Summary

• Investors appear to recognize that the ceasefire is fragile and that the underlying forces driving yields higher extend well beyond the Middle East conflict.
• Investment-grade option-adjusted spreads remain at 89 basis points, wider than the 78 basis points at year-end. The Bloomberg U.S. Aggregate Bond Index has lost 2.49 percent year-to-date.
• The ceasefire does not address the structural forces keeping yields elevated. Core PCE inflation remains above 3 percent. The Federal Reserve has signaled no rate cuts for the remainder of 2026.
• The bond market’s muted reaction to the ceasefire tells the story clearly: this market is pricing risks that extend well beyond the Persian Gulf.

A two-week ceasefire between the United States and Iran sent Brent crude plunging from $109 to $95 on April 8.

Oil Drops, Yields Hold

The announcement of a two-week ceasefire between the United States and

614 Followers