Stocks, bonds retreat after Trump says Iran MOU 'is over'

Reuters

Wed, July 8, 2026 at 7:48 AM PDT 7 min read

LONDON/NEW YORK, July 8 (Reuters) - Oil surged and stocks and bonds dropped on Wednesday, after U.S. President Donald Trump said the memorandum of understanding that had provided a framework for the ceasefire with Iran "was over" after the two sides traded attacks overnight.

Trump spoke in Ankara at a NATO summit in the Turkish capital. Oil prices rose 5% to $78 a barrel and European stocks dropped 1.1%, while the dollar jumped and government bond yields rose. U.S. stocks were modestly lower, with the Nasdaq down 0.6%.

COMMENTS:

BRUCE ZARO, MANAGING DIRECTOR, GRANITE WEALTH MANAGEMENT, ‌PLYMOUTH, MASSACHUSETTS:

"What is interesting to me is the action of oil prices. Oil prices have been on a downward trend... With OPEC coming in and adding more oil to the market, the potential for oil is to go lower and that really takes one of the biggest worries ‌off the table... When I hear that the ceasefire is off, I think it's a more muted reaction than the market would have put on than even just maybe four weeks ago, six weeks ago, eight weeks ago."

ANGELO KOURKAFAS, SENIOR GLOBAL STRATEGIST, INVESTMENT STRATEGY, EDWARD JONES, ST. LOUIS, MISSOURI:

"The spike in oil prices and higher bond yields helped drive a near 10% correction in the first half ​of the year, but they also underscored the economy's resilience to these shocks. Renewed geopolitical risks may fuel some near-term risk-off sentiment, but we do not expect investors to react to this round of uncertainty in the same way, for several reasons.

"First, neither the U.S. nor Iran appears inclined toward a prolonged conflict, in our view, and investors have already seen how reacting to fast-moving headlines can lead to suboptimal portfolio outcomes. Second, we think it would likely take a much larger and sustained rise in oil prices to materially alter the outlook for the economy and corporate earnings. Finally, oil supplies have begun to recover, providing a renewed buffer for energy markets, while the improving labor market helps support household incomes—even as the tailwind from higher tax refunds fades."

IAN LYNGEN, HEAD OF U.S. RATES STRATEGY, BMO CAPITAL MARKETS, NEW YORK:

"In practical terms, the potential reset on the war in Iran implies that the near-term economic data is less relevant – at least on the margin. June's core inflation figures will be downplayed in the ‌event that crude oil continues to march higher throughout the month of July. What had been a downward influence ⁠on headline inflation (and potential pass-through to core) appears to be reverting to an upside risk.