Global financial markets rallied over the week after reports of a ceasefire agreement between the United States and Iran, easing concerns about a wider Middle East conflict and triggering a sharp fall in oil prices.
However, a Jefferies report has cautioned that the durability of the deal remains highly uncertain.
According to Jefferies strategist Christopher Wood in a note titled “The Art of Capitulation,” the reported agreement appears to include significant concessions to Iran, such as the release of billions of dollars in frozen assets and possible sanctions relief during a 60-day negotiation period.
If accurate, the arrangement would mark a major shift in US foreign policy and suggest a softer stance in the Middle East.
The report also notes that the ceasefire comes at a politically sensitive time for US President Donald Trump, with opinion polls indicating rising public dissatisfaction over economic management.
Jefferies cites data suggesting Trump’s disapproval rating has crossed 60%, comparable to levels seen during the final phase of the Nixon administration.
Despite the market optimism, Jefferies remains skeptical about the longevity of the agreement, warning that US security institutions and geopolitical allies may resist any deal seen as overly favorable to Iran.
Markets reacted positively in the short term. US equities rose on expectations that lower oil prices will reduce inflation and support global growth. Investors also increased exposure to cyclical and non-US equities.
However, Jefferies flagged risks from elevated valuations in technology stocks and an escalating AI-driven capital expenditure cycle, estimated to reach $700 billion among US hyperscalers.
The report also highlighted speculative excess, pointing to surging trading volumes in leveraged exchange-traded funds linked to SpaceX, which saw over $8 billion in activity shortly after launch.
Jefferies described this as a sign of increasing market concentration and potential bubble-like behavior in parts of the tech sector.
Meanwhile, central banks remain cautious. Japan raised interest rates to a multi-decade high, while the US Federal Reserve maintains a hawkish stance.
China’s economy showed mixed signals, with weak domestic demand but strong export growth driven by semiconductors and AI-related products.
