July 8, 2026

Trump ends memorandum of understanding with Iran after new military escalation

International

US President Donald Trump declared today that the Memorandum of Understanding signed with Iran "is over" and that he does not wish to continue negotiations with Tehran. This declaration came after a further escalation of the conflict: the United States launched attacks against more than 80 Iranian military targets in retaliation for Iranian attacks on merchant ships in the Strait of Hormuz, while the Islamic Revolutionary Guard Corps responded with attacks on US bases in Bahrain and Kuwait. This effectively nullified the ceasefire agreement that both sides had reached just over three weeks ago. Furthermore, the Trump Administration revoked the authorizations for Iranian oil sales that had been granted under the memorandum.

The Federal Reserve (Fed) will release today the minutes from its monetary policy meeting held on June 16 and 17, in which it kept the benchmark interest rate unchanged in the 3.50%-3.75% range. On that occasion, the dot plot showed a more restrictive bias, with 9 of the 18 participants projecting at least one rate hike by the end of 2026, while 8 anticipated no change and only one expected a cut. Likewise, the economic projections revised upward the inflation expectation, as measured by the Personal Consumption Expenditures (PCE) Price Index, to 3.6% year-on-year for 2026, up from the 2.7% estimated in March. In this context, analysts will pay close attention to the degree of dissent among committee members and to signals regarding the pace of future rate decisions.

The main US stock indices closed lower yesterday. The S&P 500 fell 0.4%, while the Nasdaq registered the largest drop, at 1.2%. The Dow Jones Industrial Average also declined 0.2%. Thus, the indices have accumulated year-to-date gains of 9.6%, 11.1%, and 10.1%, respectively.

The US Treasury yield curve broadened yesterday. The 1-year bond moved from 3.92% to 3.97%, while the 3-year bond rose from 4.13% to 4.21%. Finally, the 10-year bond advanced from 4.47% to 4.55%.

Lastly, regarding commodities, the main products traded with mixed results yesterday. Gold fell 1.4% and closed at USD 4,106.8 per ounce, while oil advanced across the board: WTI rose 5.1% and Brent 5.2%, reaching USD 72.0 and USD 75.8 per barrel, respectively. Soybeans also advanced +1.5% in Chicago and closed at USD 441 per ton.

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