Trump surrenders twice within 24 hours, causing a massive sell-off of U.S. Treasuries

About the War:

Before the A-share market opened today, the U.S. media outlet The Wall Street Journal reported that Trump told his aides that he wanted to end the U.S.-Iran war without reopening the Strait of Hormuz.

After the A-share market closed and before the U.S. stock market opened, Trump again stated on social media: All those countries that can’t obtain jet fuel because of the Strait of Hormuz—such as the United Kingdom, which refused to get involved in Iran’s assassination attempt—I have a suggestion for you: first, buy from the United States; we have plenty of supply. Second, muster up some courage, go to the strait, and seize it directly. You have to learn to fight for yourselves; the United States won’t help you anymore going forward, just like you haven’t helped us in the past. Iran is basically already destroyed; the difficult part is over. Go fight for your own oil!

Overall, Trump’s remarks today are very unusual. These words do not represent his true thoughts; they’re meant for the financial markets. Today’s Wall Street doesn’t care about who wins or loses the war. What it wants is for the war to stop—even if control of the Strait of Hormuz ends up in Iran’s hands.

The fundamental reason is that this war was doomed from the beginning to end in failure for the United States. Rather than投入更多, it’s better to cut losses in time.

After these remarks were made, U.S. stock index futures began to rise sharply, while U.S. Treasury prices fell and yields increased. Trump’s TACO succeeded here.

So, the situation in the Middle East will remain, for a long time, in a kind of delicate balance: the United States is forced to accept Iran’s control of the Strait of Hormuz, stops short of escalating the war, but still maintains a form of strategic pressure—thereby achieving a delicate equilibrium.

Under this balance, many countries that originally relied on oil from that region later have to find ways to buy oil from the United States, so the United States can also gain some benefit from this war.

About Gold:

Over these past two days, the gold price has rebounded very clearly. The international gold price is once again above $4,600, which matches the earlier judgment.

The prior decline in gold was caused by multiple factors. First, there were sell-offs due to liquidity shortages. Second, because the United States came in aggressively, many people believed that the dollar’s hegemony would be further consolidated by the war.

But the reality is that a month has passed, and the U.S. army hasn’t created any miracles. On the contrary, Iran’s counterattack has been very persistent—so persistent that Trump has had to consider abandoning the region and wants to end the war in a decent way.

When the U.S. military can’t consolidate the dollar’s hegemony, gold’s value stands out again. As de-dollarized trading continues, central banks and financial elites around the world will keep adding to their gold holdings.

This is to hedge against the dollar’s depreciation.

In the Russia-Ukraine war, the failure of the U.S. and Western countries caused the gold price to rise from around $2,000 to $5,000 over the course of four years.

So, how long will the failure of the U.S. in the Iran war drive gold higher? Perhaps time will provide the answer.

About Oil:

An increase in oil prices is all but inevitable. In this war, not only key waterways have been blocked, but more importantly, some oil facilities have been destroyed.

Global supply has disappeared by about 10 million barrels. It’s very difficult to get back to below $80 as before.

International capital and some real enterprises have severely underestimated the severity of oil shortages. In fact, a full-scale oil-rush war is playing out wildly at sea.

Previously, Chevron CEO of the global energy major stated that currently, the risks are not being fully reflected in the crude oil futures market. To restore supply, it’s not just a matter of waiting for the end of the war; it will take another half-year, or even 3 to 4 years, after the war ends.

The rise in oil prices has already given momentum for U.S. oil giants to invest in Venezuela.

This crisis will become apparent as early as April. When offshore oil inventories are consumed to near depletion, many companies will have no choice but to accept high oil prices.

In fact, some countries in Southeast Asia are already facing an oil shortage. They have started to restrict the supply of refined products, and to recover, they can only accept high oil prices.

For oil-producing countries like Iran, Venezuela, and Russia—if these countries want to maintain fiscal balance, oil prices need to be maintained at anywhere from 95 to 150 dollars, depending.

Otherwise, the war and events that disrupt supply will continue to break out.

Or else, which is more likely: that the United States completely defeats Iran on the ground, or the other possibility?

About the Stock Market:

The global economy has already entered a downturn. The U.S. economy can only keep growing thanks to fiscal deficit expansion and the AI narrative in the capital markets. An inability to distribute benefits evenly is the main reason regional conflicts break out.

Since the U.S.-Iran war, U.S. short- and long-term Treasury bonds have been sold off by central banks in various countries, causing a sharp increase in the dollar benchmark interest rate.

As Treasuries are the anchor for all risk assets, when Treasury yields rise, stock market valuations fall.

In other words, when the cost of issuing U.S. government bonds is high, the stock market performance won’t be very good.

Especially under a high-oil-price scenario, the process of the Federal Reserve cutting rates is slowed down, and the killing of valuations may continue for some time.

But high oil prices also bring some opportunities and changes.

For example, coal-to-chemicals, power-related industries, and the new energy industry chain. Right now, capital is still betting that the war will end quickly; as time passes, the performance of related industries and companies will also be reflected in their stock prices.

Author’s statement: personal opinions, for reference only