Wall Street wobbled despite the easing of Iran war tensions
Oil stumbled as Trump blinked on his Iran ‘destruction’ rhetoric after oil zoomed over $100 and as the US is reportedly facing shortages of interceptor missiles.
Techs dragged on renewed concern of the AI circular finance bubble and growing Chinese competition.
Looking ahead, depending on US & Israeli political compulsions and ammunition levels, Trump may pause the full-scale Iran war till the Nov. 26 midterm elections.
But Trump may open for a surgical strike to ‘destroy’ Iran’s perceived HEUs in a deep mountain bunker to emerge 'victorious.'
Trump almost abandoned the idea of the SOH 'taking over’ from Iran.
Wall Street and gold are also under pressure as the Fed may surprise this week by hiking rates without any prior indications and emphasize that the days of forward guidance are over.
As of late July, Brent crude oil zoomed over $100 after a 13-day escalation of the US-Iran tit-for-tat war, and Trump blinked, opting for an unofficial pause over the weekend. The US-Iran war has shifted into an unexpected diplomatic lull and operational pause, temporarily halting consecutive nightly air raids as both nations test backchannel negotiations mediated by Oman and Pakistan. Last week, Trump claimed that Iran wanted to meet but that he was not interested in meeting. Trump reportedly agreed to hold off on striking Iran from July 24 after his generals told him such attacks had not been effective and that the US was running out of missile interceptors, while Iran’s military capability is significantly lower now than before the Iran war.
The Airstrike Pause & "Giving Space to Talks"
Hostilities Halted: For the first time in nearly two weeks, on Friday (July 24), the US CENTCOM did not conduct overnight bombing waves inside Iran. Following a 13th consecutive night of heavy bombing on Thursday, July 23, operations were placed "on hold." Mainly due to an apparent shortage of ammunition. Trump talked less hawkishly and seemed open to backchannel talks, while the US military is in a ‘locked & loaded’ state.
Iran Reciprocates: Iran’s IRGC announced that because Iran’s strategy is purely retaliatory, Tehran has also officially halted its missile and drone strikes against US bases and regional allies in the Middle East (GCCs).
Trump’s Policy Maneuver: The US Ambassador to the UN, Waltz, confirmed that while American forces remain "locked and loaded," President Trump ordered the pause to give peace talks "some space." This pause was initiated shortly after an Omani diplomatic delegation landed in Tehran on July 24.
Trump's Pivot & Diplomatic Posture: Trump is in a dilemma.
Rejection of Short-Term Truce: Before talking about the war pause, Trump decisively rejected a proposal for a temporary 10-day ceasefire with Iran, signaling he would not settle for a rushed or superficial resolution, even at the cost of the Nov '26 midterm election.
Denial of Munition Shortages: Trump aggressively dismissed media reports suggesting that his 4-month Iran war ‘fun’ had indeed depleted US precision munition stocks. He claimed US stockpiles remain vast and fully capable of sustaining maximum pressure. As per reports, the US has spent over one-third of its vital ammunition stockpiles (like missiles, interceptors, etc.) in Trump’s 4-month-long Iran 'excursion,' putting US security vulnerable against other global military superpower peers like China or Russia.
The Sovereign Channel: Trump’s officials are using the current pause to demand that Iran establish a permanent, toll-free mechanism for global transit through the Strait of Hormuz (SOH). The Iranian Foreign Ministry confirmed it is holding exclusive technical talks with Oman regarding maritime mechanisms, though it explicitly denies holding direct talks with the Trump admin.
Continued SOH Blockades & Peripheral Clashes
Naval Blockade Enforced: Despite the halt in airstrikes, the US Navy's hard blockade of Iranian ports remains in full effect. US Central Command (CENTCOM) confirmed it intercepted 12 commercial vessels attempting to run the blockade; two non-compliant ships were forcibly disabled, and two others were boarded.
