Trump surprised everyone by signing an agreement with Iran while he was in France last night, two days ahead of the planned signing in Switzerland on Friday. The market reacted immediately, with crude oil falling 4% and stock futures jumping. The details of the deal have not been fully released yet, but for now, the Strait of Hormuz is open without any tolls being charged by Iran. That’s enough for another relief rally. In his first FOMC talk yesterday, Kevin Warsh was perceived as more hawkish than hoped for. He made it clear that he will cease giving "forward guidance" commentary that Jerome Powell, the previous Chairman of the Fed, had given. He specifically said that while he would encourage his colleagues to make estimates of future Fed Funds rate levels, he would not be doing so himself.The commentary Warsh gave made it clear that, currently, unless inflation falls much closer to the 2% target, which he made clear would not be changed, a rate hike was likely by year’s end. He also announced he was forming 5 different task forces to study communications, the Fed’s balance sheet, data sources, productivity and jobs, AI and transformational technologies, and the approach to inflation. We seem to have a new Fed that will be much more secretive and more focused on inflation. The market reacted very negatively to this more hawkish Fed. Most pointedly, the 2-year U.S. Treasury yield popped 14.4 bps, taking stocks down hard. The S&P fell 1.2%, the NASDAQ down 1.3%, and the Magnificent 7 fell 2.8%. Today, however, thanks to the signing of the Iran deal, most of those losses have been erased. The 2-year yield closed at 4.16%, climbed to 4.21% pre-market, and has now fallen below 4.15%. The 10-year got as high as 4.46% and has cooled to below 4.42%. The yield curve has flattened meaningfully, as higher short rates are expected to lead to lower inflation in the long term. In reaction to higher interest rate expectations, we’ve seen the US dollar index rise to a 52-week high of 100.3. Gold is down 2.5% today, silver down 6%, copper down 1.4%. Bitcoin is down 1.3%. The trend is clearly positive. It’s hard to say Iran is completely behind us. At the same time, the AI theme looks as strong as ever.