Iran peace deal looks real, oil crashing 20% — grab Treasury bonds while they're still cheap
Oil has fallen 20% from its 2026 peak as President Trump signals a ceasefire deal with Iran is close. Government bonds are having their best week since the war started because falling oil means lower inflation pressure.
Idea
The Strait of Hormuz was shut down when the Iran war started in February, causing a massive energy shock that drove oil prices and inflation higher. Now Trump says a peace deal is imminent, which would reopen that critical shipping lane and remove the oil premium. Falling oil prices are great for bonds because they signal lower inflation ahead — and indeed Treasuries are already posting their best week since the war began. If a deal actually gets signed, oil could keep falling and bond prices could keep rising as markets price in a return to normal. The trade works best by buying medium-duration government bond ETFs, which benefit directly from lower inflation expectations.