President Donald Trump’s attempts to soothe markets are facing diminishing returns as investors watch the economic costs of the Iran war mount.
The U.S. 10-year Treasury yield fell more than 12 basis points this week in a volatile session, as President Donald Trump’s repeated attempts to calm markets over the Iran conflict were met with growing investor skepticism. The benchmark yield ended Thursday down 1.37 basis points at 4.3049 percent, after whipsawing from 4.31 percent to 4.36 percent during the president’s primetime remarks before sinking to a session low of 4.2831 percent.
“The uncertainty is now soaring,” said Jeffrey Sonnenfeld, a professor at the Yale University School of Management, in comments to the Associated Press. “As the messaging to calm markets with false reassurances is having diminishing credibility in financial markets, so, too, has Trump diminished public confidence.”
The flight to safety in bonds comes as other assets reflect the war's real economic costs. The S&P 500 has declined for five consecutive weeks, the global oil benchmark is up roughly 60 percent since the conflict began, and U.S. gasoline prices have surpassed $4 per gallon, according to data from the Associated Press. Treasury Secretary Scott Bessent insisted Monday that the oil market remains “well supplied,” but the price action suggests investors are not convinced.
This growing disconnect between White House messaging and market reality suggests investors are beginning to price in a protracted conflict. Confidence is fading, with the University of Michigan’s Index of Consumer Sentiment falling to a reading of 53.3 in March, its lowest since December. The survey’s director pointed directly to financial market volatility “in the wake of the Iran conflict” as the primary driver for the drop.
President Trump’s strategy of using social media to manage market expectations appears to be wearing thin. While his posts about “productive” talks have previously sparked brief market rallies, the effects are becoming shorter-lived. According to a March survey by The Associated Press-NORC Center for Public Affairs Research, just 38 percent of U.S. adults approve of how he’s handling the economy, and only 35 percent support his approach to Iran.
“Most advisers would say the president has to speak directly to the American people and fully acknowledge the economic pain that his policy has so directly caused,” said Gene Sperling, a top economic adviser in multiple Democratic administrations. Instead, he noted, the strategy has been to dismiss the pain, with White House press secretary Karoline Leavitt calling the oil price hikes a “short-term fluctuation.” This approach is failing to resonate as consumers pay more at the pump and see losses in their 401(k) accounts.
Adding a new dynamic to the situation, Iranian officials are directly challenging Trump’s market-moving commentary on social media. Mohammad Bagher Ghalibaf, the speaker of Iran's parliament, has taken to X to advise investors to treat Trump’s posts as a reverse indicator. “If they pump it, short it. If they dump it, go long,” Ghalibaf posted on March 29, according to Business Insider.
Ghalibaf’s posts, which deny the existence of productive talks and allege market manipulation, are gaining traction among elite financial circles. Marko Kolanovic, former quant head at JPMorgan, has interacted with posts discussing Ghalibaf’s commentary. The research firm Citrini, known for its AI doomsday scenario report, jokingly quote-posted Ghalibaf, saying, “This is my quant.” This social media battle introduces a new source of volatility, forcing traders to weigh competing narratives from both sides of the conflict.
This article is for informational purposes only and does not constitute investment advice.
