How will U.S. Treasury debt ultimately end?

04 Core Contradiction: Why the U.S. Is Trapped in a Vicious Cycle In fact, America’s elite fully grasp the situation. Goldman Sachs economists have stated plainly: for the Fed to cut interest rates, two conditions must be met simultaneously—oil prices must fall, and the labor market must soften. Citigroup’s research likewise points out that as long as the Strait of Hormuz reopens and oil prices drop, inflationary pressure will ease immediately—giving the Fed room to cut rates. Thus, the crux of the entire problem hinges on “oil prices.” Without bringing oil prices down, rate cuts are impossible; without rate cuts, the U.S. faces existential peril. So what has the Trump administration done to suppress oil prices? Chapter Two: Trump’s Dilemma—Why “Suppressing Oil Prices” Is Inevitably a Dead End 01 Venezuela: A Surprise Strike—But the Market Has Already Priced It In At 3 a.m. on January 3, 2026, U.S. forces launched a military strike against Venezuela, directly eliminating Nicolás Maduro. Vice President Vance admitted outright that oil was the motive. Trump was even more direct, declaring the U.S. would “manage” Venezuela, develop its oil resources, and import 30–50 million barrels to the U.S. Markets responded politely: Brent crude briefly fell 1.2%, to $60 per barrel—but quickly rebounded. Why? Because Wall Street traders aren’t naïve. Venezuela’s incremental output is negligible in a global market consuming 100 million barrels daily. Moreover, the “Venezuela strike” had long been anticipated—the news merely triggered a classic “buy-the-rumor, sell-the-news” reaction. 02 Iran: Repeated “Tug-of-War,” Pushing Oil Prices Upward What truly vexes Trump is Iran. On August 2, Trump abruptly halted plans for large-scale strikes against Iran, announcing that both sides were nearing an agreement—including “full reopening of the Strait of Hormuz.” Oil prices plunged nearly 7% on the news, with WTI touching a low of $74.78. But this rally was short-lived. Trump’s familiar playbook—“negotiate while threatening, apply maximum pressure”—resurfaced. On August 5, he remarked, “Perhaps oil prices need to rise again”; on August 9, he said talks would proceed “quietly,” engaging Iran in “semi-negotiations”; then on August 10, he abruptly reversed course, demanding Iranian reparations—and the deal collapsed once more. Each time “an agreement appears imminent,” oil drops several dollars; each time “talks break down,” prices surge higher. By August 11, Brent crude had rebounded to $89.81. Even the Associated Press grew exasperated, reporting that markets interpreted Trump’s reparations demand as signaling “fewer vessels transiting the Strait of Hormuz.” Trump is now locked in a self-defeating loop: He needs “expectations of an agreement” to lower oil prices → but no agreement materializes → markets lose patience → geopolitical risk premiums are repriced → oil rebounds → rate-cut windows close → he must again signal willingness to negotiate → and the cycle repeats. Each iteration erodes America’s credibility further. When markets finally conclude “Trump simply cannot resolve the Iran issue,” oil-price increases will become irreversible. 03 Strategic Conclusion: The U.S. Is Caged To summarize America’s predicament: ・Oil prices remain stubbornly high: Venezuela’s marginal supply gains are dismissed by markets, while actions toward Iran push prices above $88. ・No room for rate cuts: High oil prices mean high inflation—leaving the Fed powerless. ・Two ticking bombs loom: The yen under severe pressure; U.S. equities teetering on the edge.

Macroeconomic Analysis | Why Did Trump Choose to 'Not Talk to Iran'? Behind Oil Prices Lies a Prelude to the 'Second Pricing' of the U.S. Bond Market

Why Did Trump Choose to 'Not Talk to Iran'? Behind Oil Prices Lies a Prelude to the 'Second Pricing' of the U.S. Bond Market Zhìyì Research · Zhihu In-Depth Report · September 26, 2026 Conclusion First The bizarre recent movements in international oil prices are demonstrating, outside any textbook, a phenomenon: geopolitical risk isn’t merely a cause of price swings—it’s the fuse for a full-scale repricing of interest rates. On September 26, international oil prices surged over 3% in after-hours trading. The trigger wasn’t a new black swan event—but rather the rejection of a negotiation proposal: According to Xinhua News Agency citing The Wall Street Journal, U.S. President Trump rejected Iran’s offer to “reopen the Strait of Hormuz within seven days,” telling aides he may resume bombing Iran after the November U.S. midterm elections. On the surface, this signals renewed turbulence in the Middle East. Beneath it, however, oil serves only as an intermediary—it’s actually transmitting a “second pricing” of U.S. long-term interest rates. This article unpacks the chain: Geopolitics → Oil Prices → Inflation → Real Interest Rates → 30-Year U.S. Treasuries → Global Risk Assets. I. First, the Surface: Why Was Oil Ignited by the “Rejection of Negotiations”? Data: ・On September 26, Brent crude surged over 3% in after-hours trading; NYMEX crude rose over 4% (Tencent News). ・Recent geopolitical context: Escalating Middle East conflict pushed oil prices above $100/barrel. ・On September 9, Trump explicitly stated: “We are not seeking negotiations with Iran. This war will end immediately after the midterms.” He added, “Oil prices will take longer to fall than the election timeline.” (China.com) Here lies a critical counterintuitive point worth noting: Trump simultaneously declares “the war ends right after the election, and oil prices will fall”—and yet says “oil prices will take longer to fall.” These two statements are, in fact, two sides of the same coin. If he genuinely wanted a swift resolution and rapid oil-price decline, he would have accepted Iran’s ceasefire proposal. Instead, he rejected it—and previewed resuming bombing post-election. This signals that, for the foreseeable future, Middle Eastern supply risks won’t dissipate, and the oil market’s “risk premium” will persist. In one sentence: Markets aren’t panicking over “whether fighting broke out today,” but over “whether this risk premium will lift anytime soon.” Rejecting negotiations tells markets—this risk premium remains firmly in place. II. Peel Another Layer: Why Does Oil Price Movement Trigger “Rate Hikes”? Many fail to see the link between rising oil prices and Fed rate hikes. The connection is profound—and runs through a metric called “real interest rates.” First, consider the U.S.’s current interest-rate environment: ・Fed policy rate range: 3.75%–4.00% (just raised for the first time in three years, in September) ・Latest U.S. CPI: 3.4% ・Fed’s target inflation: 2% Let’s do the math (this is the core of this article—please read carefully): This +0.475% represents the real return investors actually earn after adjusting for inflation. Key judgment: Markets generally view the Fed’s “neutral real interest rate”—the level that neither stimulates nor restrains the economy—as approximately 0.5%–1%. ・Current real interest rate stands at only +0.475%, below the neutral range’s lower bound of 0.5%. ・In other words: Though the nominal policy rate of 3.875% looks relatively high, subtracting 3.4% inflation reveals monetary policy is actually accommodative—not tight enough to curb inflation.

Oil Rebounds After Trump Rejects Iran Peace Deal

Sep 27, 2026

Oil prices surged over 1% following President Trump's rejection of a peace deal aimed at reopening the Strait of Hormuz. Brent crude futures climbed to $106.14 per barrel, while West Texas Intermediate reached $93.55.

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