Oil Price Drop Eases Inflation Fears Ahead of Central Bank Meetings

A pause in fighting between Iran and the US has led to a drop in oil prices, easing inflation risks and boosting bonds. On Sunday, Iran said it would halt its own attacks if the US did the same, with the US military concerned about dwindling supplies of ammunition.

Brent crude fell 4.7% to $92.27 a barrel, while US crude dropped 5.0% to $84.89. The pullback in oil led markets to slightly reduce the probability of rate hikes from the Federal Reserve, with the central bank meeting on Wednesday implying a one-in-three chance of a rise.

Goldman Sachs analysts said there will likely be at least one dissent in favor of a hike, but most voters appear unlikely to push for a move this week after softer June inflation data. Tech earnings are also set to test bulls, with S&P 500 companies due to report this week boasting a 26.5% increase on last year's figures.

The massive sums involved were underlined by a Wall Street Journal report that Nvidia was in talks to provide a roughly $250 billion backstop for OpenAI as part of a data center project. The drop in oil helped 10-year US Treasury yields fall four basis points to 4.63%, and nudged the dollar broadly lower.