U.S.-Iran negotiations, suddenly breaking news!

Uncertainty remains high!

On the morning of March 31, according to The Wall Street Journal, President Trump told his aides that even if the Strait of Hormuz is still basically closed, he is willing to end the U.S. military action against Iran. However, he may still have difficulty determining negotiation goals.

According to CNN, the U.S. government is still casting a wide net, looking for officials it can talk to. However, U.S. and regional officials said that although the likelihood of face-to-face meetings this week is low, both sides have taken the talks seriously in private so far.

In the Asia-Pacific trading session, U.S. stock index futures and European market futures rebounded sharply, while oil prices saw a sudden plunge. But Asia-Pacific stock markets performed only moderately. Also, parts of Tehran, Iran’s capital, lost power. It is understood that the power outage was caused by shrapnel hitting a power facility in eastern Tehran. Tehran was hit by yet another round of airstrikes, with multiple explosions occurring.

New Developments in U.S.-Iran Talks

According to CNN, as Trump’s envoys prepare to make another attempt at diplomatic outreach to Iran, an important issue looms over their efforts: whether the officials they are contacting have enough authority to reach an agreement. U.S. and Gulf officials said U.S. officials do not fully know whether the regime figures receiving their messages have final authority to sign any peace agreement, let alone to carry out a peace agreement.

But according to four regional sources, because the identity of Iran’s internal decision-makers remains unclear, the U.S. government is still casting a wide net, looking for officials it can talk to. A source familiar with the relevant developments said, “Getting a short-term response from that country is not easy, so more time must be given as a prerequisite condition for dialogue later.” U.S. and regional officials said that although the likelihood of face-to-face meetings this week is low, both sides have taken the talks seriously in private so far.

Iran’s Foreign Minister Zarif admitted last Wednesday that information is being exchanged with the U.S. through “friendly countries.” But some foreign media cited statements from Pakistani officials saying that when Pakistan urged Iran to join the talks, Tehran “insisted on its demands,” refusing to meet with the U.S. unless the U.S. guarantees that it will not take military action against Iran in the future, that its missile program will not be included in the talks, and that Iran will be compensated for losses caused by the U.S. and Israel.

In addition, Israel may also be a key factor blocking the talks. At 5:51 a.m. local time on March 31, Iran’s capital, Tehran, was hit by another round of airstrikes. Multiple explosions occurred in Tehran. At the same time, the Israel Defense Command at in the morning of March 31 local time said it detected missiles launched from Iran toward Israel, and air-raid sirens sounded in multiple locations across the central region.

Shock

Markets are currently pricing in an Iran war.

On the morning of March 31, a report from The Wall Street Journal calmed market panic, causing U.S. stock index futures to surge across the board. Research firms believe that if the war cannot end quickly, the impact on the market may exceed expectations.

According to a report by Business Insider, the latest report from the research firm Ned Davis Research (NDR) said that more than 500 key technical and capital flow indicators for the S&P 500 are approaching levels, or have even issued sell signals, suggesting that the stock market may not yet have bottomed out and investors need to be more alert. Since fighting broke out at the end of February, the S&P 500 index has fallen by about 8% in total. NDR analyst London Stockton said bluntly that the overall trend is “getting worse and worse,” and most of the company’s major models have turned bearish.

The firm noted that based on analysis of the index’s pullbacks over the past 79 years, when the index drops at least 7.2% from the prior week’s high, historically it has typically been seen as a sell signal. This signal implies that investors should consider shifting money from stocks in that benchmark index to commercial paper—meaning short-term corporate bonds.

In addition, demand for trading volume in the S&P 500 is declining, while supply continues to rise, indicating that investors’ interest in selling that index is gradually greater than their willingness to buy. According to the firm’s analysis, the ratio of demand to supply was about 1.25 last Friday. If that ratio falls below 0.8, it would indicate that stocks should be sold and U.S. Treasuries should be bought instead. It is worth noting that last night, yields on U.S. 10-year Treasuries fell sharply, which means investors are buying Treasuries—and they may also be pricing in a downturn.

Layout: Wang Yunpeng

Proofreading: Zhao Yan