Morning Bid: Markets remain long TACO

By Anna Szymanski

What matters in U.S. and global markets today

By Anna Szymanski, Editor-in-Charge, Reuters Open Interest

Military exchanges between the U.S. and Iran intensified overnight as President Donald Trump seemed to double down on his view that Tehran was an unreliable negotiating partner, while also indicating that a full-scale war would not be restarting. Oil markets have so far taken the flareup in stride, with Brent crude staying under $80 per barrel despite yesterday's surge to multi-week highs.

Global bonds remained weak in Asia trading, while stocks were mixed early on Thursday. A burst of enthusiasm for chip stocks in the U.S. on Wednesday helped lift Asian equities briefly before the rally lost momentum.

I'll get into that and more below.

But first, listen to the latest episode of the Morning Bid daily podcast, where we discuss the longer-term implications of this recent burst of hostilities in the Gulf and why volatility is not necessarily a bad thing for markets.

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MARKETS REMAIN LONG TACO

Another round of U.S. strikes on Iranian targets came on Wednesday. Tehran retaliated by launching attacks on Kuwait, Bahrain and Qatar.

The U.S. strikes followed remarks by Trump in Turkey yesterday that he believed the two sides' interim agreement was "over" and that negotiating with Tehran was not worthwhile.

However, he also said the war likely would not restart, noting: "Anything that happens is going to be over very quickly ... and will only make it safer, including for oil".

And traders appear to put more weight on the latter message. Oil prices have been relatively calm, paring early gains to trade at around $78/bbl on Thursday morning. That's around where they settled on Wednesday after rising more than 5%.

The question now is if we do see both sides pull back from this latest eruption, how far do prices fall? If the Gulf is now in a chronically unstable situation as Tehran vies for control over the Strait of Hormuz, a higher risk premium would likely need to be reflected in crude prices.

Global bond yields continued to rise on Thursday given the renewed tensions in the Middle East and inflation fears, with Japan's benchmark 10-year government bond yield hitting a 30-year high.

In equities, chip stocks staged a bit of a comeback stateside on Wednesday. Broadcom rallied after Apple said it planned to spend more than $30 billion on the semiconductor giant's chips, helping the Nasdaq edge up slightly.

And memory chip optimism was also reflected in news that SK Hynix's $28 billion U.S. share sale was more than seven times oversubscribed. The South Korean chipmaker's shares jumped 5% in Asia, though the KOSPI ended lower once again after rallying earlier in the session.

Wall Street futures, meanwhile, were in the green before the bell on Thursday.

On the monetary policy front, Wednesday saw the release of the Fed's June meeting minutes, which showed an evenly divided debate over whether to hold or hike rates, with a "few participants" noting a potential case for immediate hikes and several pointing out that price pressures were becoming "more broad-based".

Elsewhere, NATO member states may have breathed a sigh of relief after the conclusion of the summit in Turkey, where President Trump said there had been "a lot of unity" and announced Ukraine would be granted a license to manufacture Patriot missile interceptors. That was a big win for Kyiv.

Meanwhile, Russia announced on Wednesday that it would ban diesel exports as part of its efforts to support its domestic fuel market. Systematic Ukrainian drone attacks on oil refineries have triggered gasoline shortages and ‌price spikes in one of the world's largest oil-producing nations.

Chart of the day

The minutes of the June 16-17 Federal Reserve meeting highlighted the central bank's growing concerns about inflation. While the majority of members think inflation will fall back to the 2% target, they are not discounting a scenario in which it remains elevated, necessitating rate hikes.

Energy prices - which, of course, came down after the Fed meeting last month - are not the only issue. The potential inflationary impact of booming investments in AI was also brought up in the debate.

Fed funds futures currently imply 38 basis points of tightening through January 2027, a slight increase back to where expectations were roughly a week ago.

Today's events to watch

• U.S. weekly jobless claims (8:30 a.m. EDT), existing home sales (10 a.m. EDT)

• U.S. 30-year bond auction (1 p.m. EDT)

• New York Fed's John Williams and Dallas Fed's Lorie Logan both speak

• U.S. corporate earnings: PepsiCo

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(By Anna Szymanski; Additional writing by Al Reed; Editing by Ros Russell)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published July 9, 2026 at 4:44 AM.