Iran takes a breather while interest rates steal the show

Good morning. U.S. markets were closed over the weekend, so here is what happened before the new week begins. The biggest news is that President Trump paused planned military action against Iran to pursue talks on the Strait of Hormuz and Iran's nuclear program, though he warned the pause assumes an early deal. Only a day or two earlier, reports said he had ordered fresh strikes, so the mood has shifted quickly.

Energy markets are not relaxing yet. OPEC+ agreed in principle to raise output by about 188,000 barrels a day in September, then pause in the fourth quarter. But with a tanker hit off Oman and shipping lanes still in doubt, many analysts say getting extra barrels out is the real bottleneck. War-driven costs are already showing up in beer, paint and airfares.

The week's real swing factor may be interest rates. After last week's Fed meeting, the 30-year Treasury yield reached its highest level since 2007, and traders began to see a September hike as more likely. Warsh's idea of cutting regular meetings from eight a year to six has added to the uncertainty.

Stocks scraped through July flat thanks to last week's tech rebound. This week is a two-part test: how high rates climb, and whether the Iran talks move forward as hoped.