After nearly two weeks of intensifying conflict, U.S. President Donald Trump announced that Israel and Iran have agreed to a “Complete and Total CEASEFIRE.” Calling it the “12 Day War,” Trump revealed via Truth Social that both nations would enter a phased ceasefire agreement beginning with Iran’s 12-hour halt, followed by Israel, leading to a formal end after 24 hours. However, skepticism remains as no official confirmation has come from either Tehran or Jerusalem, and reports of missile launches and continued hostilities suggest the deal may still face hurdles.
Despite the ambiguity, Trump’s announcement prompted an immediate market reaction. Oil prices dropped sharply, while stock markets futures rose, signaling a lift in investor sentiment. The ceasefire if it holds could reduce geopolitical risk premiums baked into oil and safe-haven assets like gold, which briefly touched a two-week low.
Still, volatility lingers. Iran’s foreign ministry has stated that ceasefire is conditional on Israel halting attacks, and the Israeli Defense Forces reported ongoing missile threats. These conflicting signals keep risk sentiment cautious, even as markets attempt to price in de-escalation.
At home, Trump is also reshaping the monetary policy conversation. With inflation appearing subdued and tariffs deemed by some Fed officials as having only a short-term impact, calls for a rate cut in July are gaining traction. Fed Vice Chair Michelle Bowman and Governor Christopher Waller both expressed openness to cutting rates at the July meeting if inflation data continues to soften. The shift in tone from the Fed has caused markets to adjust expectations rapidly, with CME Fed Fund futures raising the probability of a July cut from 15% to over 23%.
Trump, however, remains vocal in his criticism of Fed Chair Jerome Powell, whom he derisively labeled “Too Late.” He has publicly toyed with the idea of firing Powell, citing dissatisfaction with the Fed’s reluctance to act more aggressively to reduce borrowing costs. Trump argues that faster cuts could save the country billions in interest payments, a point he’s using to add pressure ahead of Powell’s congressional testimony.
In this high-stakes environment where geopolitical ceasefires, central bank policy, and presidential influence intertwine markets remain on edge. Investors are left parsing political theatrics, macro signals, and war headlines as they attempt to navigate an economic landscape where diplomacy, interest rates, and global stability remain as unpredictable as ever.