Trump's Rejection of Iran Ceasefire Proposal Sends Oil Prices Soaring

US stocks are poised for a weaker open on Monday after President Trump rejected an Iranian ceasefire proposal, which has sent oil prices soaring and fueled inflationary concerns.

The rejection of the offer from Iran has increased uncertainty over when the Strait of Hormuz may reopen, keeping a geopolitical risk premium in Brent and WTI. Oil prices have jumped over 3% on Monday, with crude oil prices rising to a three-month high.

Despite strong economic data, including a record-high September flash composite PMI, investors are becoming increasingly concerned about inflationary pressures and the potential impact of higher interest rates on the economy. The US 10-year Treasury yield has risen above 5.2%, pushing up mortgage rates and other borrowing costs.

The market is pricing in a 70% probability that the Fed will hike rates at the October meeting, which could further exacerbate inflationary concerns. Strong employment data, including the upcoming non-farm payroll report on Friday, may strengthen the case for higher interest rates to combat rising prices.