With 35 days to go until the 2026 U.S. midterm elections, how should we interpret the recent financial market trend of 'Trump Wins' trading?

The key question is this: Given Trump’s currently low approval ratings, what exactly are markets pricing in—genuine confidence in a ‘Trump victory,’ or merely an early bet on the expectation that ‘Trump will ultimately step in’? I. ‘Trump Wins’ Trading: Market Intervention Under Electoral Pressure! Over the past few months, the Iran conflict has evolved from a geopolitical event into a domestic U.S. economic issue. On September 30, Brent crude remained near USD 103 per barrel, posting a roughly 14% gain for the month. Although Middle Eastern oil exports have gradually resumed, the risk surrounding the Strait of Hormuz remains unresolved, and U.S.–Iran negotiations have yet to yield breakthroughs—leaving markets with a persistent geopolitical risk premium on oil. This sensitivity is especially acute for Trump, as American voters do not experience abstract ‘Brent crude’ prices—they feel them directly at the pump (gasoline and diesel), in logistics costs, and in food prices. Data shows that the U.S. consumer confidence index fell to 81.9 in September—the lowest level in approximately 12.5 years. Meanwhile, U.S. diesel prices have surged above USD 6.50 per gallon. Cost-of-living concerns are widely regarded as one of the most critical voter issues in this midterm election. Facing simultaneous pressure—from Israel and some Gulf allies demanding resolution of the Iran issue, and from hawkish voices within the Republican Party and Iranian-American voters—‘Trump Wins’ logic operates on a simple first-order narrative: At all costs, create the storyline: ‘De-escalation of war → falling oil prices → lower gasoline/diesel prices → easing inflation expectations → reduced consumer pressure.’ To support this, energy data—from the EIA to shipping metrics—must align with the narrative of an imminent oil price collapse. Iran, meanwhile, having been drawn into negotiations, must demonstrate ‘good faith’ by de-escalating tensions around the Strait of Hormuz (though in reality, Iran cannot halt the current relay-style vessel traffic through the strait unless it directly attacks terminal oil pipelines). Accordingly, financial markets recently have followed a ‘falling oil price’ logic—accompanied by declining U.S. long-term Treasury yields, rising tech stocks, a Bitcoin rebound, a weaker dollar, and a recovery in gold. Yet conversely, on September 29, after Trump denied willingness to ease sanctions on Iran, oil prices rebounded and the 10-year Treasury yield surged again toward 5.3%, revealing just how fragile market confidence in a ‘Trump peace deal’ truly is. This fragility explains Trump’s recent rhetorical softening—and if Iran believes his overtures, it risks sliding into a ‘Cuban economic model’! II. The Success or Failure of ‘Trump Wins’ Ultimately Hinges on the 10-Year Treasury Yield Yesterday, two Fed officials spoke on monetary policy. First, Governor Christopher Waller took a hawkish stance—prompting an immediate U.S. equity selloff and oil price surge; notably, mainstream U.S. media coverage of his remarks was minimal. Then, New York Fed President John Williams delivered a dovish message—triggering widespread headlines proclaiming ‘oil prices falling,’ ‘no rush to hike rates,’ and ‘AI-driven growth is sustainable,’ which drove last night’s U.S. equity market into a sharp V-shaped reversal. Currently, the U.S. Treasury market is pricing not only inflation—but a complex interplay of inflation, fiscal dynamics, supply constraints, term premiums, AI-related demand, and geopolitical risk. The U.S. Treasury Department projects net marketable debt issuance of USD 739 billion in Q3 2026 and USD 628 billion in Q4—still substantial amounts. If inflation remains elevated at that time, the U.S. economy would effectively be enduring an unusually prolonged ‘five-year inflation’ period—with core inflation persistently exceeding 2%.

U.S.–Iran indirect talks have resumed! Trump says the U.S. and Iran have ‘exchanged information,’ while Iran awaits Washington’s formal response.

Diplomatic contact between the U.S. and Iran is quietly advancing amid public confusion and contradictory statements. Although Trump publicly rejected Iran’s proposed ‘Seven-Day Hormuz Reset’ plan, officials from both sides held separate meetings with mediators this Monday—confirming that negotiations have not stalled. According to Xinhua News Agency, Trump confirmed at the White House on September 28 that representatives from the U.S. and Iran had exchanged information via mediators, though he declined to disclose specifics—only stating, ‘We will win,’ and ‘Things will become clear very soon.’ Meanwhile, CCTV International reported that Iranian Foreign Minister Hossein Amir-Abdollahian (Arabgchi) said Iran had conveyed its ‘Seven-Day Plan’ to the U.S. through Qatar and was now awaiting Washington’s formal response, transmitted via the same mediators. The negotiation outlook remains highly uncertain—but markets have already reacted. Oil prices rose for the second consecutive trading day, with Brent crude futures briefly climbing back above USD 100 per barrel. Trump denies offering sanctions relief—but confirms information exchange Nonetheless, on the same day, Trump confirmed to reporters at the White House that the U.S. and Iran had indeed exchanged information via mediators. According to Xinhua, during an Axios interview on September 27, he added that U.S.–Iran negotiations were expected to resume within the coming week. Citing a senior official, Reuters reported that subsequent talks would likely focus on a revised version of Iran’s proposal—not the original ‘Seven-Day Plan.’ Iran’s Seven-Day Plan rejected—but negotiation framework still evolving Iran’s proposal, unveiled during the UN General Assembly last week, included: U.S. lifting of maritime blockades; removal of oil sale sanctions; restoration of regional ceasefire; and unfreezing of Iranian assets—in exchange for Iran reopening the Strait of Hormuz within seven days and resuming nuclear negotiations. Trump publicly rejected the proposal on September 26, claiming Iran sought a deal urgently because ‘they’ve lost so badly.’ Yet according to Reuters, Foreign Minister Amir-Abdollahian stated that mediators had not formally communicated the U.S. rejection to Tehran. ‘We are awaiting a clear position from the mediators; only then will we decide our next steps,’ he wrote on social media. CCTV International cited Iran’s Mehr News Agency reporting today (September 29) that Foreign Minister Amir-Abdollahian, during a media interview, outlined one of his main objectives in attending the 81st UN General Assembly in New York: to convey Iran’s position on the war—particularly regarding the Strait of Hormuz—to the world.

Oil Prices Rise as Trump Denies Sanctions Relief for Iran

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Oil prices surged after President Trump denied easing sanctions on Iran, while Middle East crude exports rebounded to September highs. Brent crude gained over 1% to $103.73 per barrel amid concerns over US diesel export restrictions.

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