Wealthion Macro Bites 3-27

Iran formally rejected President Trump’s 15-point ceasefire plan and posted on Iranian Embassy websites five conditions to end the war: end to enemy aggression, concrete guarantee against recurrence of hostilities, guaranteed compensation of war damages, comprehensive end to hostilities against all Iranian allied resistance groups, and recognition of Iran's sovereignty over Strait of Hormuz.

On Thursday, President Trump threatened during a White House cabinet meeting to increase pressure in Iran if it did not strike a deal and open the Strait of Hormuz but subsequently posted on social media that he would pause threatened attacks on Iranian energy plants for 10 days until 4/6 at 8 pm EDT. Separately, the WSJ reports the Pentagon is considering deployment of 10,000 additional ground troops to the Middle East (including infantry and armored vehicles) to join the 5,000 marines and 1,000 paratroopers already ordered to the region.

Macquarie predicted a 40% probability of the Strait of Hormuz remaining shut through June driving Brent crude to $200/barrel. “If the Strait were to stay closed for an extended period, prices would need to move high enough to destroy an historically large amount of global oil demand.”

The Financial Post reports this morning that satellite images from NASA’s Fire Information for Resource Management System show fresh blazes at Russia’s crucial Baltic oil ports of Primorsk and Ust-Luga following overnight Ukrainian drone attacks.

After weeks of speculation, Turkey’s central bank (CBRT) confirmed it sold and swapped 58.4t of gold (>$8B) in two weeks following the start of the Iran conflict in its efforts to maintain a stable lira exchange rate. Reported Turkish gold reserves show a decline of 6t in the week ended 3/13 and an additional 52.4t in the week ended 3/20. Importantly, while some of the gold was sold outright, the majority was used to secure foreign exchange or liras via swap agreements, and it is unclear whether the SWAP lines allow the gold to be repurchased in the future.

Euro Stoxx 50 -1.2%, S&P futures -0.4% and Nasdaq futures -0.6%. European bonds continue their selloff with yields up 5bps-10bps across the board. 10-year Treasury yield +4.0bps (4.452%). DXY Index +0.15%, spot gold +0.9% and spot silver +0.4%. Brent futures +2.5% ($110.69) and WTI futures +2.3% ($96.65). [7:40 am ET]

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