Trump on Truth Social earlier today wrote:
The Iranian negotiators are very different and “strange.” They are
“begging” us to make a deal, which they should be doing since they have
been militarily obliterated, with zero chance of a comeback, and yet
they publicly state that they are only “looking at our proposal.”
WRONG!!! They better get serious soon, before it is too late, because
once that happens, there is NO TURNING BACK, and it won’t be pretty!
President DJT
The market doubts that’s the state of play. Yesterday, a multitude of reports from Iran suggested they wouldn’t even negotiate around Trump’s 15-point plan. Today we got reports of Iranian attacks on Kuwait’s airport and — while Pakistani mediators haven’t ruled it out — all indications point to Iran rejecting talks and continuing to hold Hormuz and its neighours hostage.
In a speech last night, Trump said Iran wants to “make a deal so badly” but that their leaders are “afraid to say it” for fear of their own people or the US military.
What I fear is that we’re at a crossroads. There are reports the US is thinking about an even-larger escalation — perhaps one that targets infrastructure — and if that’s the case, Iran has pledged to strike its neighbours energy and desalinization infrastructure. In addition, there would be US boots on the ground.
The US is framing this as a final strike but it would have to be so effective as to change the tune in Tehran. If not, the market may need to reprice towards an extended conflict and oil prices near $150 per barrel. Already there are signs of fuel shortages in Thailand and that could be the theme of the next few months if this continues.
Right now, WTI crude oil is up $4 to $94.30 and S&P 500 futures are down 0.8%. US 10-year yields are up 5 bps to 4.38%.
This article was written by Adam Button at investinglive.com.
