Good morning! After a week of relative calm the Iran war surprised us again, with the first US escort and the first time since the ceasefire that Iran shot missiles and drones at the UAE.
While tensions were high for a few hours, the situation seems to have stabilized. Outside of Iran war, today we will cover the fight for the midterms, as well as US gas prices forecast and a new drama in Romanian politics.
Let's take a look at the markets!
Iran Tracker
#1 Peace
Peace chances trended lower after a brief escalation period, reaching 13% by the end of May and 34% by the end of June.
Missiles and drones started flying at the UAE after the US Navy ships went into the Persian Gulf to escort vessels. However, Trump was short of calling it a ceasefire violation, after markets started to price in a return to hostilities:
The obvious conclusion here based on traders positioning is that they believe that neither side wants a return to all-out war, preferring to contain the confrontation to the Strait of Hormuz blockade.
#2 The Strait Of Hormuz
The Strait of Hormuz continues to be effectively closed with chances of traffic normalization reaching a new low of 16% after the brief escalation yesterday.
As the small escort operation is being actively contested by Iran, traders see little chances of any meaningful traffic returning. Energy prices also continue to price in a prolonged closure with all oil benchmarks well above $100 a barrel:
#3 Louisiana House Elections
Republicans overtook Democrats in the LA-02 Election forecast after the US Supreme Court struck down Louisiana's congressional map, calling it an unconstitutional racial gerrymander.
Congressional maps are being redrawn in several places as both parties engaged in a map war in order to secure more seats in either side's favorable states. That being said, at this point a Democrat sweep is still the most likely outcome:
#4 US Gas Prices Going Higher
Average gas prices are on the rise as the Iran war continues with no resolution in sight. Traders now project gas prices will hit $4.70 per gallon with a move over $5.00 priced at 36% and rising.
Amid the energy supply shock, the US is exporting more and more oil and oil products. This has the effect on domestic prices as more and more voices start saying they are struggling with the energy costs.
Traders for now don't see Trump banning the exports, thus expectations on this market are going higher.
#5 Elections Coming To Romania?
We had a successful no confidence vote in Romania, resulting in ousting of the current PM.
Traders have been expecting this outcome for some time now as the ruling coalition collapsed recently, with PSD exiting it. Additionally, George Simon is cited as the mastermind behind the vote, as his right-wing party is surging in the polls.
However, analysts are saying that a snap election is unlikely, and see the president trying to form a new government after consultations with the party leaders. Traders seem to agree:
Wrap up
Iran gave us all a bit of a scare yesterday, but it seems that the situation is contained for now. But between the gas prices, and highly contested midterms, it is impacting almost all other global events.
We will continue to monitor the Iran situation as it develops.
Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you on Monday for another Morning Brief!
This is not official investment or life advice. Do your own research. This are only my opinions and I encourage anyone to do their own research before putting any money anywhere.