An interim U.S.–Iran memorandum of understanding has just gone public, sparking a sharp drop in Brent crude and a lift in U.S. equities. Market participants now price the deal as a sign that the war‑driven inflation spike has peaked, even as shipping through the Strait of Hormuz remains uncertain. This shift signals relief for global commodities traders.

Inflation climbed to 4.2% in May, the highest in more than three years, driven largely by energy costs. Analysts say that after the surge, the trajectory is downward. A decline in gasoline, now averaging $4.07 a gallon, should ease pressure on the consumer price index and toward a more stable inflation environment for households in the next quarter.

Citigroup’s Andrew Hollenhorst notes that forecasting oil markets remains tough, but the direction is clearly downward. Meanwhile, Bloomberg Economics’ Anna Wong points out that secondary commodity prices—jet fuel, plastics, and natural gas—have also peaked, further dampening inflationary pressures across the supply chain for global investors and policy makers to adjust expectations about future rate cuts in the next cycle.

Despite the easing, consumer sentiment remains cautious. The University of Michigan gauge rose only modestly, and wage growth has lagged behind inflation for two consecutive months. Economists warn that even with lower oil prices, spending may stay muted until incomes recover fully, keeping the fiscal outlook uneven for the next six months in the U.S.