The Trump administration is nearing a framework agreement to reopen the Strait of Hormuz and extend nominal cease-fire with Iran, according to U.S. officials. Despite recent military exchanges where the U.S. downed Iranian drones and Iran retaliated with a missile strike on a Kuwait base, both sides acknowledge negotiators have agreed to a draft deal.

The proposed deal leaves critical issues unresolved, including Iran's nuclear program and frozen assets, for future negotiations. Market implications are significant as inflation data shows rising prices linked to Middle East tensions, potentially forcing the Federal Reserve to consider interest rate hikes despite recession risks.

Israel has escalated its military campaign, expanding control in Gaza to 70% and bombing Beirut for the first time in nearly a month. The economic fallout from regional conflicts continues to pressure consumer spending, with savings rates falling to their lowest level since June 2022.