Iran is the biggest winner from US truce push: Jefferies report

Iran appears to have emerged as the biggest beneficiary of the recent US-Iran ceasefire framework, according to Jefferies' latest GREED & Fear report, which argues that the proposed agreement represents a remarkable shift in geopolitical dynamics and could have far-reaching implications for global markets.

The report says the draft framework envisages the release of $24 billion of Iran's frozen funds and the removal of long-standing sanctions, with half of the funds potentially becoming available before negotiations formally begin. Jefferies described the development as a sign that Tehran had gained the upper hand in the negotiations.

Political pressure

According to the brokerage, the ceasefire also reflects mounting political pressure on US President Donald Trump, whose approval ratings have weakened significantly. A Reuters/Ipsos survey cited in the report showed a 62% disapproval rating, while 63% of respondents disapproved of his handling of the economy.

From a market perspective, Jefferies believes that a sustained ceasefire and lower oil prices could support stronger performance in markets outside the United States, particularly cyclical sectors.

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Capital expenditure

The report also highlights the enormous scale of the artificial intelligence investment boom. Capital expenditure by the four major US hyperscalers—Amazon, Microsoft, Alphabet and Meta—is estimated to reach $680 billion in 2026, underscoring the intensity of the AI arms race.

In Japan, the Bank of Japan recently raised interest rates to 1%, the highest level in more than three decades. Despite rising yields, Jefferies maintains that Japanese equities remain considerably more attractive than government bonds because of improving nominal GDP growth and inflation dynamics.

The brokerage is also increasingly concerned about inflation risks in the United States. Money markets are now pricing in about 36 basis points of interest-rate hikes by the end of 2026, reflecting concerns that inflation may prove more persistent than previously expected. Higher bond yields, Jefferies argues, remain one of the principal risks for investors.

Consensus estimates

At the same time, corporate earnings expectations remain robust. Consensus estimates now point to 22.8% year-on-year growth in S&P 500 earnings during the second quarter of 2026, with technology companies expected to lead the expansion.

However, Jefferies sees growing evidence of speculative excess in equity markets. It notes that only 24.6% of stocks in the MSCI Emerging Markets Index outperformed the benchmark over the past year, a record low that signals increasingly narrow market leadership.

The report also highlights the extraordinary enthusiasm surrounding SpaceX. Eleven leveraged SpaceX exchange-traded funds launched recently generated $8.2 billion in trading volume within three days, despite managing assets of just $638 million. Jefferies views the development as another indication of retail-driven speculative fervour.

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China's domestic economy

Meanwhile, China's domestic economy continues to struggle. Retail sales have weakened, credit growth has slowed and property investment remains under pressure. Yet exports, especially semiconductor shipments, continue to expand strongly, creating an increasingly uneven economic picture.

Overall, Jefferies believes investors are navigating a world shaped by geopolitical uncertainty, rising bond yields and an AI-led market boom that is becoming increasingly concentrated.

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