Red Sea Tension & Drone Interceptions: The Iran-backed Houthi rebels in Yemen claimed they successfully shot down a Saudi Arabian armed reconnaissance drone over northwest Yemen, following Houthi missile strikes on Saudi oil infrastructure. Concurrently, the Saudi Defense Ministry announced it intercepted several hostile drones launched from Iran-backed militias in Iraq.
Lebanese Deployment Obstruction: The Lebanese Army issued a fierce condemnation of ongoing Israeli military sweeps and home demolitions in southern Lebanon. The army stated that Israel's continuous cross-border automatic weapon fire is directly obstructing the Lebanese military's full deployment under last month's framework deal.
Meanwhile, Trump’s daily ‘reality shows’ go on—a look at some of Trump’s rhetoric.
On Monday, July 27, 2026, Trump ‘confirmed’ that the US is in "very deep talks with Iran" but warned that he remains fully prepared to authorize "strong military action" if diplomacy falls flat.
The Ultimatum: "Fast or Not at All":
The Brief Window: When pressed by Axios regarding how much time he would give the Omani-led mediation channels, Trump stated, "Not much time. Either it goes fast or not at all."
The "Locked and Loaded" Posture: Trump emphasized that the current suspension of American bombing runs is merely an operational pause to give talks "some space" rather than a permanent ceasefire. UN Ambassador Mike Waltz reiterated Trump's stance that additional US military assets are still flooding into the theater, and forces are actively primed to resume offensive operations.
Rejection of "Ammunition Shortage" Reports
The Inventory Denial: Trump aggressively dismissed recent media reports—including an exposé by The WSJ—alleging that the 13-day consecutive bombing campaign had heavily depleted US precision munitions and air defense interceptor stockpiles: “We have far more munitions than anyone in the world, and far more than we need"—flatly contradicting reported internal warnings from the Chairman of the Joint Chiefs of Staff.
Psychological Warfare: Over the weekend, Trump supplemented his messaging by posting a series of highly detailed, AI-generated images depicting devastating US attacks on Iranian facilities to visually project unhindered military capabilities, but Iran mocked it as a childish cartoon.
Upcoming Strategic Alignment with Netanyahu (BB)-Israeli PM
The First Face-to-Face: Trump is preparing for his first direct meeting since February with Israeli Prime Minister Netanyahu, who departed for Washington on Monday amid ICC warrant (war criminal) controversies.
The agenda: Trump and Netanyahu are scheduled to coordinate red-line strategies regarding the final resolution of the Iran conflict. Ahead of his arrival, Netanyahu publicly echoed Trump's maximum-pressure doctrine, telling Fox News that the conflict will not end until the Iranian regime completely abandons its nuclear program or is fundamentally removed from power.
Nuke Pitch: As per the NYP report, Israeli PM Netanyahu is expected to provide U.S. officials with intelligence alleging Iran is expanding nuclear facilities at 'Gaoshan' and is lying about wanting to continue peace talks. Netanyahu, who meets President Trump on Monday, is expected to make the Iran war and Iran's nuclear program central topics. Sources say Israel will also present evidence. Tehran is rebuilding missile and drone programs damaged by repeated U.S. strikes; the intelligence is said to indicate Iran is not seriously considering giving up its nuclear ambitions or missile program in ceasefire negotiations with the U.S. Netanyahu will also brief Trump on progress maintaining ceasefires in Lebanon and Gaza.
Summary of Trump’s comments (July 24-27):
I'm going over now to talk about the Iran war.
Iran Will Settle Any Damages to Ships and Cargo With Funds Held by the US
I am considering a massive attack, bigger than anything before—I am close to making a decision.
Inflation is way down—oil will come tumbling down.
If you're paying a little more now, a lot has come down.
We don't need the Hormuz Strait—we're winning in Iran big---
Trump asked about an Iran exit strategy: There are a lot of them—we can negotiate, and we are speaking to them.
I don't know that Russia and China are enabling Iran. I don't think Russia or China wants me disappointed—I trust Xi and Putin on their word on Iran.
I haven't decided on major strikes on Iran. I think Iran is getting more serious in talks as days go by.
