DeFAI

🚨 THE US-IRAN WAR WILL LIKELY END BY NEXT WEEK. And markets are starting to price it. Just a week ago, I told you that US-Iran will be over in 1-2 weeks and US Oil prices won't go above $120 again. Since then, a lot of signs of de-escalation have emerged, so take a look. First, look at bond yields. US 10-year yields are again moving close to 4.4%–4.5%. This level has repeatedly forced policy reactions. In April 2025, when yields moved higher, tariffs were paused. Later in the year, trade deals were pushed to calm markets. Higher yields tighten financial conditions very quickly. They increase borrowing costs, pressure equities, and slow down the economy. That is why governments usually step in when yields move too fast. Right now we are again near that zone. So the probability of some form of market relief action is increasing. Second, look at oil and inflation. Earlier, oil prices spiked because of supply disruption and fear around Hormuz. That pushed inflation expectations higher. Now a key shift is happening. The US has allowed around 140 million barrels of Iranian oil to move. This is important because: • More supply → oil prices come down • Lower oil → lower inflation pressure • Lower inflation → more room for policy support If this oil actually enters the market, it directly reduces one of the biggest risks. Also, allowing this supply signals a shift in approach. It shows movement from pure aggression toward stabilization. Third, look at the military situation. Reports suggest: • Major Iranian bases have been hit • A large part of military infrastructure is already damaged • Several top-level figures have been removed At this stage, wars usually do not continue in the same way. They move toward: • Negotiations • Internal political shifts • Or controlled settlement Because the cost of continuing becomes higher than the benefit. Fourth, look at the global market reaction. We already saw: • Oil spike sharply • Equity markets correct • Risk assets lose momentum These are typical fear phase moves. But after that, markets start looking for what comes next. And right now, the drivers that caused the panic are slowly stabilizing: • Oil supply may increase • Yields are near levels that trigger action • War intensity is no longer increasing at the same pace This is how markets usually move from panic → stabilization → recovery. That is why the current setup suggests we are getting closer to a local bottom. Not immediately, and not in one day. But from here, de-escalation is much more likely to happen than more aggression.

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