US Stocks Rise, Treasuries Gain on US-Iran Truce Progress Hopes

2026-05-27

Expectations are spreading for progress in US-Iran truce talks, with money flowing into US stocks and Treasuries. The S&P 500 hit a fresh high for the first time in about two weeks, while the 10-year Treasury yield briefly fell below 4.5%.

Hopes for progress in talks

US President Donald Trump said in a social media post on the 25th that talks aimed at ending the fighting with Iran were progressing 'well'. Under a draft agreement disclosed to Nikkei by Middle East diplomatic sources, the plan would first extend the cease-fire by 60 days and, during the first 30 days, advance mine-clearing operations in the Strait of Hormuz.

Risk appetite rises as oil prices fall

The de facto blockade of the Strait of Hormuz, a key route for crude oil and natural gas shipments, has been a factor pushing up energy prices. It has also led to supply tightness for products and materials passing through the strait, including naphtha and aluminum. Jose Torres, senior economist at US Interactive Brokers, said growing expectations that progress in talks would bring a sustained decline in crude prices and interest rates is boosting risk appetite on Wall Street.

Stocks and bonds rally in tandem

In the US stock market on the 26th, buying of risk assets dominated as trading resumed after a holiday. The S&P 500 rose 0.6% from the previous close to 7,519, marking a new high for the first time in about two weeks since the 14th. Semiconductor shares rose across the board, with Micron Technology jumping 20%, and the Philadelphia Semiconductor Index (SOX) gained 6%.

By contrast, oil majors such as Exxon Mobil and Chevron fell more than 3%. The Dow Jones Industrial Average, which hit a record high at the end of the previous week, slipped 0.23% to $50,461.68 as weakness in energy shares weighed on the index. In the bond market, yields fell across a broad range of maturities, and long-dated bonds with maturities of more than 10 years, which had been sold in the previous week on concerns that a prolonged blockade of Hormuz could stoke inflation and worsen fiscal conditions, were bought back on expectations that the fighting would end.

Safe havens and oil fall

Gold, also regarded as a safe-haven asset, was sold, with the most active COMEX futures contract in New York settling at $4,500 per troy ounce, a two-month low on a closing basis since late March. US crude benchmark WTI for near-term delivery fell 3% from the previous weekend to around $94 a barrel, and at one point slipped below $90.

Still, the outcome of any agreement remains unclear. The US Central Command said on the 26th that it had attacked targets in southern Iran, while the Islamic Revolutionary Guard Corps said it had shot down a US military drone. There has also been criticism from within Trump's own Republican Party that the cease-fire proposal is too lenient toward Iran. Matthew Murray, chief market strategist at Miller Tabak, said the turmoil within the Republican Party could have meaningful negative effects on the US over the long term.

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