The conflict between the U.S. and Iran is undermining the policy achievements that Trump has painstakingly cultivated in the financial markets. With oil prices soaring, U.S. Treasury yields jumping, and the dollar making a strong comeback, the triple pressure is heating up inflation expectations and obstructing the path to interest rate cuts, directly threatening several economic &#34;barometers&#34; that Trump values most.
After the U.S. and Israel launched airstrikes against Iran, international oil prices have risen by more than 10% this week, reigniting inflation concerns. Traders have begun to lower their expectations for the Federal Reserve's interest rate cuts this year—previously, the market had bet on three rate cuts within the year, but now even two cuts are uncertain. Meanwhile, the Bloomberg Dollar Spot Index has risen by over 1% this week, and the yield on 10-year U.S. Treasuries has climbed by about 20 basis points.
In the stock market, U.S. stocks have remained relatively stable this week, but the situation is still evolving. On Thursday, as the conflict entered its sixth day, oil prices, yields, and the dollar rose again, leading to a decline in the stock market.
Mina Krishnan, a portfolio manager at Schroder Investment, warned that,
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These unexpected consequences pose a brake on the goals Trump can achieve, especially in an election year. The barometers he focuses on are the S&amp;P 500 index, gasoline prices, and mortgage rates. He attributes his success to these indicators, which means he must now also take responsibility for any failures.
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<h2>Three Major Market Targets Suffer Simultaneously</h2>
Before the outbreak of the conflict with Iran, Trump was reaping—whether intentionally or by coincidence—the results he desired in three key financial markets: falling oil prices, declining U.S. Treasury yields, and a weaker dollar.
In January of this year, Trump publicly expressed satisfaction with the recent depreciation of the dollar, reinforcing market expectations that the White House wanted a weaker dollar to boost exports. The dollar subsequently fell until Treasury Secretary Mnuchin reiterated the strong dollar policy, after which it stabilized.
However, with the outbreak of this conflict, the dollar quickly regained its status as a safe-haven currency, strengthening against almost all major currencies. If this trend continues, it will weaken U.S. export competitiveness, contradicting Trump's core agenda of revitalizing manufacturing.
The U.S. Treasury market is also under pressure. The yield on 10-year U.S. Treasuries is an important benchmark for corporate loans and housing mortgages, and the Trump administration has explicitly sought to lower this rate to alleviate the annual interest burden of about $1 trillion on federal debt.
However, on the day the conflict broke out, the 10-year Treasury yield experienced its largest single-day drop since October of last year, putting pressure on the bond market indicators that Mnuchin values most. Ed Yardeni, president of Yardeni Research, bluntly stated, &#34;Market movements reflect geopolitical realities, which do not always align with domestic policy goals.&#34;
<h2>What Are the Risks of a Nightmare Repeating in 2022?</h2>
Investors have begun to cite the painful precedent of 2022. At that time, after the outbreak of the Russia-Ukraine conflict, international oil prices briefly surpassed $100 per barrel, driving up inflation and forcing the Federal Reserve to aggressively raise interest rates, leading to a significant strengthening of the dollar, while both the bond and stock markets suffered heavy losses.
Currently, traders view this scenario as a tail risk rather than a baseline expectation. Scott Ladner, chief investment officer at Horizon Investments, stated that the current asset price movements &#34;align with the market's pricing logic that the 'duration of the conflict in Iran will be relatively short'.&#34;
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It is worth noting that as a net oil exporter, U.S. assets outperformed the European and Asian markets, which are heavily reliant on energy imports, this week, with the excess returns of U.S. stocks relative to other global markets reaching the largest weekly gap since April.
However, if the conflict persists for a long time and energy prices remain high, consumer confidence and corporate investment outlooks will come under pressure simultaneously. Last month, Trump boldly claimed in the State of the Union address that gasoline prices were falling and inflation was &#34;sharply retreating,&#34; but the sudden rebound in oil prices poses a severe test to this narrative.
Ayako Yoshioka, Director and Senior Investment Strategist at Wealth Enhancement Group, pointed out, &#34;This war could undermine market expectations for declining inflation and lower interest rates.&#34;

USDU

The US-Iran conflict triggers a chain reaction in the financial markets—oil prices surge over 10% in a week, US Treasury yields jump 20 basis points, and the dollar strengthens across the board, simultaneously hitting the three economic barometers that Trump has worked hard to maintain. Expectations for interest rate cuts cool, a strong dollar bites into exports, and debt interest pressures rise sharply, as the once favorable policy dividends are rapidly disintegrating, with the shadow of an inflation nightmare reminiscent of the 2022 Russia-Ukraine conflict looming

- The escalating conflict between the U.S. and Iran is undermining former President Trump's financial policies, with rising oil prices, increasing U.S. Treasury yields, and a strong dollar elevating inflation concerns.  
- Following airstrikes on Iran, oil prices surged over 10%, leading traders to reassess interest rate cut expectations from the Federal Reserve this year.  
- If the conflict persists, it could severely impact consumer confidence and corporate investment, challenging Trump's earlier narrative of declining inflation and lower gas prices.

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Oil prices rise in dollars, stock prices fall! The market begins to "pressure" Trump