The market continues to bet that this new confrontation between the U.S. and Iran will be limited and short-lived, with risk assets rebounding globally today: major stock indices rose 0.5–1.5%, accompanied by a 2.5% drop in crude oil prices (WTI $72; Brent $76), as well as a drop in yields of up to 5 bps at the short end of the Treasury yield curve and 9 bps on European sovereign yield curves. The dollar remained essentially flat, and the VIX fell back to 16.

Venezuelan bonds opened the day down 0.25 points on the sovereign yield curve and 0.1 points on the PDVSA curve, where they remained for most of the session, but we saw demand toward the end of the day that caused the sovereign curve to close up 0.25 points and the PDVSA curve to close up 0.10 points, with trading activity focused on the short end of the Venezuelan curve and the middle segment of the oil company’s curve. The PDV’20, meanwhile, has seen sustained demand in recent days around the 106 handle.

In Latin American bonds, we saw demand in Argentina, where toward the end of the day we began to see some reinvestment of the coupons and principal paid by the country today; meanwhile, the rest of the region remained flat to up 0.25 points, with spreads widening slightly, particularly at the short end.