Analysts: The breakdown of US-Iran talks has sown uncertainty, and the US dollar will strengthen in the short term.

Pepperstone strategist Dilin Wu stated that the failure to reach an agreement between the US and Iran has firmly established uncertainty. The recent strengthening of the dollar, accompanied by a slight decline in US Treasury yields, is a fairly reasonable pricing outcome. After the initial shock from the news subsides, the reaction of US Treasuries could become more complex. Short-term yields may continue to decline slightly due to safe-haven demand, but if oil prices continue to rise, they will quickly re-anchor to higher inflation expectations, thus putting new upward pressure on long-term yields. Monday is also likely to see the energy and defense sectors outperform the broader market, opening with a significant upward gap. The energy sector is the most direct beneficiary of supply-side contraction, while the defense sector reflects the rising geopolitical risk premium and its more persistent nature. However, the magnitude of market volatility will depend on two key factors—the sustainability of the oil price strength and whether the market confirms that this is a sustained supply shock, rather than just a short-term, sentiment-driven reaction. (Jinshi)