Hormuz Near-Deal Lifts Oil While Tight Labor Data Bolsters Dollar

Markets navigated a cautious session on August 6 as geopolitical optimism around the Strait of Hormuz collided with persistent macro uncertainty, leaving equities little changed while energy and rates stole the spotlight. The S&P 500 slipped -0.18% to 7,709.96 and the Nasdaq edged down -0.06% to 26,348.35 — both indices holding well above their 50-day moving averages of 7,488 and 25,997 respectively, with S&P RSI at 63.1 suggesting momentum remains constructive but not yet stretched. The US Dollar Index firmed 0.28% to 99.97, recovering toward its 20-day moving average of 101 while still sitting beneath it, consistent with a market tentatively repricing rate-cut expectations lower. Gold dipped -0.09% to $4,242.00 per ounce, trading above its 50-day moving average of $4,169 but well below its 200-day of $4,489, reflecting lingering safe-haven demand tempered by dollar resilience.

The dominant market-moving narrative was the Iran-Oman Strait of Hormuz framework, which reached its final drafting stage on August 6 but stopped short of a signed agreement. Tehran confirmed that geographical coordinates for new shipping lanes had been agreed upon, and President Trump said 'a lot of progress had been made,' yet the deal faces three critical hurdles before commercial shipping can resume: approval from Iran's Supreme Leader, US acceptance of terms that currently diverge — Iran insisting on some measure of control, Washington demanding zero impediments or fees — and a halt to vessel attacks, one of which was reported on the same day when a tanker heard explosions in the strait. The Strait remains effectively closed to normal commercial traffic, meaning roughly 25% of global seaborne oil trade and 20% of LNG flows remain disrupted. Crucially, any US sanctions relief embedded in a broader deal — particularly measures under the Iran Sanctions Act or CAATSA — are congressionally mandated and cannot be lifted by executive order alone, materially extending any full implementation timeline and undercutting near-term deal credibility.

WTI crude surged 2.75% to $77.29 per barrel on reopening optimism, yet the move carries an important technical caveat: WTI is now trading below both its 20-day moving average of $81 and 50-day of $80, with RSI at 45.7 — a level that signals neither oversold relief nor bullish momentum, but rather a market pricing a partial, probabilistic reopening rather than a certainty. The 10-year Treasury yield rose 1.15% to 4.67%, though it remains meaningfully below its 20-day and 50-day moving averages near 5%, suggesting the bond market has not fully capitulated on eventual Fed easing. The labor market data reinforced the rates move: initial jobless claims for the week ending August 1 came in at 199,000, the third consecutive week below 200,000 — the longest such streak since 1969 — beating the consensus estimate of 203,000. Continuing claims rose 24,000 to 1,801,000, painting a 'low-fire, slow-hire' picture that keeps the Fed firmly in data-dependent mode ahead of Friday's July nonfarm payrolls release.

Cross-asset rotation was modest but directionally telling. Energy equities received a tailwind from the crude rally while defensive rate-sensitive sectors faced headwinds from the yield backup to +2.75%. The dollar's 0.28% gain to 99.97, while still below the 20-day moving average of 101, pressured commodity-linked emerging market currencies and reflected the market trimming odds of near-term Fed easing on the back of the blowout claims data. Gold's marginal decline to $4,242 was consistent with a session where risk-off hedging demand faded slightly on Hormuz optimism, though the metal remains in firmly elevated territory relative to its 200-day average of $4,489, which it has not recaptured — indicating the long-term trend remains one of structural demand for hard assets amid geopolitical and fiscal uncertainty.

All eyes now pivot to Friday's July nonfarm payrolls print, which will either validate or challenge the narrative embedded in three consecutive sub-200K claims weeks. A strong payrolls number would cement the case for the Fed holding rates higher for longer, pushing the 10-year yield back toward its 5% moving average complex and adding further pressure on growth equities trading at stretched valuations. On the Hormuz front, the absence of Supreme Leader Khamenei's explicit endorsement and the unresolved gap between Iranian and US terms means oil markets should remain volatile — any breakdown in talks or further vessel incidents could rapidly reverse Wednesday's crude gains and reignite safe-haven flows into gold and Treasuries.