Why markets are rallying

 📈 Why markets are rallying

1. Ceasefire optimism between Israel and Iran

A truce agreement announced today between Iran and Israel has lifted risk appetite globally, diminishing fears of a broader Middle East conflict. European shares surged—the Stoxx 600 rallied ~1.3%, marking its largest one-day gain in over a month  .

In the U.S., the S&P 500, Dow, and Nasdaq each gained around 1–1.5%, fueled by hopes that peace will ease geopolitical uncertainty  .

2. Sharp drop in oil prices

Oil prices have declined more than 6% today after Iran’s missile activity didn't trigger disruption to shipping lanes or infrastructure  .

Lower energy costs help profitability for companies and reduce inflation concerns, easing pressure on central banks and boosting equities.

3. Improved risk sentiment & dovish Fed tone

U.S. futures markets hovered higher as traders braced for Fed Chair Powell’s upcoming testimony, anticipating that rate cuts might be on the table later this year  .

In Europe, dovish signals and cheaper valuations have supported gains—particularly in banks and industrials  .

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Also there’s been a notable shift in U.S. and European bond yields today—and it has definitely helped drive the equity rally.

🇺🇸 U.S. 10‑Year Treasury Yield

As of June 23, the benchmark 10‑year yield edged down to about 4.35%, slipping ~0.03 percentage points from the previous day  .

After today's reach for safe-haven assets softened (fueled by optimism over the Iran‑Israel truce), yields remained steady—trading roughly flat in the mid‑4% range  .

Implication: Lower or stable yields reduce borrowing costs and increase the present value of future earnings, thereby supporting higher equity valuations.

🇩🇪 German 10‑Year Bund Yield

Germany's 10‑year Bund yield ticked up slightly to 2.53% on June 23, up about 0.01 ppts from its prior session, though still modestly lower over the past month  .

With global risk sentiment improving, European rates have been largely range-bound—offering support to regional stock markets.

Implication: A flat or mildly rising Bund yield amid easing geopolitical risk encourages capital inflow to stocks, especially when central banks signal upcoming rate cuts.

📊 How Yield Movements Fueled Today’s Equity Surge

Decline in U.S. yields (~4.35% on the 10‑yr) helped US equities by easing discount rates and reducing safe-haven competition  .

Relative stability in European yields — Bund yield remained low and slightly down versus recent highs—complements the equity rebound across Europe.

Together with the drop in oil prices and ceasefire optimism, complacent bond markets helped drive investors into riskier assets like stocks.

🧩 Summary Table

Market Today's Yield Move Equity Impact

U.S. -0.03 ppts to ~4.35% Boosts valuations, cuts risk premium

Germany +0.01 ppts to ~2.53% Maintains appeal of equities vs. bonds

Bottom line:

Yield dynamics—steady to slightly lower in the U.S., stable in Europe—have complemented other bullish catalysts (the ceasefire and falling oil), helping to support today’s >1% rally in both U.S. and European markets.

Anish Jagdish Parashar 

Indirect tax india research 

Disclaimer Content reflects personal views of the author and for trading and investment purposes consult your financial advisor.