Treasuries Recover Amidst Pakistan Announcing Potential US-Iran Deal: Aug. 11, 2026 — 2026-08-11
What moved & why: Treasuries recovered from prior losses on Pakistan's disclosure of potential US-Iran accord over the Strait of Hormuz, combined with softer labor market data (ADP weekly hiring deceleration, existing home sales contraction). Oil prices rose modestly on lingering Middle East supply concerns, limiting fixed-income gains despite geopolitical optimism.
Cross-asset:
- Equities: Trading lower overall; 5 of 11 principal sectors advancing despite complicated geopolitical backdrop.
- Treasuries/Rates: Recovering; author views 5+ coupon Treasuries as attractive risk-reward on potential Iran deal or further job losses.
- Dollar: Unchanged.
- Oil: Slight rise; supply concerns from Middle East conflict persist despite deal optimism.
- Commodities: Non-energy commodities slipping.
- Crypto: Unchanged.
Econ / Fed angle: ADP private-sector hiring fell to 8.3k (weakest since January), marking seventh consecutive month of deceleration and raising risk of job losses. Existing home sales contracted 1.7% m/m to 4.06M SAAU amid high mortgage rates and 37 consecutive months of y/y price gains. Small business sentiment hit 11-month high (99.8 vs. 97.5 forecast), but labor quality cited as top concern by 27% of respondents. Core CPI expected to post 63-month low near 2.4% tomorrow; headline CPI projected ~1% higher, signaling disinflationary progress if geopolitical tensions resolve. Author argues rate hikes would be removed from conversation post-deal, with Fed's 2% target within reach by year-end.
Watch next: Core CPI print tomorrow (expected 2.4%); tangible progress on US-Iran accord required for significant Treasury yield declines and equity rally; further labor market deterioration risk.