TACO Trading Heats Up, Model Predicts Trump to Shift Iran Policy by End of July

On July 22, the TACO (Trump Always Comes Out) trade received support from quantitative models. Analysts at geopolitical consulting firm Signum Global Advisors predicted, based on Brent crude oil prices, U.S. 10-year Treasury yields, shipping traffic through the Strait of Hormuz, and the S&P 500 index, that Trump may adjust his hardline policy towards Iran by the end of July. The model indicates that Trump typically requires a significant market change of about 2.3 to 3.4 standard deviations to prompt a policy shift, with an average threshold of approximately 2.9 standard deviations. Analysts believe that the "TACO moment" has not yet arrived but is approaching, potentially occurring as early as July 22 and no later than July 30, with July 26 considered the most probable time. The ongoing U.S.-Iran conflict continues to heighten market pressures, with Brent crude oil prices surpassing $91 per barrel, and the average U.S. gasoline price breaking $4 per gallon for the first time since mid-June. Disruptions in shipping through the Strait of Hormuz, rising war costs, and U.S. military casualties are increasing the political pressure faced by the Trump administration. Republican insiders warn that if oil prices remain high for an extended period, energy costs could become a risk factor in the midterm elections. Some conservatives have stated that if oil prices exceed $90 during the ruling party's term, it will significantly weaken voter support. Analysts suggest that Trump's current hardline stance may partly aim to force Iran back to the negotiating table, but as the conflict continues, the U.S. government will face greater policy pressure between "continuing escalation" and "reducing military pressure."

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