Investors are closely watching negotiations between the United States and Iran as traders begin pricing in the possibility of a significant geopolitical breakthrough.
Bank of America Securities has outlined two key scenarios for markets, with a peace deal and full reopening of the Strait of Hormuz representing the bank’s baseline outcome.
Under that baseline scenario, Bank of America Securities projects Brent crude futures averaging $82 per barrel for 2026, reflecting the relief that would come from eased supply disruptions.
The broader market has already moved into relief mode, with U.S. futures higher, global equities catching a bid, and oil breaking lower as optimism builds.
The dollar has softened as traders price in the possibility that the sharpest edge of the geopolitical war premium could soon be removed from energy markets.
Equities, particularly technology and consumer discretionary stocks, rallied on expectations of lower energy costs, easing inflation, and supply chain normalization.
Reduced crude prices did real work across asset classes, lowering the immediate risk of another inflation shock and helping Treasuries, equity duration, and the broader risk complex.
The 10-year Treasury yield hovered near 4.46%, with traders watching whether a genuine geopolitical improvement could pull yields back toward 4.33% and then 4.25%.
Bank of America data showed $31.5 billion flowing into stocks alongside $20.8 billion into bonds, marking the 59th straight week of bond inflows as investors repositioned around the evolving outlook.
Cash saw $2.5 billion in outflows, while gold recorded $2.3 billion in outflows, its fourth consecutive week of losses as the safe-haven appeal of the metal faded with improving sentiment.
Crypto also saw $0.7 billion in outflows during the same period, suggesting investors are rotating away from alternative stores of value and back into traditional risk assets.
The flow data paints a clear picture of where institutional money is moving as the prospect of a more stable Middle East begins to look increasingly credible to Wall Street.
A full reopening of the Strait of Hormuz would represent one of the most consequential geopolitical shifts for global energy markets in years, with wide-ranging implications across equities, bonds, and commodities.
