"President Trump announced late last night that, at the request of leaders in the Middle East, he'd scrapped planned strikes in Iran for Tuesday. This will be a relief to Wall Street, with investors nervous about the conflict between Iran and the U.S. escalating once more, delaying the reopening of the Strait of Hormuz and choking global oil supply as a result."
"But traders were cautious about jumping on a jolly bandwagon too soon. Markets moved only modestly on the news, perhaps because investors viewed it as the avoidance of bad news rather than confirmation of good news. Trump also made it clear he wouldn't hesitate to re-engage militarily in Iran if a deal couldn't be reached."
"He added on Truth Social that the U.S. is "prepared to go forward with a full, large-scale assault of Iran, on a moment's notice, in the event that an acceptable Deal is not reached.""
"Sit down in any entry-level econ class, and one of the first things you'll learn is a graph: The equilibrium between supply and demand. Somehow, the Fed has overlooked this in its monetary policy response, according to William Luther, an associate professor at Florida Atlantic University. Luther says Powell's reasoning for "transitory" price rises due to Iran and tariffs is ill-advised and could land the economy in an inflationary scourge akin to 2021 and 2022."
Planned U.S. strikes in Iran scheduled for Tuesday were scrapped at the request of Middle East leaders. The change is expected to relieve Wall Street by reducing worries that U.S.-Iran conflict could escalate, delay reopening of the Strait of Hormuz, and disrupt global oil supply. Markets reacted only modestly, suggesting investors viewed the move as avoiding bad news rather than confirming good news. The president also stated the U.S. would re-engage militarily in Iran if an acceptable deal is not reached. Separately, William Luther criticized the Fed’s view of “transitory” price increases tied to Iran and tariffs, arguing inflation stems from aggregate demand as more money chases the same number of goods.
#us-iran-tensions #financial-markets #oil-supply-and-strait-of-hormuz #inflation-and-monetary-policy #federal-reserve
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