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It seems someone tapped the President on the shoulder given this afternoon’s explosive opening in futures and he has posted X that spiking oil prices are a “small price to pay” for world peace, adding that prices “will drop rapidly” once the Iran nuclear threat is over.
Treasury yields are up 5bps, recoupling modestly from Friday’s ‘weak jobs decoupling’…
For all the color you can eat on Iran-related market angst, the following posts should help:
Goldman Flows Guru Warns Relatively Calm Index Belies ‘Fragile’ Market With ‘Poor Tolerance For Bad News’
Goldman Panics, Expects Oil To Hit $100 Next Week And Reach “Demand Destruction” Levels
Deutsche Bank Warns Energy Shock “Existential Threat” To Airlines, May Force Some To Ground Fleets
These moves come as the Trump administration said it is not prioritizing using the US Department of the Treasury to trade oil futures as it weighs ways to ease surging global energy prices, according to Yahoo Finance.
Officials have considered having Treasury buy or sell energy futures, but believe the agency would have limited ability to move such a large and active market.
Daily trading volumes have surged during the recent conflict, diluting the impact any single participant could have.
The White House is also reluctant to immediately tap the Strategic Petroleum Reserve.
Heavy drawdowns under former president Joe Biden left the reserve about 60% full, while repeated withdrawals have created maintenance issues.
Still, officials acknowledge that even a modest release could send a strong signal to calm markets.
Doug Burgum said “everything is being considered,” from immediate steps to longer-term measures, as officials try to contain rising fuel costs that pose both geopolitical risks and political pressure ahead of November’s midterm elections.
Given the current moves we are seeing, we suspect that laissez-faire attitude will shift rapidly and some kind of intervention is imminent.