(The opinions expressed here are those of the authors.)

By Anna Szymanski

March 27 -

Everything Mike Dolan and the ROI team are excited to read,

watch and listen to over the weekend.

From the Editor

Hello Morning Bid readers!

Whoever said "talk is cheap" isn't following President Donald

Trump on Truth Social. A single social media post from the U.S.

leader on Monday claiming that "very good and productive" talks

had taken place with Iran was enough to reverse the direction of

trillions of dollars in financial assets. After Trump said he was delaying his previous 48-hour deadline

for Iran to reopen the all-important Strait of Hormuz to five

days, oil prices plunged more than 10%, while global stocks

rallied, the dollar weakened, yields fell and gold rose. Most of

these moves didn't prove durable, but the power of a single

all-caps message was remarkable nonetheless.

Trump may have been aiming for a repeat of Monday's magic on

Thursday, but the results were mixed.

Following a bruising day for markets, with the tech-heavy Nasdaq

slipping 2% to officially enter correction territory and Brent

crude prices up almost 6% to over $108 a barrel, President Trump

announced that he was extending his deadline for attacking

Iranian energy plants yet again to April 6 (8 PM EDT), saying

talks with Tehran were going "very well."

In response, U.S. equities pared their losses, but only

modestly, and crude prices merely stabilized. As of early

Friday, oil was rising yet again, with Brent edging over

$109/bbl, and S&P futures were back in the red.

Additionally, stocks in Asia - the region most heavily impacted

by the energy supply disruption - continued to tumble, with

South Korea's KOPSI falling nearly 4% on Friday.

The dwindling "power of the post" may reflect the decidedly

mixed signals coming out of Washington and Tehran.

While the U.S. president claims Iran asked for a seven-day

reprieve, the Wall Street Journal cited mediators who said no

such request had been made. Tehran has also rejected Trump's

15-point proposal to end the conflict, and the U.S. is looking

to send an additional 10,000 troops to the Gulf, according to

WSJ reports.

So dramatic escalation may be in the cards, or we could see

a deal in two weeks. Good luck pricing that.

What we do know is how financial assets have reacted thus

far - and it's sometimes counterintuitive.

Both Treasuries and gold have weakened since this crisis

began on February 28.

The former is unsurprising given inflation fears and

expectations for a hawkish shift at the Federal Reserve, not to

mention roughly 300 years of financial history. A series of poor

debt auctions is signalling more potential danger ahead in the

$30-trillion Treasury market.

But the softening in bullion has caught many off-guard,

suggesting it may be time to rethink the concept of a safe

haven.

Investors also remain on edge about risks in private credit,

which would likely be the biggest story in markets were it not

for the war. Ares Management and Apollo Global Management were

the latest to cap investor withdrawals from private credit funds

after a spike in redemption requests.

Perhaps the asset to run to is ... U.S. equities? While stocks

have wobbled amid the geopolitical turmoil - especially given

ongoing concerns about artificial intelligence spending and

technological disruption - several big banks are now upping

their S&P 500 forecasts on expectations of bumper earnings

growth. The bull case is more compelling than you might think.

Back on the energy front, the oil futures curve still seems

quite optimistic considering the level of supply disruption - as

high as 20 million barrels a day - and the amount of damage to

energy infrastructure. Investors appear to be banking on a

relatively swift conclusion to the conflict resulting in the

full reopening of the Strait of Hormuz, but by pricing this in,

they may, ironically, be making it more likely that the narrow

waterway remains mostly closed.

President Trump may have been willing to initiate the Iran

war because he was convinced that America's vast oil wealth

would insulate the country from an energy shock. But with U.S.

gasoline prices inching up toward $4 a gallon, that gamble does

not appear to be paying off.

While the average U.S. consumer has arguably never been better

equipped to deal with $100/bbl oil, the U.S. public certainly

doesn't appear pleased with the current state of affairs. Only

29% of the country approves of the president's handling of the

U.S. economy, according to a recent Reuters/Ipsos poll, the

worst rating President Trump has ever seen on this question.

Ultimately, the gas market may be hit harder by the Middle East

war than its crude counterpart, given its relatively inflexible

supply chains, limited storage options, and difficult-to-repair

infrastructure.

That's bad news for heavily gas-dependent Europe, which may be

forced to trim its ambitious climate agenda in the wake of this

crisis.

However, on the flip side, the war may speed up the energy

transition in Asia, particularly the adoption of electric

vehicles, which is excellent news for EV powerhouse China.

Speaking of China, President Trump announced that his ⁠trip to

Beijing to meet President Xi Jinping - which was due to take

place next week - has been rescheduled for mid-May. This signals

that the U.S. president expects the war to be mostly wrapped up

in the next six weeks. For investors and everyone impacted by

the war, that likely seems a long way away.

For more data-driven insights on markets and commodities, check

out Reuters Open Interest. You can learn:

* What hard-to-source metal is being destroyed with each

U.S. missile strike?

* Which companies are set to cash in on the post-Iran war

reconstruction?

* Why did European defense stocks fall right after the Iran

war broke out?

* Could we be entering a world of 'petroyuan' in place of

'petrodollars'?

Morning Bid Weekend will be off next Friday for the long

holiday weekend. To those of you celebrating, happy Easter and

chag sameach!

I'd love to hear from you, so please reach out to me at .

This weekend, we're reading...

MIKE DOLAN, ROI Finance & Markets Columnist: This New York

Fed paper is the latest attempt to model global r*, calculated

by looking at trends in this elusive neutral rate worldwide.

Researchers found it has risen about one percentage point since

the pandemic, though it's still below pre-1990 levels.

GAVIN MAGUIRE, ROI Global Energy Transition Columnist: This

compelling read from our Reuters colleagues examines the allure

of Chinese EVs to U.S. car buyers, who are not allowed to

purchase them legally. It's a revealing example of industrial

policy clashing with consumer tastes.

JAMIE MCGEEVER, ROI Markets Columnist: Three months before

going to war with Iran, Trump signed a National Security

Strategy expressing a "clear preference for non-intervention."

In a Project Syndicate op-ed, economist James K. Galbraith asks

the obvious question: what happened?

CLYDE RUSSELL, ROI Asia Commodities and Energy Columnist:

This Lloyd's List article analyses Iran's newly imposed toll

system in the Strait of Hormuz, going beyond the news to weigh

the risks and rewards for shipping.

We're listening to...

ANDY HOME, ROI Metals Columnist: This week I joined Adrian

Pocobelli on The Northern Miner podcast to discuss how the

Strait of Hormuz blockage is hitting an already fractured metals

market - aluminium and tungsten supply chains in particular.

Tungsten stands out: it's a key input for the missiles and

munitions being fired across the Middle East.

And we're watching...

JAMIE MCGEEVER, ROI Markets Columnist: This discussion

features two voices always worth listening to: Nobel laureate

Paul Krugman and economist Robin Brooks, who discuss Iran, oil,

the dollar and at lot else in between.

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Opinions expressed are those of the authors. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.