Markets are mostly optimistic about a US-Iran deal; bond yields drop while dollar slipsOil prices remain sticky despite Monday’s decline; both gold and bitcoin trend lowerRate hikes have become the central scenario for the ECB, RBNZ and BoJDollar/yen refuses to drop; are Japanese officials postponing another intervention?“Agreement Is Coming”A paraphrasing of a famous phrase from one of the most popular TV series ever made can describe the current situation regarding the Middle East conflict. Despite the sporadic hostilities, which did not escalate as both sides are showing constraint, the central scenario is that an initial agreement, along the lines presented over the weekend, should be announced over the next few days, which also explains the increased number of oil ships crossing the Strait of Hormuz on a daily basis. Obviously, there are still disagreements over Iran’s nuclear capabilities, the unfreezing of Iranian assets, and sanctions, but progress has been considerable.Another indication that the US administration is gradually shifting its focus elsewhere is the overnight commentary from US Trade Representative Greer, pushing the US trade strategy back into the spotlight. The USMCA agreement is set for review on July 1, which explains recent comments about tariffs imposed on both Canada and Mexico amidst the football World Cup hosted in North America, while US-China and US-EU trade relations continue to normalize, keeping investors busy.Mixed Market MovesJudging by the cautious performance of US equity indices, the small dollar decline overnight and the drop in sovereign bond yields – the 10-year US Treasury yield is 20bps below last week’s peak – one could assume that investors remain confident about a US-Iran solution, opting to focus on the positive AI-driven outlook.That said, Monday’s drop in oil prices has not persisted, with the July WTI oil future hovering above $90 and the December WTI oil future stuck above $78. Even more telling, gold and bitcoin are moving in the same direction. Gold has quickly erased Monday’s bullish gap and looks poised to test the recent local trough at $4,453, ignoring today’s dollar weakness.Similarly, Bitcoin appears to have lost the battle with the 50-day simple moving average and is in the red again today. The king of cryptos has been struggling since climbing to $82.8k in early May, failing to benefit from the improved risk appetite that pushed US equity indices to fresh all-time highs. The positive gold-bitcoin correlation and the stickiness in oil prices could be seen as indications that there are lingering concerns about the US-Iran negotiations derailing and the restart in hostilities. Hence, could US equity investors prove too optimistic?Central Banks In FocusIn the meantime, investors are also looking at the central bank activity. The RBNZ was the last to meet during May, with the message being simple: rate hikes look necessary regardless of the outcome of the US-Iran talks, despite the looser labour market. This resembles the message from most ECB officials that a June rate hike is the central scenario, with next week’s preliminary CPI report potentially being crucial for the rate hike size and the overall meeting rhetoric.And the Fed is not far behind. Minneapolis Fed President Kashkari was the last to openly highlight the possibility of “a series of hikes in response to inflation”, as markets await Fed Chair Warsh’s first speech. Rumours that he is planning to avoid speaking until the June 17 Fed meeting press conference could be seen as a mockery of markets, since at the meeting he will express the view of the FOMC and not his personal stance.Finally, the BoJ looks ready for a June rate hike. This is not helping the yen though, as dollar/yen is hovering at 159.30 at the time of writing, with investors questioning the Japanese government’s intervention strategy. Are government officials hoping that the combination of a US-Iran agreement and a BoJ rate hike could push this pair lower, or are they waiting for the US to greenlight a coordinated operation in support of the yen?