I'm in no hurry over Iran despite what's said of the election.
We are having deep talks with Iran. If they are not successful, we will return to powerful military action.
I have granted the request of the mediators who asked him to provide an opportunity for talks—
I paused strikes Friday because countries mediating between the US and Iran and other nations in the Middle East asked them to give him another chance to negotiate—
Trump asked why he agreed to the mediators’ request: There’s nothing to gain and nothing to lose—
Trump notes oil dropped and stocks rose after pausing attack—
Iran wants to meet, and we're meeting. There's a chance we can make a deal with Iran.
Iran requested a meeting through surrogates.
Trump, asked about patience with Iran: Plenty of time
We're having good talks with Iran; we'll see what happens—
Good chance something could happen with Iran in talks---
I'd like to have more ammunition, to be honest—lots of Patriot missiles are being built.
Trump on Israel: We're pretty close when it comes to Iran—
Will ask Putin if he's sending Iran satellite images. Will ask Putin about speculation of Russia aiding Iran.
I don't think Russia has been sending Iran images; if Russia gave Iran images of us, it hasn't worked. -
Money from Venezuela can go to the military. -- We will use Iran's money to pay for the damage they did.
Trump asked the Fed this week: Costs are going down rapidly. As soon as the war is over, you'll see a big drop in prices.
Trump, asked about the Fed & rates: Warsh is great, but he has a board—Warsh'll do the right thing; I know what he wants.
Israel wouldn't survive without us—I am going to talk to Bibi about the fact that if I weren’t president, Iran would have had nuclear weapons by now and Israel would have been destroyed.
Trump on Netanyahu & Turkey F-35s: Turkey has been a great ally—nobody tells me what we should be selling or not--- Turkish President Erdogan is a friend. Turkey's not a big fan of Israel, not a great fan of Bibi. But they’ve been great for me---
Iran is saying, 'Please. Please, no blockade—they want to meet, and we’re meeting. There’s a chance we can make a deal. But without what we did, they wouldn’t even be talking to us—we are in very deep talks with Iran. If they don’t work out, we will go back to very strong military action—either it goes fast or not at all. " All of the people that deal with Iran asked me, 'Don't fire.'
You can’t bribe them. You’ve got to beat them, and we’ll beat the hell out of them. But we’ll see how it turns out—right now, there are very friendly negotiations going on.
Iran ‘tapped everyone along’ for 47 years—Iran could not be bribed. -You got to beat them, and we’ll beat the hell out of them. We'll see how it turns out.
Conclusions
Although a US-Iran ceasefire may now be looking fragile, considering Trump’s fascination with Wall Street and US/global economic sensitivity over potentially higher crude oil prices, Trump can’t afford an all-out or even lingering sporadic Iran war for long. But the question is whether there will be a permanent deal between Iran and the US and also Israel amid respective domestic political compulsions of each stakeholder. Iran’s ‘softer negotiators’ like Araghchi and Ghalibaf are also under heavy pressure from hardliners, while Israeli PM Netanyahu doesn’t want to look ‘weak’ by letting Iran have a favorable deal with the US ahead of the October '26 general election. The same is also almost true for Trump ahead of the Nov '26 midterm election.
In fact, Trump’s Iran war 'fun/excursion/adventure'—whatever it may be—doesn't result in any new concessions from Iran. There are no proven nukes by Iran. Above all, the SOH was free for all before the March Iran war; now it’s closed or changeable by Iran & Oman. Thus, Trump may now be seeking to ‘take over’ the SOH from Iran’s control, something that Iran may not allow at all. Iran may not surrender but linger in the negotiation talks for a potentially weaker Trump after the Nov. 26 midterm US election, in which Trump is set to lose his trifecta (congressional slim majority—Senate + House + White House) to become a minority (lame duck) president.
