The Iran Deal Is Terminated

by: , Portfolio Strategist, New York Life Investment Management

What’s Going on Here?

As expected, President Donald Trump has chosen not to extend sanctions relief for Iran, withdrawing the U.S. from the Joint Comprehensive Plan of Action (JCPOA), otherwise known as the Iran nuclear deal. Oil is down -1.6%, having traded lower throughout the day, and the S&P 500 Index is down 30bps on the news.

The deal was brokered under the previous presidential administration and included China, France, Russia, the UK, and the U.S. as co-signatories, along with Iran. JCPOA strictly limited Iran’s nuclear program, including intrusive monitoring by the International Atomic Energy Agency (IAEA), in exchange for removal of economically crippling sanctions. Many foreign leaders have lobbied the President to preserve the deal. Today, however, the U.S. has nonetheless chosen to abrogate the deal, in hopes of replacing it with a more extensive agreement.

Bottom Line

It’s difficult to say what impact this will have on financial markets beyond today’s initial reaction. The lack of a deal further raises geopolitical risk in the Middle East, while also curtailing Iran’s petroleum exports. Both factors could contribute to higher oil prices. Longer term, the U.S. exit from the deal may hinder diplomatic relationships with allies and adversaries alike, potentially posing trouble for future deal brokering.

Opinions expressed are current opinions as of the date appearing in this material only. The information and opinions contained herein are for general information use only. New York Life Investments does not guarantee their accuracy or completeness, nor does New York Life Investments assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. There can be no guarantee that any projection, forecast, or opinion in these materials will be realized. Past performance is no guarantee of future results.

About Risk

All investments are subject to market risk, including possible loss of principal. There is no assurance that the investment objectives mentioned will be met. Diversification cannot assure a profit or protect against loss in a declining market.

Index performance is shown for illustrative purposes only and does not predict or depict the performance of the Funds. Indices are unmanaged, include the reinvestment of dividends, and cannot be purchased directly by investors. Past performance does not guarantee future results.

The International Atomic Energy Agency (IAEA) is an international organization that seeks to promote the peaceful use of nuclear energy, and to inhibit its use for any military purpose, including nuclear weapons. The IAEA was established as an autonomous organisation on 29 July 1957.

Joint Comprehensive Plan of Action. On July 14, 2015, the P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States), the European Union (EU), and Iran reached a Joint Comprehensive Plan of Action (JCPOA) to ensure that Iran’s nuclear program will be exclusively peaceful.

The Standard & Poor’s 500 Index (S&P 500) is an index of 505 stocks issued by 500 large companies with market capitalizations of at least $6.1 billion and is seen as a leading indicator of U.S. equities and a reflection of the performance of the large-cap universe.

New York Life Investments® is a registered service mark and name under which New York Life Investment Management LLC does business. New York Life Investments, an indirect subsidiary of New York Life Insurance Company, New York, NY 10010, provides investment advisory products and services. Securities distributed by NYLIFE Distributors LLC, 30 Hudson Street, Jersey City, NJ 07302. NYLIFE Distributors LLC is a Member FINRA/SIPC.


Robert Serenbetz

Portfolio Strategist, New York Life Investment Management

Robert Serenbetz is the Portfolio Strategist with New York Life Investment Management’s Multi Asset Solutions (MAS) team. He contributes to investment thought leadership and communication efforts across New York Life Investment Management

Full Bio

Leave a Reply

Your e-mail address will not be published.