On Saturday, the US and Iran are having talks in the Baghdad negotiations; markets may open with a jump next week.

The US-Iran “ceasefire agreement” has caused the entire market to reprice. The first round of talks is expected to be held this morning. The fact that both sides have been able to return from the battlefield to the negotiating table so far shows that neither side wants to keep fighting. In the end, the outcome is likely to be successful negotiations, with both sides getting the results they want. For the market, this is certainly a major positive: geopolitical risk is eased, and more funds flow into the market seeking safety.

Initial US unemployment claims rose to 219,000 last week, but overall they remain at low levels, indicating that the labor market has not yet clearly deteriorated. Meanwhile, the February PCE price index rose 0.4% month over month, and the core PCE year-over-year increase is still 3.0%. This suggests that before oil prices surge further, inflation itself already lacks sufficient downward momentum.

The core logic is: crude oil prices → US CPI/PCE inflation → Federal Reserve policy and pressures on livelihoods → diplomatic easing of geopolitical tensions. High oil prices directly boost energy inflation, and indirectly transmit to logistics, chemicals, and food, leading to a rebound in inflation. For the US to quickly rein in inflation, it must stabilize the supply of crude oil and cool oil prices. Since oil prices’ key variable is tied to Middle East geopolitics, easing conflicts and pushing forward negotiations are crucial measures.

Once negotiations succeed, the big move will likely surge again significantly to test the previous high in the 76,000 area for resistance. We’ll wait patiently for next week’s negotiation results. With the weekend being a two-day break, there probably won’t be too much volatility—after all, US equities are closed, and liquidity is lacking. For the next two days, short-term trading can temporarily focus on selling high and buying low around 73,500-72,300.