Although there are little probabilities of another all-out Iran war ahead of Israeli & US elections, we may see intermittent skirmishes due to respective domestic political compulsions. Going forward, the US-Iran ceasefire may continue to be fragile, and the overall theme of TACO (Trump Always Chickens Out) trade may also continue. Ahead of the Oct '26 Israeli general election, Israeli PM Netanyahu (BB) may escalate Iranian tensions for domestic political compulsion.
Similarly, depending upon the actual trajectory of Iran's nuclear and SOH deal negotiations, if Trump feels the Iran deal may not help him politically (Nov '26 midterm election), Trump may also launch a surgical or even an all-out strike on Iran by September '26 (along with Israel).
The Iran ceasefire may continue to be fragile due to respective domestic political compulsions by all principal stakeholders (the US, Israel, and Iran). Iranian hardliners and also the IRGC are maintaining negotiations as a 'tool,' not a 'goal. 'Iran may not opt for any active direct talks with the US until the Trump admin honors the letter & spirit of the June MOU. This involves full control of the SOH by Iran and withdrawal of the US Navy after 60 days, a full & functional ceasefire between Israel and Hezbollah/Lebanon.
Iran is also seeking withdrawal of all types of US sanctions, including oil exports. Trump and Netanyahu may not allow Iran full control of the SOH ahead of respective domestic elections. Also, the killing of Iran’s Supreme Leader Khamenei under Trump’s approval may lead to not only personal life risks for Trump during or after the presidency but may also open the cycle of another decade of extreme hostilities between the two adversaries (US-Iran); we may see another 9/11-type incident in the coming years.
Trump has launched the Iran war for no valid reason amid the active provocation/blackmailing (Epstein files?) by the Israeli PM, Netanyahu. Iran has no proven nukes, and even if it had, Trump/the US has no moral/legal authority to launch an all-out war against Iran just for a 'fun excursion.' And after this heinous war, Iran may also try to develop deliverable nukes as a security guarantee for itself—irrespective of China & Russia's help/support.
After COVID, the US is involved in a proxy/indirect Ukraine war, a Gaza war, a brief Israel-Iran mini war (mid-2025), and now directly in the 2026 Iran war. All these proxy wars were acting as fiscal stimulus (military-industrial complex) for the US economy without causing domestic inflation. But now, after the Iran war, inflation may be a serious issue amid lingering higher oil & gas prices. This, along with AI infrastructure (ecosystem)-related higher demand from chips to electricity/energy, may put the Fed in a dilemma over its monetary policy stance.
Although AI-related labor market disruption and Trump’s policy uncertainties are also disrupting the US labor market, as a central bank, the Fed may have no option but to opt for an insurance rate hike of 25 bps by Dec '26 if this Iran tension lingers. Irrespective of the underlying cause of supply disruptions, as a central bank, the Fed may try to bring down overall economic demand by tightening monetary policies so that demand can match the constrained supply side of the economy.
Thus, Trump is now under pressure from both Wall Street and Main Street to have an early face-saving exit from his Iran war 'excursion.' But at the same time, this will be in Iran’s favor. Iran is leveraging Trump’s domestic political and economic compulsions to delay the actual deal. Also, Iran may have support from most of the countries, at least privately (irrespective of the 'terrorist sponsor’ stamp by the US), as Trump launched the war without any real reason. Thus, going forward, we may have a TACO (Trump Always Chickens Out) trade theme soon.
An Emerson College poll finds Democrats leading Republicans 53% to 42% on midterm election preference—the largest Democratic margin in the series. Trump's approval is 39% with 57% disapproval. The Democratic edge is concentrated among women, where Democrats lead by 27 percentage points. Newsweek applied a uniform national swing to House districts and estimates Democrats could flip about 36 Republican-held seats, implying a hypothetical 251-184 House split; Newsweek stressed this is a national-model stress test, not a forecast, and actual outcomes will depend on candidate quality, local issues, turnout, and districting.
Overall, Trump may lose the Trifecta (majority House and Senate, along with the White House) in the Nov. '26 midterm election—he may soon become a lame-duck president, causing political & policy paralysis in 2027-28, during the last two years of his presidential term. Thus, Trump is now desperate to pass his signature bills—the Save America Act and even the near-impossible filibuster rule.
