President Donald Trump stated the U.S. will win against Iran in both military and economic warfare. He claimed Iranian inflation stood at 318% as of this morning and expressed expectation that the conflict would end "very soon," leading to a decline in oil prices.

Market Reaction

US equity futures advanced in early trading. Dow futures rose 120 points, or 0.23%, to 52,199.00. S&P 500 futures gained 26 points, or 0.34%, to 7,738.50. Nasdaq 100 futures advanced 164 points, or 0.55%, to 30,081.25 as of around 8:48 p.m. EDT.

Asian markets also traded higher. South Korea’s KOSPI rose 0.73% to 6,944.56. Japan’s Nikkei 225 gained 1.38% to 65,018.95.

In commodities, prices moved lower despite the geopolitical risks. WTI crude oil fell 1.61% to $98.69 per barrel. Brent crude declined 1.43% to $102.38 per barrel. Natural gas futures fell 1.24% to $2.876 per MMBtu. The U.S. dollar index stood at 100.254, up 0.04%.

Escalating Tensions and Retaliation Threats

Trump outlined three primary paths regarding the conflict: "wiping Iran out," allowing the country to "rot economically," or negotiating a deal. He warned that "they better behave" while expressing uncertainty about the timing of any drastic measures. Trump declined to say whether Iran strikes will end before the midterms.

Iranian officials have responded with threats of retaliation. Iran’s military stated that any new attack would trigger sustained retaliation against U.S. bases and interests. Washington’s regional allies could also be treated as participants in the conflict, Reuters reported.

The confrontation widened over the weekend after Yemen’s Iran-backed Houthi group claimed missile and drone attacks on sensitive targets in Riyadh. The U.S. State Department issued a security alert warning of possible further escalation.

Diplomatic Moves and Energy Disruptions

Diplomatic efforts continue alongside these threats. The Trump administration has permitted a "core delegation" of Iranian officials, including President Masoud Pezeshkian and Foreign Minister Abbas Araghchi, to attend the United Nations General Assembly. Trump indicated he would be open to meeting President Pezeshkian.

Iran has continued restricting shipping through the Strait of Hormuz. Tehran reiterated it will not reopen the strait until conditions tied to a June ceasefire agreement are met. That agreement collapsed in July, stalling diplomatic efforts. The Houthis’ position near the Bab el-Mandeb Strait threatens another major route for energy and commercial shipments.

Former counterterrorism chief Joe Kent warned there is no military solution to the Iran issue. He urged the White House to consider withdrawing troops from the Middle East instead.

What the Numbers Show

The market reaction presents a divergence between geopolitical rhetoric and asset pricing. While Trump escalated threats with a claim of 318% inflation in Iran and predicted an imminent end to hostilities, crude oil prices fell despite ongoing disruptions in the Strait of Hormuz and Bab el-Mandeb. This suggests traders are pricing in a rapid resolution or reduced risk premium rather than sustained supply constraints from the current blockade status.

President Trump canceled $810 million in congressionally approved funding on Friday through a rare "pocket rescission," only the second such move in 49 years. The action affects immigration, education, and housing programs across seven federal agencies.

In a notice to House Speaker Mike Johnson (R-La.), Trump cited the Congressional Budget and Impoundment Control Act of 1974. He reported 11 rescissions of budget authority totaling the specified amount. This executive action bypasses standard legislative approval processes for spending cuts.

Fuel standards rollback approved

Trump announced his approval of new fuel-economy standards that roll back vehicle efficiency rules implemented during Biden's presidency. The Transportation Department is expected to formally finalize these standards on Monday.

The Trump administration argues this move will lower new-car prices and provide automakers with more flexibility in production. Critics warn it could lead to increased gasoline consumption. The change terminates the previous administration's electric vehicle mandate framework.

Iran seeks diplomatic solution

Iran is advocating for a negotiated solution to its conflict with the U.S. and Israel after Trump rejected an Iranian proposal to reopen the Strait of Hormuz and end fighting. The proposal was announced at the UN General Assembly and communicated through Qatari mediators.

Iranian Foreign Minister Abbas Araqchi stated that any action on the waterway depends on conditions set by Iran. "Only a negotiated solution can get them out of this deadlock," Araqchi said, according to Reuters.

Supreme Court revives voter database

The U.S. Supreme Court revived an expanded voter-citizenship database on Friday, allowing states to resume bulk voter screening weeks before the midterms. Federal law bars states from systematically purging voter rolls within 90 days of an election, which limits the immediate practical effect of the ruling.

Vance criticizes H-1B visa usage

Vice President JD Vance expressed strong views against corporations replacing American workers with foreign labor through the H-1B visa program. "Our message to corporate America is simple: We're not going to let you lay off American workers so you can replace them with cheap foreign labor," Vance stated.