Overnight, Trump extended the deadline for the ceasefire indefinitely while also keeping up the blockade on Iranian ports. This leaves the timeline for the normalization of energy export flows from the Strait of Hormuz still in limbo. Regardless, the market still remains complacent with stock futures rising despite closing in the red last night. Notably, financial conditions have largely recovered back to pre-war levels as market stresses ease. We are wary of asymmetrical downside risks to risky assets if a deal does not materialize. For rates, we suspect that investors have become less sensitive to oil gyrations. Swings between USD 90-110 / bbl probably would not prompt 2Y US yields to revisit 4% (the cycle high), with 3.85% likely to serve as a soft cap. Moreover, central bank communications have generally been consistent. There is a preference to wait and see before acting on inflation. We still see reasonable odds that the Fed would be able to ease towards the end of the year, but also note upside risks to our yield forecasts across the board.
In Asia, there are opportunities to consider as investors prepare for a post-conflict investment landscape, current uncertainties notwithstanding. We can consider the net moves in govvie yields since the conflict to get a gauge of performance. By this measure, IndoGBs (especially the frontend) are clearly lagging. If a deal gets announced, we think that frontend yields can probably head down further. Similarly, we think that rate hike pricing for Korea looks overdone and investors may still be keen to look for opportunities across the curve. We are somewhat more cautious on SGSs, which have large removed the war premium. Lastly, CGBs, which have been the best performers, could lag if demand for safety further unwinds. 
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