🥛 Two ways to be wrong 📉

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✍️ Two ways to be wrong.
🎙️ The Milk Road Show: From Bitcoin to Hyperliquid: Crypto’s Next Phase Is Already Here.
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EVERYONE’S PRICING PEACE EXCEPT FOR BONDS

President Trump took the stage at the United Nations yesterday and said exactly what the markets wanted to hear.

He spent 9 of the 37 minutes on stage talking about Iran, the centerpiece of his monologue.

Trump claimed that since the naval blockade of the Strait of Hormuz, the U.S. Navy has successfully escorted more than one billion barrels of oil and continues to move 22-37 ships daily.

He said, “More oil is flowing than at any point since the war started”.

But it was his two-options theory that really spooked the gathering. Trump said, there are two options on the table regarding his next move against Iran:

Option 1: Strike a deal that lets Iran rebuild into “one of the greatest” countries.
Option 2: “Annihilate the Islamic Republic… drive them into hell”.

As you can already see, he’s playing the good cop, bad cop. If history’s any indicator, we know Trump Always Chickens Out, or TACO. So we believe a peace deal is on the cards.

And this time around, the signal didn’t just come from the U.S. alone. Iranians told Qatari mediators they’re willing to reopen the Strait within the week, provided Washington eases military pressure and lifts the blockade on Iranian ports.

Brent is trading at ~$96.15, down ~9.6% since Sep 11, while WTI, the U.S. benchmark, is down ~12.4% over the past week and now trades at ~$93.69.

Both markets have been trading above $100 since Sep 10, following the largest wave of tanker and shipping attacks since the Iran war began in late February 2026.

The U.S. forces destroyed five Iranian oil tankers while Iran and Houthis launched multiple retaliatory strikes across the Strait, and the Houthis seized control of Yemen’s port of Mocha.

Everyone's talking about Bitcoin hitting an eight-month high. The thing that got it there is the oil chart.

Source: TradingView

August's inflation data is where the connection starts. Headline inflation came in at 3.4%, but core inflation (which strips out food and energy) came in at 2.4%. The lowest since March 2021.

Which should tell you the broader economy is fine, and the real issue lies at the pump. Put differently, the inflation problem is a gasoline problem wearing a CPI costume.

Source: BLS

This is what made the Fed's September 16 move so strange. It hiked the Fed Funds Rate by 25 bps, its first increase since 2023, into an inflation problem that was almost entirely about oil.

Raoul Pal, who was on The Milk Road Show last week, put it best: The Fed didn't hike rates during the first Iraq war in 1990 because Greenspan called it a supply shock that would slow the economy on its own. Raising rates doesn't produce more oil.

So the Fed is squeezing, and the only thing that actually fixes this is tankers moving through the Strait of Hormuz again.

Which brings us back to the UN headquarters in New York yesterday, where Trump indicated that the deal will probably land right after the midterms, which are six weeks out.

Iran says seven days, Trump says six weeks, but one market thinks they're both wrong…

The next inflation report lands on October 14 and covers September, the same period that Brent crude oil climbed from $92 to $103.

So the cooling in oil won’t show up in the data until the October numbers arrive in mid-November.

In short, anyone waiting on inflation data to confirm the peace trade will be waiting until it's long over.

But the bond market isn't waiting. Since August 18, the yield on the 2-year Treasury has jumped 64 basis points, while the 30-year has moved 8 basis points.

Source: FRED

The 2-year is the market's bet on what the Fed does over the next couple of years. The September hike accounts for 25 of that 64 bps move, while the remainder suggests traders are pricing in further hikes. A dozen Fed officials said the same thing in their September projections.

So oil is down 10%, Bitcoin is at an eight-month high, and the front end of the bond market is positioned for a Fed that keeps squeezing.

Point being, they can't all be right, and the 30-year is telling us a story. When traders bet that hard on rate hikes, the 30-year usually climbs right alongside the 2-year.

This time it barely flinched.

That's Raoul's argument showing up in a price. You can't hike your way out of an oil shock, so nobody is willing to pay up for that view past the short end.

Which leaves us with two ways to be wrong.

If Trump gets his deal, oil keeps falling, those extra hikes never arrive, and the 2-year is the one that got it wrong. Crypto keeps running.

If it slips past his six-week mark, oil and Bitcoin are in for a rude shock to the downside. Iranian state media has already denied the seven-day timeline, and Parliament Speaker Mohammad Bagher Ghalibaf says the Strait will remain closed until Iran's conditions are met.

All eyes are on the Oil chart now. A move below $95 and the Bitcoin rally likely continues.

A break above $100 and Bitcoin could suffer.