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Markets Rally on US-Iran Interim Deal as Fragile Peace, Tariff Risks Loom, Macquarie Says

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Despite doubts over the durability of the US-Iran interim accord, markets have rallied, with the agreement's key significance being the potential reopening of the Strait of Hormuz, Macquarie strategists said in a note on Monday.

The strait's reopening is expected to ease the main threat to global oil supply and reshape expectations across assets.

Macquarie analysts Thierry Wizman and Gareth Berry said US President Donald Trump welcomed the agreement, saying on Truth Social that shipping through the Strait would be "toll-free" and that the US naval blockade would be removed to "let the oil flow."

Markets interpreted the announcement as a sign that oil prices could normalize, reducing inflationary pressures and improving the global economic outlook.

The strongest gains were seen at the short end of government bond yield curves, as traders reassessed expectations for interest rate increases, with lower energy prices reducing pressure on central banks to tighten monetary policy further.

Despite the optimism, Macquarie warned that significant risks remain. The agreement is only an interim arrangement, providing for a two-month ceasefire while negotiations continue toward a permanent settlement. Key details of the plan have not yet been released, and political opposition in Washington could emerge if lawmakers believe excessive concessions were made to Tehran.

Questions also remain over Iran's nuclear program, sanctions relief, and the release of frozen Iranian assets. In addition, Israel is reportedly not a party to the accord, raising concerns that regional tensions could persist.

Analysts also highlighted conflicting interpretations of the deal. Iranian media reports suggested that the agreement recognizes Iran's right to collect fees related to the Strait of Hormuz, which appears to contradict Trump's claim that passage would be free of charge.

However, if the agreement holds and oil prices stabilize, Macquarie expects the euro and Japanese yen to benefit from renewed investor diversification away from US assets.

But Macquarie warns that tariffs are also likely to re-emerge as a key market driver if geopolitical tensions ease, with Washington expected to broaden and rotate trade restrictions across multiple legal authorities rather than unwind them.

It argues this could become a renewed source of US dollar weakness by sustaining trade uncertainty and reviving the "diversification away from US assets" theme.

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