TLDR
- US stock futures are flat Monday as investors watch US-Iran peace talk developments out of Switzerland
- Iran and the US agreed on a mechanism to end military operations in Lebanon and keep the Strait of Hormuz open
- Oil prices fell on the peace progress, with Brent crude near $79 and WTI near $75 a barrel
- Markets are focused on Thursday’s PCE inflation report, the Fed’s preferred price gauge
- UK Prime Minister Keir Starmer resigned, sending the pound to a 2026 low
US stock futures are barely moving Monday morning as investors digest two big stories: progress in US-Iran peace talks and an upcoming inflation report that could shape the Federal Reserve’s next move.
S&P 500 futures dipped 0.1%. Dow Jones futures were flat. Nasdaq 100 futures edged up 0.1%. Wall Street is returning from Friday’s holiday closure to a cautious mood.
US-Iran Talks Show Progress
Iran said Monday there has been “encouraging progress” in peace talks with the US being held in Switzerland. Mediators Qatar and Pakistan confirmed that a line of communication between Iran and the US has been set up to avoid incidents and allow commercial ships through the Strait of Hormuz.
The Strait of Hormuz is one of the world’s most important oil shipping routes. Iran had closed it again over the weekend, accusing the US and Israel of breaking ceasefire conditions.
President Trump had threatened Iran on social media over its support of Hezbollah in Lebanon. The threat briefly drove oil prices higher after the Iranian delegation left the negotiation venue.
But after news of the new agreement broke Monday, oil prices pulled back. Brent crude fell around 1.9% to about $79 a barrel. West Texas Intermediate dropped to near $75 a barrel.
Treasury yields moved higher despite the oil drop. The two-year yield rose to 4.22% and the 10-year climbed to 4.48%.
The US dollar also strengthened, with the DXY index up 0.1% to around 100.9. It had hit a one-year high of 101.1 on Friday.
PCE Inflation Report in Focus
Investors are now turning their attention to Thursday’s Personal Consumption Expenditures report. This is the Federal Reserve’s preferred measure of inflation.
Economists expect core PCE, which strips out food and energy costs, to show a slight increase from April levels.
The data matters because the Fed recently struck a more hawkish tone at its last meeting. Markets are trying to figure out whether a rate hike is still possible later this year.
In the UK, Prime Minister Keir Starmer resigned Monday under growing political pressure. The British pound fell to its lowest level of 2026 as investors worried about a shift in fiscal policy.
Japan’s Nikkei closed at a record high Monday, a contrast to the more cautious mood in US markets.
Former Federal Reserve Chairman Alan Greenspan died at age 100, according to reports Monday morning.
Bitcoin rose slightly but stayed within a narrow trading range, according to market data.
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