Oil, government bonds, ratings: investors seek Trump's 'pain point' on Iran

Investors are trying to determine the "pain point" at which US President Donald Trump will be ready to change the course of his policy in the war with Iran, writes the Financial Times (FT). Among the factors that could affect the decisions of the US administration, market participants name sharp fluctuations in oil prices, the yield on 10-year US Treasury bonds, as well as inflation expectations and Trump's own rating.

Determining when the next "Taco" ("Trump Always Chickens Out") moment is coming has become Wall Street's new obsession, writes the FT. Maximilian Uhler, head of multi-asset markets strategy at Deutsche Bank, this week developed a so-called "pressure index" - a measure used as a benchmark to predict possible changes in the US administration's rhetoric or strategy.

The index takes into account the change in Trump's approval rating over the month, annual inflation expectations, the performance of the S&P 500 index, and U.S. Treasury bond yields.

"If the index is rising, there is an increased likelihood that the U.S. administration will adjust its strategy. If all four pain points are under pressure at the same time, the incentive to change [behavior] becomes very high," says Uhler. Right now, he says, the index is "near its highest levels" since Trump last returned to the White House in 2025.

Among other factors that may affect the decisions of the US President's administration, analysts and market participants name government bond yields. Thus, the head of the investment institute Amundi Monica Defend drew attention to the fact that in the second term Trump has become "much more sensitive" to this indicator: "As soon as the yield on 10-year Treasury bonds approaches 4.5%, the [US president's] administration gets visibly nervous - and that's usually when it takes action. It's important for investors to keep that in mind," she said.

FT notes that against the backdrop of the war in the Middle East, the yield on benchmark 10-year US government bonds, which determines the cost of borrowing, shows the worst dynamics since the end of 2024. It has risen by about 0.4pc since the beginning of the month to 4.36%.

Another important factor that influences the White House's decision-making, the FT calls oil prices: according to market participants, since the beginning of the conflict in the Middle East, Trump tends to increase threats against the Iranian regime on weekends, when oil markets are closed, and when commodity prices rise on weekdays - signaling a possible peaceful settlement of the conflict.

The FT attributes such rhetoric of the US administration to an attempt to curb the rise in gasoline prices ahead of the US midterm elections, where the cost of living will be one of the key topics for voters.

"Gasoline more expensive than $4 a gallon is political death," commented Jorge Montepeque, an oil market analyst at Onyx Capital Group, in a conversation with the FT. - On the other side is his [Trump's] ego. He can't look like a loser [in the war]," he added.

As of March 26, gasoline prices across the United States averaged $3.98 per gallon (that's about 3.78 liters), up about 33 percent from a month ago, CNBC writes.

One of the major traders on the energy market pointed to what he believes is a clear pattern: every time oil prices in the U.S. approached the $95-100 per barrel range, the rhetoric of the U.S. presidential administration in favor of de-escalation intensified, and talk of possible government intervention in the market became louder. So far, the interlocutor of the publication pointed out, such verbal signals have helped to restrain the growth of energy prices. However, the market could go up sharply if there is a real shortage of physical oil supply, he warned.

At the maximum after the start of the conflict in the Middle East oil quotes Brent rose above $119 per barrel and fell to $96 per barrel at the minimum. The volatility of oil prices is demonstrated against the background of Iranian attacks on energy infrastructure in the Gulf countries and on ships passing through the Strait of Hormuz (through it in peacetime passes up to 25% of the world's marine oil supplies and a significant amount of LNG).

In trading on March 26, Brent crude oil rose by more than 5% to $107.8, having recovered the losses of the previous trading session amid contradictory statements of the U.S. and Iran on attempts to resolve the conflict, CNBC writes. U.S. oil WTI added 4% and cost $94 per barrel at the time of publication.

The Trump administration has been making contradictory actions and statements throughout the conflict in the Middle East. Thus, since mid-March, the U.S. administration has declared that it is ready to release hundreds of millions of barrels of oil from the strategic reserve and has sent thousands of U.S. military personnel to the Middle East. The US also attacked Iran's Kharq Island in the Persian Gulf, where Iran's largest oil terminal is located. At the same time, since late March, the White House has been signaling "progress in peace talks" with Iranian representatives (which Tehran denies). Mike O'Rourke, an analyst at Jones Trading, a New York-based brokerage firm, noted that all of "this [Trump's statements] is starting to look like fiction," according to the Financial Times.

"We're all doing the same thing right now - nothing. You can't go short on oil because prices could easily skyrocket to $150 a barrel. Or maybe the war will be over in five minutes [and oil prices will go back down]," said the chief investment officer of a North American hedge fund.

This article was AI-translated and verified by a human editor