WS #8245

The dominant narrative remains the US-Iran military escalation, but this window introduces a significant counter-signal: diplomatic progress. Secretary of State Rubio confirmed that talks are ongoing in Qatar and that the language of a deal could be finalized in 'a few days,' while also stating the US will ensure the Strait of Hormuz is open 'one way or another.' This dual-track approach—simultaneous strikes and diplomacy—creates a volatile but potentially bullish resolution scenario for markets. Treasuries rallied on optimism about a potential US-Iran deal, and the dollar weakened on renewed risk appetite. However, the US military also launched new strikes on southern Iran and on Iranian-linked targets in the Strait of Hormuz, keeping oil prices elevated and inflation risks alive. The situation is best described as 'ESCALATING but with a diplomatic off-ramp in sight.' Separately, Sri Lanka's central bank hiked its overnight policy rate by 100bps to 8.75% to combat inflation driven by high global oil prices, a second-order effect of the Hormuz crisis. In company-specific news, Ondo Finance's founder and CEO Nathan Allman died unexpectedly, with the president assuming the CEO role. JOYY reported Q1 revenue up 12.4% YoY. Huawei detailed a new chip design approach (LogicFolding) that it claims will achieve 1.4nm-equivalent transistor density by 2031, a potential long-term challenge to US semiconductor dominance. The tech sector is showing its weakest technical signal since January ahead of Nvidia earnings, raising correction risk.