Trump Speaks With Qatar Emir As Pakistani-Led Iran Peace Push Intensifies

US-Iran de-escalation hopes drove crude oil and rates lower and put a bid in equities by the end of Friday's trading day, amid speculation that President Trump would stay at the White House over Memorial Day weekend instead of attending Donald Trump Jr. and Bettina Anderson’s wedding celebrations in the Bahamas.

"As Iran/oil/rates pressure eased on de-escalation hopes, leadership rotated toward small caps, equal weight, housing, transports, discretionary, and selective defensive growth, with short covering in high short-interest/profitless tech and consumer cyclicals reinforcing the catch-up trade," UBS analyst Torsten Sippel wrote in a note to clients late Friday.

Early Saturday morning, Bloomberg reports that President Trump held a phone call with Qatar's Emir Sheikh Tamim bin Hamad Al Thani, regarding Pakistani-led efforts to de-escalate Gulf tensions and preserve the fragile US-Iran ceasefire.

Iran's top negotiator and Parliament Speaker Mohammad Bagher Ghalibaf met Pakistani Army Chief Asim Munir in Tehran earlier today amid ongoing diplomatic efforts to bring the US and Iran to a peace deal, Reuters reported, citing Iranian state media.

Ghalibaf told Munir that Iran's Armed Forces "have rebuilt themselves during the cease-fire in such a way that if Trump foolishly restarts the war, they will definitely be more crushing and bitter for the U.S. than on the first day of the war."

The Iranian top negotiator also said, "We will not compromise on the rights of our nation and country."

There was a series of headlines from Sky News Arabia, citing sources, indicating that a major push for regional diplomacy was underway earlier today, with officials from Iraq, Oman, Jordan, and Qatar working to mediate with Tehran to avert another flare-up in the conflict.

Sky News Arabia sources said Pakistan’s mediator helped break the deadlock over the Iranian nuclear file, though several major issues remain unresolved, including the conflict in Lebanon, sanctions on bank accounts, the status of Iranian ports, and the presence of U.S. military forces in the Gulf area.

Iran is reportedly demanding the lifting of restrictions on its ports and a U.S. military withdrawal from the region before reopening the Strait of Hormuz and entering a new round of talks within 30 days.

There is also a reported internal conflict between Iran’s government and the Revolutionary Guard over Tehran’s negotiating demands.

Latest negotiation headlines (via sources) from Sky News Arabia:

• Iranian Foreign Ministry: Iraqi and the Omani Foreign Minister discuss in a phone call the ongoing diplomatic efforts to prevent escalation

• The foreign ministers of Jordan and Qatar affirm the necessity of concerted efforts to ensure the success of mediation efforts with Iran to reach a sustainable solution that addresses all the roots of the crisis and prevents the renewal of escalation.

• The Foreign Ministers of Jordan and Qatar affirm the continuation of coordination of efforts to support targeted mediation aimed at ending the escalation in the region and restoring security and stability.

• Sources to Sky News Arabia: The Pakistani mediator has succeeded in overcoming the deadlock on the Iranian nuclear file.

• Sources to Sky News Arabia: The issues that have not yet been resolved include stopping the war in Lebanon and lifting the ban on financial accounts.

• Sources to Sky News Arabia: Iran demands the lifting of the siege on Iranian ports and the withdrawal of military forces from the region to open the Strait of Hormuz and proceed to a round of negotiations within a 30-day timeframe.

• Sources to Sky News Arabia: There is a severe disagreement between the Iranian government and the Revolutionary Guard regarding Iran's demands for negotiations.

Additional overnight headlines (courtesy of Bloomberg):

Economic Impact

• The dollar ended the week nearly unchanged as risk assets got a boost from optimism around US-Iran peace talks [BN]
• Germany's business outlook improved for the first time since the Iran war began, with an expectations index rising to 83.8 in May [BN]
• UK retail sales fell 1.3% as consumers made fewer car journeys amid the global energy shock from the Iran war [BN]
• Qatar Airways will skip bonuses for almost 60,000 workers this year after the war forced cancellation of tens of thousands of flights [BN]

Military Readiness

• The US halted arms sales to Taiwan to ensure sufficient munitions for the Iran war, according to Acting Navy Secretary Hung Cao [BN]

• Director of National Intelligence Tulsi Gabbard resigned from her post, with her anti-war views having spurred tension with the White House [BN]

Trade Disruption

• Japan is set to receive its first Persian Gulf oil shipment to transit the Strait of Hormuz since the war began, with the Idemitsu Maru carrying 2 million barrels of Saudi crude [BN]

• Anglo American is redirecting Brazilian iron ore output to Asia as the near-closure of the Strait of Hormuz prevents shipments to Bahrain Steel [BN]

Polymarket Odds For US-Iran Peace Deal By ...

Charting Brent Crude

Friday's US-Iran Wrap

• Iran Says 'No Deal' Will Materialize If US Insists On Enriched Uranium Handover

Hormuz Chokepoint:

• Iran Says 35 Ships Exited Strait Of Hormuz As Rubio Condemns Tolls

Chart of the Day (read UBS note): 

Fuel Shock Risks Begin Spilling Into Broader Economy

• Hormuz Shock Raises Recession Risk As Retailers Sound Alarm On Consumer Stress

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