Die-hard Trump posted on July 27:
John Thune should not allow the United States Senate to “leave town” until it passes The Save America Act, or, far better still, TERMINATES THE FILIBUSTER, whereby Republicans can then quickly pass everything they ever dreamed of, including a full and deep-throated SAVE AMERICA ACT, the budget, and the ever-looming Debt Ceiling disaster, 1929! The Democrats will do it on day one and can’t believe how lucky they got with this Senate leadership. Remember, stupidity always brings LOSING & DEATH!
Whichever party terminates the filibuster FIRST will be the party that survives and thrives. If the Democrats win this race, however, America will rapidly become nothing more than a Third World nation!
Bottom line: Summary
The theme of TACO trade may continue in the coming days; Wall Street is now a victim of Trump’s insane policies, his morning moods, truths, and 24/7 media bytes. Trump may soon blink as oil approaches the $100 red line. The US is fast depleting its munitions—almost 35% has gone for the Iran war within the first 3-4 months; China is tightening weapon-grade REMs. This, along with domestic political & economic compulsion, means Trump is bound to blink fast, as oil was hovering around $100; we have the TACO (Trump Always Chickens Out) trade soon.
You may support Trump or not, but you must agree Trump is the biggest source of market volatility—gone are the days of boring Fed jawboning. In that sense, Trump may be the biggest source of global employment (financial markets and AI economy)—directly or indirectly. It's simple—Brent oil is the best indicator now; at ~$100, Trump will talk softly on the Iran war and look for continuing talks. At ~$70-65, Trump will double down on Iran and threaten 'nuke.'
Looking ahead, considering potential shortages of US ammunition, including the vital missile interceptors and Patriot missiles, coupled with the forthcoming Nov. '26 midterm election, Trump may now postpone his active Iran war ‘excursions’ to at least Dec. '26 or even Jan. '27. Trump may now focus more on US ammunition production & stockpiling while making a last-ditch effort to ensure a face-saving result in the midterm election for Republicans.
Market impact
Wall Street closed mixed Monday (July 27) despite the easing of Iran war tensions as techs dragged on the renewed concern of the AI vendor circular finance bubble and growing Chinese competition. AI chipmakers led by NVIDIA tumbled amid reported massive short positions being created by legendary & celebrity short sellers. The S&P 500 closed almost flat (+0.10%), and the Nasdaq (NQ) 100 lost 0.3%, while the Dow Jones (DJ-30) gained 263 points (+0.6%). But all these indices stumbled significantly from the early EU session high on Monday as Nvidia fell 5% after announcing a $500 billion AI memory chip supply agreement with SK Hynix. Separately, NVIDIA guaranteed $250 billion for OpenAI to lease computing capacity from a major data center project. All these again triggered renewed concern about circular AI finance, which may affect the actual CAPEX by hyperscalers. As a result, chipmakers like Micron, AMD, Intel, and Scandisk plunged. On the other hand, easing tensions over the Iran war and lower oil prices helped industrial heavyweights (real economy); the DJ-30 AS Fed may be on hold till at least Dec '26 rather than any insurance hike.
Oil stumbled on easing Iran war tensions despite Houthi militants claiming to have targeted Saudi Aramco-linked facilities in Jizan and Yanbu, although neither the Saudi government nor Aramco confirmed the claims.
Stocks and also gold tumbled as the USD surged on market chatter that Fed Chair Warsh may hike rates on July 29 as insurance against the Trumpflation threat despite no prior indication. As per a report, Citadel Securities expects the Fed to raise rates this week; a Wednesday 25bp hike would bolster Chair Kevin Warsh’s credibility in the inflation fight, the firm’s head of macro strategy Frank Flet wrote. The move would signal policymakers no longer rely on pre-signaling every action and could “decisively end the era of forward guidance" and would underscore Fed independence. “Markets may again underestimate the extent of the Fed’s hawkish shift.”
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