Crypto & Forex June 22, 2026 0 Comments

S&P 500’s Short-Lived Bounce After US-Iran Deal: Why Deutsche Bank Warns the Real Storm Is Just Starting

So here’s the kicker: despite the buzz around the US-Iran interim deal and a plunge in oil prices that had everyone thinking, “Game on!”, the S&P 500 just can’t seem to break past its early-June peak . You’d expect a market relief rally, right? But nope—credit spreads are widening, and if you squint at the charts, it’s like déjà vu from a rollercoaster that’s already hit a 16% climb in just two months. Now, throw in the Fed’s hawkish stance and spiking US real yields, and you’ve got a cocktail that’s putting a serious damper on any further equity fireworks. It’s almost as if the market’s asking itself, “Are we riding a bull, or just chasing its shadow?” And with valuations flirting with levels not seen since the dotcom bubble burst, the question must be asked: are we gearing up for more upside, or is the stretch just too tight to bear? Buckle up, because this isn’t your usual market chatter—it’s a tale of resilience, stretched metrics, and the ever-present dance between hope and caution. LEARN MORE

Deutsche Bank’s Henry Allen notes that despite the US-Iran interim deal and lower Oil prices, the S&P 500 remains below its early-June record and credit spreads have widened. He argues that a prior 16% two-month rally left valuations stretched, while higher US real yields and a more hawkish Fed have offset the macro relief, capping further gains in US equities.

Hawkish Fed and stretched valuations

“Last week’s interim US-Iran deal was a key moment for markets. But despite a considerable fall in oil prices, with stagflation fears easing considerably, risk assets haven’t benefited much. Indeed, the S&P 500 is still beneath its record high at the start of the month, credit spreads have also widened in that time, and other measures of financial stress have ticked up as well.”

“Over April and May, there was a genuinely historic rally for many risk assets. Most notably, the S&P 500 was up +16% in a two-month period, something we’ve only seen on four other occasions since WWII. Moreover, three of those were post-recession bouncebacks, so it’s only happened once in a non-recession context, which was a few months before the Black Monday crash in 1987.”

“Given we’d seen such a big rally that had stretched traditional valuation metrics, there simply wasn’t much space to rally further to start with. Indeed, this month has seen the CAPE ratio for the S&P 500 reach its highest level since 2000, around the time that the dotcom bubble was bursting.”

“Finally, the underlying picture of economic resiliency is unchanged. Data has consistently surprised on the upside, and we’ve not seen the wider macro deterioration needed to generate bigger selloffs historically, whether that’s around an energy shock or generally.”

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)