US equity futures are flirting with the best levels of the pre-market following a wave of economic data that points to rate cuts if/when the US or Iran reopen the Strait of Hormuz.
Notable in the pre-market news was a report saying that Trump told other world leaders earlier this week that he expected Iran to surrender shortly. We also heard from Hegseth who claimed that Iran’s new supreme leader is “wounded and likely disfigured”. A new report also said France and Italy opened talks with Iran in the hopes of securing safe passage for its oil.
All that’s leading to some optimism the war can be wrapped up shortly, though there are certainly cogent arguments that the US has overplayed its hand and the oil can be cut off for months.
In terms of economic data, the numbers today likely boosted the case for a rate cut. Notably, US GDP in Q4 was cut in half to 0.7% from 1.4%. That comes after many weeks of the Atlanta Fed tracker saying it would be +5% and dozens of White House pundits touting super-strong growth based on that flawed metric (which was particularly skewed by the US government shutdown).
On the inflation front, PCE numbers were entirely in-line with expectations.
As a result, S&P 500 futures are up 0.5% after rising as high as 0.7% in the immediate aftermath of the data.
There is no doubt that economic data is secondary at the moment but it will quickly become primary again when the war ends. At the moment, the market is sensing some possibility of a breakthrough on the weekend and is still hanging onto Trump’s 4-5 week timeline, which he said had been significantly moved up.
Expect another day of volatile trading today and for the market to bounce around based on war reports and tweets. WTI crude was last down $3.44 to $92.25.
This article was written by Adam Button at investinglive.com.
