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US Equity Indexes Rise This Week as Signing of Iran Peace Deal Lays Groundwork for Hormuz Chokepoint Reopening

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US equity indexes rose this week as the interim Iran peace agreement set the stage for reopening the Strait of Hormuz, outweighing the Federal Reserve's hawkish tone at the June policy meeting.

* The S&P 500 closed at 7,500.58 on Thursday versus 7,431.46 a week ago. The Nasdaq Composite stood at about 26,517.93, compared with 25,888.84 a week earlier. The Dow Jones Industrial Average ended at 51,564.70, versus 51,202.26 at the end of last week.

* President Donald Trump and his Iranian counterpart, Masoud Pezeshkian, digitally signed a memorandum of understanding targeting a permanent deal to end the war between the US and Iran.

* "The traffic of commercial vessels will immediately start and, considering the need for removing the technical and military obstacles and de-mining by the Islamic Republic of Iran, will be instated within 30 days," Reuters cited from the MoU.

* West Texas Intermediate crude oil traded at $73.81 late Thursday, heading for pre-Iran war levels ahead of the reopening of the Persian Gulf chokepoint for about a fifth of global crude oil flows.

* The US 10-year Treasury yield traded at 4.43% late Thursday, after touching 4.66% in May, as slumping oil prices alleviated inflation concerns.

* The Fed kept policy steady to mark its fourth consecutive pause, but ejected the so-called lingering easing bias from its policy statement.

* "While Chair [Kevin] Warsh was unwilling to indicate the direction of the Fed funds rate ahead, nine of his 18 colleagues had no such reservations and pencilled in a hike to 3.75-4.00% by year-end in the dot plot," Berenberg said in a note. "That was a big change from the previous iteration in March, in which 12 out of 19 were expected to cut this year.

* "This, alongside Warsh's defence of his Fed's commitment to the 2% inflation half of the Fed's mandate, led investors to price in 38bp of tightening this year, up from 21bp previously," the Berenberg note said. "A hike is now fully priced in by October."

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