotiations ended with fireworks that tell you negotiations are alive, but nowhere near settled. The talks have created a volatility corridor rather than a durable settlement, with both sides agreeing to remain in the room while still arguing over the terms of exit, sequencing of concessions, and who must move first. The White House is running a deliberate good cop, bad cop framework, with Vance offering an off-ramp while Trump keeps the 60-day military option visible, creating leverage while keeping geopolitical risk premiums from fully evaporating.
Asian markets posted strong gains following the diplomatic developments, with Japan's Nikkei rising 1.9% after climbing almost 8% last week to all-time highs. According to Business Standard, South Korea's red-hot market added another 2.6% after surging more than 11% last week on demand for semiconductor stocks. MSCI's broadest index of Asia-Pacific shares outside Japan gained 1.0%, while Chinese blue chips remained flat. S&P 500 futures pared early losses to be off 0.2%, and Nasdaq futures lost 0.3%, indicating mixed sentiment in US markets. In European markets, EUROSTOXX 50 futures edged down 0.1% while DAX futures were near flat and FTSE futures added 0.1%.
The **Strait of Hormuz is now operating under wartime restrictions, with security described as day to day, hour to hour by Chubb chief executive Evan Greenberg. According to Investing.com India, oil is still moving, with 55 merchant vessels carrying more than 17 million barrels through on Saturday, but this represents transit under constraint rather than normal commerce. Insurance is now part of the frontline machinery of the conflict, with Lloyd's of London and Chubb assembling a $400 million marine war risk consortium, while the U.S. development finance framework adds a far larger layer of reinsurance support. The U.S. Navy's effort to open additional channels remains more consequential than political statements, as wider corridors would gradually increase shipping capacity and ease the queue of tankers.
The diplomatic progress helped ease oil market tensions, with Brent crude futures shedding early gains to ease 0.4% to $80.17 a barrel, far away from its May peak of $126.41. According to Business Standard, US crude remained 1.2% firmer at $77.52 a barrel. The news saw Brent crude futures shed early gains to ease 0.4 per cent to $80.17 a barrel, far away from its May peak of $126.41. In commodity markets, news of the progress in peace talks helped gold bounce 1.1% to $4,205 an ounce, reflecting broader market sentiment shifts as geopolitical tensions ease.
Treasuries remained under pressure following a hawkish turn by the Federal Reserve last week that led markets to price in a 75% chance of a rate hike as early as September. According to Business Standard, futures imply 38 basis points of tightening by year-end, while yields on 2-year notes rose as much as 4 basis points to the highest since early 2025 at 4.2276%. Fabio Bassi, head of cross-asset strategy at JPMorgan, said their baseline call is for patience and a first hike in the second half of 2027, but believes the margin for error and the tolerance for further inflation is limited, with genuine risks of earlier hikes. The Fed's favoured gauge of core inflation is due on Thursday and is forecast to rise a tick to 3.4% in May, underlining the risk of tighter policy.
