According to an official briefed on the US-Iran negotiations, Qatari mediators presented Tehran with a new draft proposal on Sunday. Iran is considering the proposal, with a response expected by the end of the week. The draft reportedly establishes a seven-day timeline for addressing both sides’ concerns, requiring daily confidence-building steps, potentially beginning early next week.

The report follows yesterday’s news that Iran’s army chief met with Supreme Leader Khamenei, who reportedly stressed the importance of pursuing Iran’s interests and securing its conditions to end the war and the ongoing stalemate. The markets are so desperate for good news that any deal headline is triggering risk-on reactions amid hopes for an agreement before the US midterm elections.

It goes without saying that a deal would trigger a strong rally in risk assets on improving growth expectations and easing inflation concerns. Crude oil would be the main victim, with a sharp and quick selloff expected. The stock market could quickly reach new record highs, while precious metals may erase most of the losses experienced in recent months.  

Keep in mind that these reports do not confirm that a deal is near, they are just updates on the latest developments. The market is extrapolating good news just on expectations of a potential deal before the midterms. The reports have also come at a time when positioning got a bit overstretched, so they triggered relief rallies. For a sustained follow-through, we would need more concrete stuff.

This article was written by Giuseppe Dellamotta at investinglive.com.