Morning Bid: Relief rally hits pause

• Brent and WTI crude topped $98 per barrel as Iran warned vessels in the Strait of Hormuz would be 'targeted and destroyed' without permission, with daily shipping traffic falling to less than 10% of historical averages
• Asian equities declined with Japan's Nikkei and South Korea's KOSPI both falling after multi-day gains, while European futures opened in the red and the dollar traded mixed
• Fed minutes revealed 'many participants' still favor rate cuts despite some policymakers advocating a pause, with 'most' seeing potential risks to economic growth from the conflict

Market Summary: Relief Rally Hits Pause

Key Development:

Wednesday's market relief rally lost momentum Thursday as the fragile U.S.-Iran two-week ceasefire showed signs of strain, with both sides disputing the agreement's terms despite peace talks scheduled for Saturday.

Energy Markets:

• Brent and WTI crude surged to $98 per barrel before pulling back slightly
• Prices remain below earlier weekly highs but rose on renewed geopolitical uncertainty
• The Strait of Hormuz remains effectively closed, with shipping traffic at less than 10% of historical averages
• Iran warned vessels sailing without permission would be "targeted and destroyed" and is considering fees for waterway transit

Equity Markets:

• Asian markets declined: Japan's Nikkei and South Korea's KOSPI fell after multi-day gains
• European stock futures opened in the red
• Markets paused after Wednesday's rally on ceasefire durability concerns

Currency Markets:

• Dollar traded mixed as investors assessed ceasefire viability
• Yen weakened to around 159 per dollar, reversing some Wednesday gains

Geopolitical Tensions:

• Iran claims Israeli strikes in Lebanon violate ceasefire terms
• Iran's negotiator suggested peace talks may not proceed
• President Trump issued military threats

Economic Data Watch:

• February PCE inflation report expected Thursday showing 0.4% monthly increase for the second consecutive month
• Fed minutes revealed policymakers divided on next moves, though "many participants" still favor rate cuts
• "Most" Fed officials see potential growth risks from the conflict

Market Implications:

The energy shock and inflationary pressures remain significant concerns, slowing Wednesday's Treasury rally and keeping markets on edge about the ceasefire's durability.