Trump on Truth Social:

There are no talks or conversations going on, or scheduled, with the Islamic Republic of Iran. The Naval Blockade remains in full force and effect. The Hormuz Strait is open and operating. All water mines have been removed or detonated. Thank you for your attention to this matter! President DONALD J. TRUMP

This is not really a news as the US-Iran talks have been in a deadlock for a couple of weeks, despite some initial optimism. Following Trump’s post, oil prices spiked to the upside, while equities got back under renewed pressure. The moves were quickly faded, though, given that the situation remains pretty much the same.

Overall, the two main stories moving the markets at the moment are the US-Iran stalemate and the Fed tightening risk. The former is keeping inflation risks skewed to the upside and limiting the downside in oil prices. The latter is providing some minor easing in financial conditions as rate hike bets get pushed back amid “benign” core inflation data.

Chart: WTI crude oil (blue) vs US 5-year breakeven rate (red)

Since the Fed adopted a tightening bias in June, inflation breakeven rates have remained relatively stable despite another spike in oil prices. This is good news for the Fed as it could be a confirmation that Warsh’s limited forward guidance and hawkish bias of the FOMC is contributing to limit the shock from the US-Iran war.

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