With global stock and bond markets using crude as a lodestar for how they react to the Iran crisis, the remarkably quick reverse and decline in U.S. oil prices on Monday have seen U.S. and European equities rally following the weekend events.
Wall Street futures were up about 0.25% ahead of Monday's bell. European and Chinese were higher too, with Japan's Nikkei bucking the trend even as the yen weakened. Mostly due to the yen slide, the dollar index was firmer.
U.S. President Donald Trump said he had "obliterated" Iran's main nuclear sites in strikes over the weekend, joining an Israeli assault in an escalation of conflict in the Middle East as Tehran vowed to defend itself. Trump then openly hinted at 'regime change' in his social media posts on Sunday.
U.S. crude prices initially jumped above $78 per barrel to their highest since January, but quickly fell back below Friday's close to trade below $74 - more than $6 below the high for this year and down 11% on levels seen a year ago. Brent prices are down on the day too.
While the escalating conflict surrounding Iran has turned unpredictable, it happens in a market where global space oil production capacity is running in excess of 4 million barrels a day - an oversupply expected to persist through the end of next year at least.
What's more, outsize bets on the direction for oil linked to the outcome of the Iran war are frustrated by numerous binary outcomes - including both the survival of the Tehran government and even possible mining of the Straits of Hormuz. While the latter could stymie shipping in the region for a bit, it's not clear how long it could be enforced.
With global demand set to ebb later this year, due in part due to the growth-dampening effects of U.S. trade tariffs, and U.S. production set to increase, speculative oil price punts are very risky.
With oil prices still largely under wraps, the fallout for U.S. Treasuries is similarly limited.
With one eye on Federal Reserve chief Jerome Powell's semi-annual Congressional testimony on Tuesday and series of debt auctions during the week, 10-year yields remained stuck in recent ranges about 4.4%.
Trump on Friday again floated the idea of firing Powell.
"I don't know why the Board doesn't override (Powell)," Trump wrote in a lengthy post on Truth Social criticizing Fed policy. "Maybe, just maybe, I'll have to change my mind about firing him? But regardless, his Term ends shortly."
San Francisco Fed President Mary Daly said on Sunday that U.S. central bank should consider giving less forward guidance about its monetary policy intentions, particularly in uncertain times. "Words have power, which is a great tool. But words can be harder to reverse than the interest rate," she said.
The economic data calendar homes in on June business surveys, with the flash versions of U.S. soundings from S&P Global due out later in the day.
Overall euro zone business activity expanded only modestly in June, with a small improvement in the dominant services industry offsetting more downbeat manufacturing.
The services PMI nudged up to sit right on the break-even 50 mark up from May's final reading of 49.7. Optimism among services firms increased and the business expectations index bounced to a four-month high of 57.9 from 56.2.
European Central Bank boss Christine Lagarde testifies at the European Parliament later in the day.
Economic surprise indexes, capturing how incoming economic readings are above or below expectations overall, show a sharp divergence between Europe and the United States - with the euro zone index at its most positive since May and the U.S. equivalent at its most negative in nine months.
Elsewhere, Bitcoin was sharply lower over the weekend, while gold prices also fell back early on Monday.
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