u/Progress_8

Inflation is holding steady at a lower level (2.4%), and the author points to weak jobs data as a sign of a slowing economy. The author explicitly states that this data "leaves the Fed some room to decrease future interest rates." Lower interest rates are typically a powerful tailwind for equity markets, as they reduce borrowing costs for companies and make stocks more attractive relative to bonds. The prospect of Fed rate cuts, potentially starting as early as September or even sooner, creates a bullish environment for the broader stock market. If the "recent war" causes an inflation spike, the Fed may delay or reverse its dovish pivot. A severe economic downturn (hard landing) could hurt corporate earnings more than rate cuts help stock prices.

Brent crude has fallen 13% to $96 a barrel following the postponement of US strikes on Iranian power plants. The removal of immediate military threats to Middle Eastern energy infrastructure rapidly deflates the geopolitical risk premium priced into oil. Short oil/energy markets as de-escalation eases supply disruption fears. Iranian media denies the talks; if the de-escalation is a bluff, oil will violently spike back up.

February CPI data was in-line with expectations (2.4% headline, 2.5% core), and last month's jobs data "wildly missed expectations." This combination of moderating inflation and a weakening labor market gives the Federal Reserve justification to cut interest rates. The author suggests cuts could be "sooner and more aggressive" than the market's current pricing. The expectation of imminent and potentially aggressive Fed rate cuts will increase the value of long-duration Treasury bonds, as bond prices rise when yields fall. Inflation could re-accelerate due to the "recent war" or other factors, forcing the Fed to hold rates higher for longer. The job market could rebound, removing the impetus for cuts.

Gold perpetual swap futures on Hyperliquid rose 1.3% over the weekend amid rising geopolitical tensions. This price action indicates a classic flight-to-safety move by traders who are active 24/7. This sentiment is likely to carry over into the traditional markets when they open. The pre-market rally in gold perpetuals suggests that safe-haven assets like gold (and the GLD ETF) will see increased demand at the market open on Monday. A sudden de-escalation of geopolitical tensions could reverse the flight-to-safety trade. The move might already be priced in by the time markets open, leading to a "sell the news" event.

Silver perpetual swap futures on Hyperliquid rose 2% over the weekend. Similar to gold, the rise in silver reflects a demand for precious metals as a hedge against geopolitical uncertainty and potential inflation from rising energy costs. The rally in silver perpetuals suggests that silver and related ETFs like SLV are likely to open higher on Monday as the flight-to-safety trade materializes in traditional markets. Silver can be more volatile than gold; a broader market risk-off move could negatively impact its industrial demand component, muting the safe-haven rally. The geopolitical situation could improve before the open.

Perpetual swap futures for oil on a 24/7 crypto exchange rose 5% over the weekend due to escalating tensions with Iran. This weekend trading activity acts as a leading indicator, suggesting that when traditional markets open, there will be strong buying pressure on oil as traders hedge geopolitical risk. The significant pre-market rally in oil perpetuals signals a likely gap up in oil prices and related assets like USO on Monday morning. The geopolitical situation could de-escalate before markets open, causing the risk premium to evaporate. The crypto-based perpetual market may not be a reliable indicator for the broader traditional markets.