US Stocks, Bonds Rally on US-Iran Deal Hopes
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- Treasury yields fell and oil prices dropped sharply on May 20, 2026, on hopes for a US-Iran deal, with the benchmark 10-year yield sliding 9.4 basis points to 4.576% and US crude plunging $5.89 to settle at $98.26 a barrel.
- Trump said US-Iran negotiations were in the "final stages" but warned of further attacks unless Iran agrees to a deal, adding the US was willing to wait a few days for the "right answer."
- Major US stock indexes posted broad gains, with the Dow rising 1.31% to 50,009.35, the S&P 500 gaining 1.08% to 7,432.97, and the Nasdaq climbing 1.55% to 26,270.36.
- Fed funds futures traders are now pricing in roughly 50% odds of a rate hike by December — a sharp reversal from before the Iran war began in late February, when markets had expected two cuts this year.
- Two Chinese oil tankers exited the Strait of Hormuz, shipping data showed, offering tentative signs of easing pressure in the Gulf.
- Nvidia forecast second-quarter revenue above Wall Street expectations and announced an $80 billion share repurchase program, sending the broader semiconductor index up 4.5%.
- SpaceX unveiled its IPO filing after the closing bell, with the listing poised to become the first trillion-dollar US market debut.
Why it matters: The roughly 50% odds Fed funds futures now price for a rate HIKE by December — up from expected cuts before the war — shows how dramatically the Iran conflict has repriced the entire rate path. For investors, the $5.89 single-day drop in US crude and the 9.4 bps yield decline on mere talk of a deal reveal how jittery the market has become: any concrete agreement could rapidly unwind the war-driven inflation premium now baked into energy prices and borrowing costs.
