What has changed?

Katie Martin (0:06)

Pushkin. Investors want to believe so bad. They want this war in Iran to be over, so they can get back to the happy, shiny world they had imagined at the start of the year. More than anything, they want to buy the dip. This week, they once again grabbed the apparent opportunity to do just that. Donald Trump, for it is he, declared he had reached a ceasefire with Iran. Pete Hegseth, Defense Secretary, said Iran had in fact begged for one. Rob, I can hear you slurping your coffee.

Robert Armstrong (0:39)

Sorry.

Katie Martin (0:41)

Oil prices dropped, stock prices jumped, happiness and joy across the world for like a day. Today on the show, the ceasefire seems to be shaky, but markets are trying to cling on to it. Why? What is that about? This is Unhedged, the markets and finance podcast from the Financial Times. I'm Pushkin, I'm Katie Martin, a markets columnist here at FT Towers in an unseasonably warm London. It is no coat weather, people. Joining me down the line from New York City is the coffee slurper who spawned a million memes, Mr. Robert Armstrong.

Robert Armstrong (1:17)

Good morning.

Katie Martin (1:18)

Have you finished your breakfast now?

Robert Armstrong (1:21)

No, I'm right in the middle. By this time of the week, I'm a little tired, and I need a pretty continuous drip feed of caffeine to keep the machine going, you know.

Katie Martin (1:31)

Intravenous.

Robert Armstrong (1:33)

More slurping incoming, Katie Martin.

Katie Martin (1:37)

You've been warned, listeners. So, we need to talk about this bounce of peace, this peace bounce and what it tells us about the broader world. But first of all, for listeners who have happily been trapped under a rock for the past few days, let's just have a bit of a recap of what has happened. Because it's a lot, right? So first of all, Trump was saying he was going to end civilization in Iran unless it did a deal. And then he says he had a deal?

Robert Armstrong (2:07)

And it's deal, question mark. I think that's right. There was still drones smashing into things. Israel was still bombing Lebanon.

The strait was still closed. So it's not at all clear. The deal got off to a shaky start. I think that's a fair way to...

Katie Martin (2:26)

Yeah. And crucially, they're on basically no ships heading through the Strait of Hormuz. It's supposed to be open, according to Trump and his people, but the satellite imagery doesn't lie. There are no ships.

Robert Armstrong (2:39)

Right. And this, I think, is what we were warned about. It's not like turning a tap on and off. There is quite a lot of things that have to be lined up to get traffic going. Insurance has to be dealt with, cruise, equipment.

Where is the oil going to go once it leaves, et cetera, et cetera. So I don't think that's so much of a surprise as it is just a reality that... And this, I think, was probably going to be a theme of all our comments. You can't snap your fingers and get back to where we were in February.

Katie Martin (3:17)

No. Which is why I find it odd that, in a way, that markets are so keen to jump on signs that this is all going to be over. Like, in real life, this is not going to be over overnight, but markets are kind of trying to make that happen. Like, we saw some pretty big jumps in Asian and European and US stocks yesterday, which was Wednesday.

And already, that's kind of slightly falling apart because we've got the oil price heading up back close to $100 a barrel. I think last time we checked, it was about 98 on Brent, which is the big European benchmark. Well, I will... I feel like a bit of a yo-yo here.

Robert Armstrong (3:59)

Yeah, it's true. Zoom out a tiny bit. And let's look at the very big numbers. Big number, number one. Number one number, S&P 500 stock index. That is within a percent or two of where it was before the war began. So it's had, in the last week or so, it's had a decent bounce. And US equities are saying, we're just about back. Big number, number two. Number two number is the 10-year yield. That's not back to where it was when the missile started to fly, but the 10-year yield is back to where it was in February.

Katie Martin (4:42)

Yeah. So bonds and borrowing costs are pretty steady, really.

Robert Armstrong (4:47)

Pretty steady. And there's exceptions to that we should talk about, but the market is not only saying we want to come back, there is at the very top line, a sense that the market is saying, we are roughly where we were before we went on this terrible excursion in Iran.