Iran Tensions

• Diplomatic efforts between the United States and Iran have advanced ceasefire talks, with both nations signaling willingness to negotiate a formal agreement to end months of escalating regional conflict. • Officials from both countries met in a neutral location this week to discuss terms, including sanctions relief, prisoner exchanges, and military de-escalation measures along disputed maritime boundaries. • The ceasefire proposal carries significant implications for global oil markets, international shipping routes, and broader Middle Eastern stability, with analysts warning that failure could trigger wider regional conflict.

• US President Donald Trump arrived in Beijing on May 13, 2026, for a state visit and high-level talks with Chinese President Xi Jinping addressing major bilateral and global issues. • Key agenda items include US-China trade disputes, rare earth minerals supply chains, Taiwan's political status, artificial intelligence competition, and the ongoing Iran conflict. • The summit represents a critical diplomatic engagement aimed at managing US-China strategic competition and reducing military escalation risks.

• Indian equities are expected to remain highly sensitive to geopolitical developments this week, with markets tracking the ongoing US-Iran situation and fluctuating crude oil prices that could trigger sharp movements in large-cap stocks. • Foreign investors have withdrawn Rs 14,231 crore from Indian equities so far in May amid global macroeconomic uncertainties, signaling reduced confidence in the market amid external headwinds. • Key macroeconomic releases this week include India's April CPI inflation data and US inflation prints (CPI and PPI), which analysts warn could materially shape Federal Reserve rate-cut expectations and global risk sentiment.

• Asian stock markets fell broadly on Friday as renewed clashes between the US and Iran strained ceasefire efforts, with missile and drone attacks prompting US retaliatory strikes on Iranian military facilities. • Tokyo's Nikkei 225 dropped 1.1% to 62,174, retreating from a record high of 62,833 reached Thursday, while SoftBank Group lost over 5% and Hong Kong's Hang Seng fell 1.3% to 26,289. • Oil prices climbed amid Middle East uncertainty, with Brent crude rising 1.1% to $101.13 per barrel—roughly 44% higher than pre-war levels in late February.

• The US military carried out strikes targeting Iranian facilities in the Strait of Hormuz area on May 7, 2026, according to Pentagon statements, marking a significant escalation in ongoing US-Iran hostilities. • Iran's state media claimed the US violated a ceasefire agreement by targeting an Iranian tanker, while the Pentagon stated it targeted Iranian facilities responsible for attacks on US forces. • The strikes occur amid negotiations over a potential nuclear deal, with Trump having previously issued ultimatums to Iran and allies, raising concerns about the fragility of diplomatic efforts.

The launch of ‘Project Freedom’ in the strait of Hormuz has brought the region back to the brink of full-scale war. Plus: The electoral battle for CongressGood morning.Donald Trump has again raised the stakes in the Gulf region with the Monday launch of “Project Freedom” to open a route through the strait of Hormuz. More than 800 ships and roughly 20,000 crew members remain stranded in the region.Have any vessels made it out of the strait? US Central Command (Centcom) said two US-flagged merchant vessels had “successfully transited” the strait, but Iran has denied this claim. Late on Monday, the container shipping company Maersk said the Alliance Fairfax – a US-flagged vehicle carrier – exited the Gulf. Shipping industry experts remain skeptical about whether vessels will be able to travel safely to and from the Gulf under Trump’s plan.This is a developing story. Follow the liveblog here.How will this play into the overall battle for Congress? Red states, including Alabama and Tennessee, are rushing to revise their congressional maps after the original supreme court decision. On Monday, Ron DeSantis, the Florida governor, signed a gerrymandered congressional district map into law that gives Republicans an electoral advantage in four additional races in November’s midterm elections.How are Democrats fighting back? Eight candidates have been added to their slate of top contenders vying to reclaim a Democratic House majority in November’s midterm elections.When do voters head to the polls? Ohio voters will today select candidates before November’s midterm elections, including the candidates for Ohio’s Senate special election. Indiana voters also go to the polls today, with seven Republican state senators battling for re-election against candidates backed by Trump. Continue reading...

• Oil prices jumped above $100 per barrel and broke through $115 as Iran controls the Strait of Hormuz, with Brent crude rising 6% amid U.S. efforts to free up shipping lanes. • The S&P 500 fell with all 11 sectors declining except energy (+0.9%); Dow Jones dropped approximately 1%, while Asia ex-Japan surged 2.8% led by KOSPI's 5% gain to new highs. • U.S. Treasury yields climbed across the curve by 7-10 basis points, with the 30-year Treasury clearing 5.0% as inflation pressures mount and the USD index moved higher above 98.