Updated
Updated · ING Think · Jun 15
Brent Drops to $80 After Iran Deal as ECB Keeps Another Rate Hike Priced
Updated
Updated · ING Think · Jun 15

Brent Drops to $80 After Iran Deal as ECB Keeps Another Rate Hike Priced

3 articles · Updated · ING Think · Jun 15

Summary

  • Brent crude has fallen from near $100 to almost $80 a barrel in less than two weeks after the Iran deal was signed, with markets now watching whether shipping through the Strait of Hormuz actually normalizes.
  • US and euro rates have eased only modestly because traders see the oil shock’s inflation damage as largely already absorbed and expect reserve rebuilding to keep energy demand and volatility elevated.
  • US 10-year Treasury yields are still hovering around 4.45%, with real yields just above 2%, while 10-year inflation breakevens have already slipped back to about 2.3%, near pre-war levels.
  • In Europe, 10-year EUR swap rates remain near 3% even after oil’s drop, and the ECB’s recent hike plus hawkish comments have left a second increase more than fully priced by year-end.
  • The broader takeaway is that lower oil has reduced re-escalation fears, but bond markets are not returning to pre-war yield levels unless shipping proves durable and growth weakens materially.

Insights

The Iran deal promises cheaper oil, but with Hormuz still unsafe, is the market ignoring a ticking supply chain bomb?
As central banks abandon the dollar for gold, is the era of US Treasuries as the ultimate safe asset officially over?