Senior officials from the US and Iran met over the weekend for their first high-level direct talks in almost five decades – 21 hours of negotiations that ended without a deal. The optimist in me hoped for a quick resolution, while the realist prepared for a bumpy ride.
Hosted by Pakistan’s Prime Minister Shehbaz Sharif in Islamabad, the US delegation was led by Vice President JD Vance, while Parliament Speaker Mohammad-Bagher Ghalibaf led the Iranian delegation.
The Sticking Points
The US and Iranian delegations sought to work through a number of key issues, including the Strait of Hormuz – which facilitates approximately a fifth of the world’s seaborne oil flow – US sanctions relief, war reparations, and, most importantly, Iran’s nuclear programme. In fact, the nuclear issues proved to be the overwhelming obstacle.
Both sides left essentially empty-handed. Following the conclusion of talks, Vance told reporters that no agreement was reached, but added that it was worse for Iran than for the US. Tehran saw things differently.
Vance demanded long-term commitments from Iran to abandon the development of any nuclear initiatives, which the Iranians reportedly had not conceded. Iranian Foreign Ministry spokesman Esmail Baghaei said there was agreement on some aspects, yet a couple of matters remained unresolved. State media in Iran delivered a blunter version, essentially saying that the US was greedy and sought concessions at the negotiating table that it had failed to extract on the battlefield.
What Happens Next?
What comes next is the big question. Evidently, the lack of a framework leaves the two-week ceasefire in a precarious position.
Whether both sides will return to the negotiating table, particularly after Vance noted that he left having made the ‘final and best offer’ from the US, remains unclear. Iran’s Baghaei, however, seemingly left the door open, noting that ‘diplomacy never comes to an end’.
One point I found interesting was Trump’s response to reporters’ questions about the outcome of these talks; he noted that, either way, with or without a deal, the US wins. I guess, militarily speaking, he may have a point. But that surely does not include the political or economic dimensions?
I think it is now a question of whether the US and Iran see any benefit in returning to the table. Time will tell. To Pakistan’s credit, Foreign Minister Ishaq Dar has said they will continue to facilitate talks between the US and Iran. There is, of course, still some scope to work out an arrangement between the two countries, though it may come down to the eleventh hour before the two-week ceasefire concludes.
America is continuing to move troops into the region, so the situation is still on edge, and no one honestly knows where this goes next.
Markets This Week
For markets, the failure to reach a deal over the weekend is not good news. We can expect oil and gas prices to jump higher at the open, bond yields to potentially rise, and stocks to drop. Bond markets face competing themes: typically, a geopolitical shock prompts investors to sell risk and buy haven assets (for example, bonds), thus lowering yields. But given inflation concerns amid elevated oil prices, a rise in yields is also a plausible outcome.
While the weekend’s events will dominate the opening bell, and subsequent messaging between the US and Iran will continue to influence volatility across key asset classes, a handful of risk events this week should be noted.
Monday will be a quiet one, but Tuesday brings the March US wholesale () inflation numbers and China’s March trade figures. Wednesday is pretty quiet, while Thursday offers a busy data slate, including the March Australian employment report, China’s Q1 2026 GDP data, and the February UK figures. Earnings season will also claim some of the spotlight this week, with focus on bank earnings from major players, such as and .