US stock futures are pointing to a higher open, with September S&P 500 E-Mini futures up +0.57% and September Nasdaq 100 E-Mini futures up +0.47%. This upward trend follows a significant drop in oil prices, over -6% on Monday, after President Donald Trump indicated that a deal to ease Middle East tensions and reopen the Strait of Hormuz was agreed upon, and that new US-Iran talks would commence. Trump had called off a planned strike on Iran, stating that it would have been the biggest attack since World War II, and described the new discussions as a "last chance" for Iran, though Iran's Foreign Ministry denied any direct negotiations with the US, only ongoing talks with Oman regarding the Strait of Hormuz.
Investors are closely monitoring upcoming economic data, particularly the US July Nonfarm Payrolls report, which is expected to show the unemployment rate holding steady at 4.2% and payrolls increasing by 88K. This would represent a "Goldilocks-type" outcome, easing inflation concerns and potentially allowing the Federal Reserve to maintain interest rates in September. Other important labor market indicators include JOLTS Job Openings, ADP Nonfarm Employment Change, and Initial Jobless Claims. Additionally, the U.S. ISM Manufacturing PMI for July is awaited, with economists forecasting a rise to 54.0 from 53.3, and the "Prices Paid" component will be scrutinized for inflationary signals.
Treasury yields also reacted to the news, with the 10-year T-note yield falling five basis points to 4.69% as oil price declines alleviated inflation fears. Market participants are also preparing for a new round of corporate earnings reports, comments from Federal Reserve officials, and various other US economic data points throughout the week. Despite Trump's claims, Iran's foreign minister denied direct talks, stating that ongoing discussions were solely with Oman regarding the Strait of Hormuz, with Trump later accusing Iran's leadership of being "unbelievably duplicitous" while expecting further discussions.
