Iran has turned down a ceasefire proposal that Iraqi leaders had put forward on the United States' behalf, according to the New York Times, and Thursday marks the 145th day since the war between the US and Iran began, market commentary account The Kobeissi Letter reports. Iraq has positioned itself as a mediator between Washington and Tehran, given its proximity to Iran and its own exposure to any disruption in the region, but this latest attempt to broker a truce has failed to gain Iranian acceptance. The rejection extends a conflict that has already reshaped bond and energy markets this year. US Treasury yields have carried an extra risk premium tied to the war, and oil prices have climbed as shipping in the Gulf came under repeated threat, including strikes on tankers bound for Saudi Arabia in the past day. With no ceasefire in sight, traders are left pricing in the possibility that hostilities, and the market volatility that comes with them, continue well past the five month mark.
Why it matters · A failed ceasefire means the war-risk premium sitting in yields and oil prices isn't going away soon, and could deepen if hostilities escalate further.
Worth asking · Iran just rejected a ceasefire even as Iraq tried to broker peace, with the war now past 145 days. Does the market keep pricing in a long war, or is a resolution closer than it looks?