Trump’s claim on Iran talks moves markets, but truth is hard to come by

In recent days, markets have painted a picture of classic panic. Gold has just recorded its worst weekly decline since 1983, erasing all its gains from 2026. Brent crude briefly exceeded $110 a barrel, a rise of more than 50% since the start of US and Israeli strikes against Iran late last month. Across the world, the value of bonds fell by more than $2.5 trillion, with yields rising in turn, suggesting that markets globally are expecting a sharp rise in inflation.

The cause of the panic is not mysterious. Goldman Sachs $GS called the Strait of Hormuz disruption the largest “supply shock” ever recorded in global crude markets. The IEA compared it to the oil crises of the 1970s and the Russian gas shock of 2022 – combined.

As of 6:30 a.m. ET Monday morning, stock futures were down about 1% as risks and losses rippled across asset classes.

Then, shortly after 7 a.m. ET, Trump posted to Truth Social, saying in all caps that he was calling off a planned strike on Iranian power plants after what he described as “very good and productive” conversations regarding a “complete and total resolution of our hostilities” — and futures swung violently into the green, with the S&P rising as much as 2.6%. The Dow briefly looked poised to open up about 900 points.

The market does not need to believe that the negotiations took place

Even at the time of publication, there was little evidence that Trump’s “talks” had taken place, and even less that a “complete and total” resolution was within reach. It is well known that U.S. and Iranian officials have had little or no direct contact, only messages relayed through third-party intermediaries.

The most likely interpretation is that Trump was walking back a threat that his own advisers considered reckless, or that was always a feint, or that had never been seriously considered beyond the time it was issued. A combination of all three seems genuinely plausible. Yet some news reports have repeated Trump’s claims as fact, with no more evidence provided than Truth Social’s post.

It is likely that the markets, by moving upward, were reacting more to Trump’s reversal of his aggressive statements than to the belief that negotiations had taken place or were in progress.

About an hour after Trump’s announcement, the Iranian Foreign Ministry issued a statement completely denying it. Iranian sources have denied any direct contact with Trump, period.

Following Iran’s statements, US futures narrowed their lead to close to 1% gains.

Trump’s options narrow as risks rise

As Bloomberg’s Marc Champion has argued, Trump has reason to pause for a moment to rethink his options, which appear to be narrowing. Although Iran may be weakened by the missile attacks, the regime remains in control of a major global strategic asset, with which it is able to partially cripple the global economy – or “more negotiating leverage at this point than before the war,” as Champion put it.

Meanwhile – whatever anyone may say about Truth Social – risks are rising in the US market, whether in the form of stagflation, triple-digit oil and a plummeting bond market combined with mortgage rates threatening 7%, all of which go a long way to explaining the morning’s unusual market moves.