The two-week ceasefire agreement reached between the US and Iran triggered a risk-on rally across global assets. The US dollar, oil prices, and Treasury yields fell sharply, while stocks and gold rose significantly. However, beneath the surface optimism, asset pricing still includes a substantial geopolitical risk premium, as the market generally perceives the ceasefire as fragile and temporary. With face-to-face talks scheduled for Friday in Pakistan and several key US data releases imminent, investors are bracing for a new round of market volatility. The Federal Reserve meeting minutes, official speeches, and today's 10-year Treasury auction have further increased their importance, as the market attempts to price in the next phase of this high-risk geopolitical event.



A two-week ceasefire agreement was reached, but it came with strict conditions.

At the last minute, the United States and Iran reached an agreement to suspend all military strikes for two weeks, averting a full-blown escalation of the regional conflict that had been feared. In a public statement, US President Trump emphasized that the ceasefire was contingent on Iran reopening the Strait of Hormuz to commercial shipping. Although no full official confirmation has yet been released, multiple sources indicate that a small number of oil tankers and cargo ships will receive safe passage under the coordination and control of the Iranian navy in the coming days.

This limited passage is merely a minor sign of de-escalation. Before the escalation on February 28, the Strait of Hormuz saw approximately 20 to 21 million barrels of crude oil transported daily, accounting for 20% of global seaborne crude oil and 30% of global liquefied natural gas supply. The current volume of traffic is far less than before, but analysts believe this could form the basis for a gradual de-escalation. It is noteworthy that the US demand for freedom of navigation while Iran retains its claim to sovereignty over the strait aligns with the core content of the ten-point proposal Iran previously submitted to the US, which served as the basis for a permanent ceasefire.

Therefore, the face-to-face negotiations to be held in Pakistan this Friday will be closely watched. Historically, the first ceasefire agreements in Middle Eastern hotspots have a very high failure rate. Many still remember how, during previous tensions involving Iran, some short-term ceasefire agreements collapsed within days due to the resurfacing of core contradictions. The market generally views this two-week window as a respite rather than a final solution, allowing both sides time to probe each other's intentions without direct military pressure.

While Israel formally accepted the US-brokered ceasefire agreement, its stance was noticeably lukewarm. Israeli officials have repeatedly expressed strong skepticism towards Iran and stated they will maintain a high state of alert. Military operations against Hezbollah targets in Lebanon will continue, highlighting the far-from-stable security situation in the region. This divergent attitude further exacerbates uncertainty: any apparent breach or provocation by either side could shatter this fragile ceasefire within hours.

The market reacted significantly: risk appetite rebounded, but the rally still had room to run.

Following the ceasefire announcement, financial markets immediately exhibited a typical upward trend in risk appetite. The crude oil market saw the most dramatic fluctuations, with US WTI crude oil plunging over 18% in a single day, hovering around $95 per barrel. Even after this sharp decline, the implied volatility of crude oil futures and options still reflects a high geopolitical risk premium, indicating continued market concerns about another sudden disruption to navigation in the Strait of Hormuz. If subsequent news confirms a gradual increase in the number of vessels operating through the Strait and smoother coordination processes, analysts believe that the current decline in oil prices may continue, with Brent and WTI crude oil potentially falling to around $85, while simultaneously easing global inflationary pressures.

The US dollar index, previously the preferred safe-haven asset, suffered its biggest drop in weeks. Following a surprisingly hawkish signal from the Reserve Bank of New Zealand, the New Zealand dollar led the gains among non-US dollar currencies, rising sharply against the US dollar. The euro and pound sterling also surged against the US dollar, both breaking through key 200-day moving averages during the session. The US dollar suffered its biggest one-day drop against the Japanese yen since March 19, but still held above the key psychological level of 158; strong corporate cash earnings data released overnight by Japan was completely ignored by the market amid the overall dollar sell-off.

U.S. Treasury yields declined significantly in tandem, with the benchmark 10-year Treasury yield falling to a one-month low. The decline in yields, coupled with a weaker dollar, provided strong support for gold prices, pushing them to their highest level since March 19. The traditionally negative correlation between gold and risk appetite was temporarily offset by the combined effects of declining real yields and a depreciating dollar.

Stocks led the market rebound, with S&P 500, Nasdaq 100, and Dow Jones Industrial Average futures quickly recovering above their 200-day moving averages—a key inflection point closely watched by trend-following trading algorithms. This rebound has significantly recovered losses since late February, but several strategists caution that only a sustained close above these moving averages will provide technical confirmation of this rally.

The subsequent developments of the ceasefire remain the core theme of the market.

Despite the initial clear market reaction, the subsequent market trend will still be dominated by unexpected news risks. Any sign of a easing of the ceasefire—whether it's a statement from Israel, a tough stance from Iran, or a sudden incident in the Straits—could quickly reverse the current positive sentiment, and crude oil will likely be the first and most sensitive indicator.

Today's 10-year US Treasury auction will be closely watched, with the market observing changes in demand under the low-yield environment: strong buying from both domestic and international markets could further drive up bond prices; weak subscriptions may reflect lingering concerns about energy price-related inflation. While the impact of tonight's Federal Reserve meeting minutes has been somewhat diminished by geopolitical tensions, they will still be carefully analyzed to gauge the Fed's inclination to raise interest rates at its March 18 meeting. Currently, the market expects a roughly 50% probability of at least one rate cut by the Fed before the end of the year; a dovish tone in the minutes could further boost risk appetite, while a hawkish tone could suppress gains in stocks and gold prices.

In the long run, the success or failure of Friday's talks with Pakistan will determine the market tone for the next two weeks. If the negotiations proceed smoothly and even limited confidence-building measures are reached on issues such as shipping security, it could drive risk assets higher and continue to put pressure on the dollar and oil prices. Conversely, if the negotiations break down, oil prices will likely return above $100, the dollar will regain safe-haven appeal, and the stock market will give back its recent gains.

In summary, the ceasefire agreement immediately triggered a market stabilization and rebound, but pricing in the oil, currency, and interest rate markets still reflects considerable caution. The news events of the next 48 to 72 hours, the current key technical levels being tested, and the upcoming US economic data will determine whether this round of risk-on sentiment is sustainable or merely a temporary rebound within a volatile geopolitical and macroeconomic environment. Investors are advised to maintain flexible positions and closely monitor real-time developments in the Middle East.