IRAN: Explosions Reported Near Bandar Abbas: Fars

• WTI crude is higher ahead of President Trump’s Iran deadline today, seeing further gains after Iran reportedly stopped negotiation efforts with the US. Uncertainty remains high given that Trump could ultimately delay the escalation once again.
• WTI May 26 is up 0.6% at $113.1/bbl.
• President Trump warned that if a deal isn't reached and the Strait of Hormuz reopened by 2000ET Tuesday, the US military could destroy Iranian bridges and power plants by midnight. He repeated threats on Truth Social, but left open the possibility that a deal could still happen.
• There have been conflicting reports over the position of negotiations between the US and Iran. However, Axios later reported that progress had been made on a deal, although it would be hard to agree before the deadline.
• A bull wave in WTI futures remains intact, with the contract piercing key resistance and the bull trigger at $113.41, the Mar 9 high. A clear break of this would confirm a resumption of the uptrend and open $118.99, a Fibonacci projection, ahead of the psychological $120.00 handle.
• Elsewhere, spot gold has edged higher, as the US dollar has traded with a softer tone, despite the heightened level of geopolitical uncertainty.
• Spot gold is up by 0.6% at $4,678/oz.
• Recent gains in gold appear to be corrective, with a clear break of key near-term resistance at $4,784.8, the 50-day EMA, required to signal scope for a stronger recovery. This would open $4,914.9, a Fibonacci retracement point.

• Iran war rhetoric continued to weigh on risk sentiment Tuesday, markets wary of tonight's 2000ET deadline to attack Iranian infrastructure targets if the Straight of Hormuz was not opened. Off first half lows, US equity indexes trade -.40% to -.60% late Tursday, Nasdaq underperforming.
• Consumer Discretionary and IT sector shares lead second half declines with auto and travel shares weighing on the former: Norwegian Cruise Line, Carnival Corp, Carvana, Royal Caribbean Cruises, United Airlines and Tesla trading -4.8-3.2%.
• Services, hardware and software makers weighed on the Technology sector: Gartner Inc, NetApp Inc, Sandisk Corp, Apple and EPAM Systems trade -2.75-4.25%.
• Meanwhile, defense stock Axon Enterprise trades -10.23%.
• Health Care providers pulled ahead in the second half, UnitedHealth Group, Humana and CVS Health Corp gained 6.25 to 10.5%.
• Energy related stocks remained buoyed with the rise in crude (WTI trades just over $113.5/bbl vs $117/bbl high), oil and gas shares outperforming: Valero Energy Corp, Targa Resources and ONEOK Inc gaining +1.88%-2.25%.

EGBs and Gilts sold off Tuesday as a US-set deadline for a deal to end/pause the conflict with Iran loomed.

• President Trump set the tone for the session, warning again that tonight (8pm ET, 1am London time Wednesday) would mark the deadline for Iran to reach an agreement, and escalating rhetoric in a social media post saying of Iran "A whole civilization will die tonight".
• Following that pronouncement, EGBs and Gilts reached session lows by mid-afternoon, with periphery spreads widening.
• As the cash close approached, New York Times and Wall Street Journal reports that Iran had stopped negotiations with the US saw EGBs and Bunds selling off, with periphery spreads widening; after the close, an Axios report pointing to a "glimmer of progress" in negotiations saw futures rebound but still lower on the day.
• Bunds underperformed Gilts, with both the UK and German curves bear flattening.
• Periphery/semi-core EGB spreads widened.
• The looming Iran deadline overnight will take centre-stage after hours; Wednesday brings final March PMI readings.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 10.4bps at 2.72%, 5-Yr is up 10.8bps at 2.816%, 10-Yr is up 9.2bps at 3.084%, and 30-Yr is up 6.7bps at 3.539%.
• UK: The 2-Yr yield is up 8.5bps at 4.408%, 5-Yr is up 7.6bps at 4.459%, 10-Yr is up 7.1bps at 4.904%, and 30-Yr is up 5.1bps at 5.513%.
• Italian BTP spread up 2.2bps at 88.2bps / French OAT up 1.3bps at 70.6bps