Mediators are actively pushing to break the deadlock in US-Iran negotiations by proposing a preliminary agreement. This deal aims to restart talks on a final settlement, addressing key maritime and economic constraints.

Proposed Exchange Terms

Under the terms of the proposed agreement, Iran would allow free movement of traffic through the Strait of Hormuz. In exchange, the United States would ease its blockade of Iranian ports. One official indicated that progress had been made, though the parties were still negotiating the sequencing of the next steps.

Separately, Al Hadath reported that Iran has reportedly agreed to halt uranium enrichment. This move is proposed in exchange for US sanctions relief, though the broader negotiation landscape remains difficult.

Negotiation Status

The diplomatic stalemate highlights significant hurdles in ongoing talks between the United States and Iran. A US source engaged in negotiations told Al Arabiya that the gaps are wide and obstacles are major. The source added that the chances of an agreement are extremely slim.

US stock futures pointed to a mixed opening on Tuesday, with the Dow Jones and S&P 500 edging lower while the Nasdaq 100 rose. This follows President Donald Trump’s denial of reports offering Iran sanctions relief, which he labeled a "HOAX."

Trump explicitly rejected claims that he proposed economic relief or access to frozen funds in exchange for nuclear concessions, stating, "I offered them NOTHING!" Former Secretary of State Antony Blinken countered that the reported proposal closely resembled the Obama-era nuclear deal, arguing that tearing up the previous agreement contributed to current regional instability.

Diplomatic stalemate and market reaction

The diplomatic push follows Trump’s rejection of Iran’s latest proposal, where he stated Tehran had "overplayed their hand." U.S. envoys Steve Witkoff and Jared Kushner held indirect talks with Iranian Foreign Minister Abbas Araghchi in New York last week, with Qatari officials carrying messages between the two sides. A White House official described these discussions as "positive and constructive," noting flexibility from Iran on nuclear issues.

Significant divisions remain regarding the sequence of actions. Iran seeks sanctions relief and access to frozen assets before making major concessions, while the Trump administration demands concrete nuclear progress first. U.S. Ambassador to the United Nations Mike Waltz stated that Iran was asking for "everything up front with a promise that they would then talk."

Prediction market traders are becoming more optimistic about a resolution. Polymarket now assigns a 15% chance to a final U.S.-Iran nuclear deal by December 31, up from 10% on Saturday. The wider market has attracted nearly $18.9 million in trading volume. However, skepticism persists regarding major nuclear concessions, with just a 6% chance that the U.S. obtains Iran’s enriched uranium by year-end.

Stock market performance

U.S. stocks look set for a mixed session following Monday’s lower close. The SPDR S&P 500 ETF Trust (NYSE: SPY) was down 0.038% at $765.32, while the Invesco QQQ Trust ETF (NASDAQ: QQQ) advanced 0.12% to $737.44 in premarket trading.

Key movers included Nvidia Corp. (NASDAQ: NVDA), which rose 0.94% after announcing a $150 billion share repurchase authorization increase. AAR Corp. (NYSE: AIR) gained 4.21% on better-than-expected first-quarter results. Conversely, Vail Resorts Inc. (NYSE: MTN) fell 1.84% after reporting mixed fourth-quarter results.

Energy markets and interest rates

Oil prices remained elevated amid ongoing indirect negotiations. Brent crude gained 1.5% Sunday night after Trump rejected Iran’s proposal, as disruption around the Strait of Hormuz continues to pressure global energy markets. Crude Oil WTI futures edged higher in the early New York session, rising 0.08% to hover around $92.67 per barrel. Shares of Exxon Mobil Corp. (NYSE: XOM) were up about 1% Monday as oil prices remained elevated.

On the economic front, the 10-year Treasury bond yielded 5.24%, and the 2-year Treasury bond yielded 4.94%. The CME Group’s FedWatch tool projections show markets pricing in a 72.5% likelihood of the Federal Reserve hiking interest rates after its October meeting. BlackRock’s weekly commentary noted that expectations for further Fed tightening may be overstated, viewing a potential rate hike alongside stronger economic growth as net good news for risk assets.

What the numbers show

The divergence between the rising probability of a general deal (15%) and the low probability of obtaining enriched uranium (6%) suggests traders anticipate a partial or phased agreement rather than comprehensive nuclear disarmament. Simultaneously, the 72.5% probability of a Fed rate hike contrasts with BlackRock’s view that tightening fears are misplaced, highlighting a disconnect between market pricing and institutional outlooks regarding monetary policy.