Dear Reader,
Good morning.
Simmy Adelman here with Behind the Markets, stepping in for Dylan this week.
The Iran story just got a lot more complicated.
And as an investor, it just got a lot more important too.
What Happened Over the Weekend
At the United Nations General Assembly on Friday, Iran's Foreign Minister made a public offer.
Open the Strait of Hormuz within seven days.
Restart nuclear negotiations.
In exchange: release frozen Iranian funds, lift sanctions, and end the US naval blockade of Iranian ports.
It was the clearest path toward ending the conflict that anyone had offered in seven months.
Trump rejected it over the weekend.
His exact words: "They made a proposal but I rejected it."
He called Iran the side under pressure.
He said Iran wants the strait open immediately because they have no money coming in.
And he reportedly told aides he expects US bombing to resume after the November midterm elections.
What the Markets Are Saying
Brent crude jumped to $108 a barrel this morning before settling around $107.
That's the highest level since the early days of the conflict.
The 10-year Treasury yield hit 5.25% — the highest since 2007, the last year before the financial crisis.
The 30-year yield is at 5.52%.
The S&P 500 is down. The Nasdaq is down.
And the odds of another Federal Reserve rate hike in October just jumped to 70%.
Dylan told you about the 5% ceiling on the 10-year yield many times on this channel.
We just blew through it.
Trump's Calculation
Now here's the strategic logic behind the rejection — and it's worth understanding because it tells you a lot about how long this drags on.
Trump believes Iran is bleeding.
The Strait of Hormuz has been effectively closed since February 28th.
That's seven months with almost no oil revenue for Iran.
Their economy is under enormous pressure.
Trump's view: why make a deal now when Iran is getting weaker every week?
He reportedly relabeled the strait on Truth Social with his own name this weekend — which tells you exactly how he sees the leverage.
He holds the keys.
Iran's Foreign Minister responded that Tehran isn't willing to soften its terms either.
So right now you have two sides, each convinced the other is running out of time.
That is not a recipe for a quick resolution.
What This Means for You
We wrote about this back in July when the Strait first closed.
The largest oil supply disruption in the history of global energy markets.
Bigger than the 1973 Arab oil embargo.
Bigger than the Gulf War.
And here we are seven months later, with no resolution in sight, oil back above $107, the 10-year yield at a 19-year high, and the Fed odds tilting toward another hike.
The market has been remarkably resilient through all of this.
But resilience has a way of making people comfortable right before something changes.
A few things worth watching closely this week.
Micron reports tomorrow after the close — the first major chip earnings of the season.
Nike reports later in the week.
And Friday brings September nonfarm payrolls, which will either give the Fed cover to pause or justification to hike again.
A lot of moving pieces on the table.
With Oil at $107...
The 10-year yield hitting a 19-year high…
And the Fed likely hiking again in October…
This is exactly the right environment gold was built for.
Central banks bought a record 289 tonnes of gold in a single quarter this year.
They didn't buy it because they're nervous.
They bought it because they understand what happens when energy prices spike, yields surge, and the dollar gets pressured all at once.
That’s why you need to check out Dylan’s #1 Gold Play here>>>
Before the surge.
I'll see you tomorrow.
All the best,
Simmy Adelman, Editor in Chief
Behind the Markets
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Written by Simcha Adelman