Hopes for a US-Iran ceasefire hit another setback! Trump rejects Iran's seven-day proposal; inflationary pressure remains hard to shake off with oil prices at $100.

Media reports citing informed sources say that U.S. President Donald Trump rejected Iran's proposed seven-day ceasefire plan and told aides he expects to resume bombing Iran after the November midterm elections. The Iranian government had previously said it hoped to exchange the reopening of the strait and the resumption of nuclear talks for the United States lifting its blockade of Iranian ports, but Iran said it would show no flexibility on its nuclear program and would not give up rights including uranium enrichment. The diplomatic process for easing the U.S.-Iran conflict has encountered another major obstacle, and whether the Strait of Hormuz can resume stable navigation continues to affect global energy supply and inflation expectations. The core of this latest major disagreement lies in the fact that both sides want to retain their own tools of pressure while demanding that the other side first deliver substantive benefits. According to accounts from informed sources and regional mediators cited by media, Iran's proposed exchange conditions also include unfreezing some assets and lifting oil export sanctions to ease the impact of the blockade on foreign exchange revenue and the domestic economy; the United States, meanwhile, wants to continue using economic pressure to secure more favorable arrangements on the nuclear issue and regional security. U.S. officials believe that escort operations have already helped some tankers pass through the strait, so there is temporarily no need to lift the blockade in exchange for navigation. The resulting deadlock is this: Iran links the restoration of shipping to economic relief, while the United States tries to improve shipping conditions while maintaining the blockade. The so-called "seven-day plan" also includes a phased implementation framework. Iranian Foreign Minister Araghchi publicly explained that after the United States accepts the plan, relevant measures should first be implemented within four to five days, then navigation through the strait should resume on the sixth day, and negotiations on a final agreement should begin on the seventh day. Therefore, restoring navigation, starting negotiations, and reaching a nuclear agreement are three different stages. Before news of the rejection emerged, U.S. officials still described contacts through mediators as positive and constructive, which shows that both sides have retained channels of communication, but there is still a clear gap in their acceptance of specific conditions. Political and military constraints also make the subsequent path uncertain. Trump publicly stressed that handling the Iran nuclear issue will not be based on electoral interests; yet the military judgment privately described by U.S. government officials treats the period after the midterm elections as a possible window for action. At the same time, the United States also needs to weigh ammunition stockpiles and the needs of other potential conflicts. On the Iranian side, diplomatic efforts to seek relief from economic pressure coexist with the Revolutionary Guard's position of adhering to the original conditions and preparing to continue confrontation, further increasing the difficulty of securing internal support for the plan and implementing it. What investors need to watch is whether these positions can be translated into executable arrangements, and whether actual energy transportation through the Strait of Hormuz and the Bab el-Mandeb Strait, which has recently continued to face threats from the Houthis, can continue to recover. The historic high crude oil price of $100 is hard to exituncertainty over supply recovery is prolonging inflationary pressure The energy market is repeatedly pricing both "the possibility of a diplomatic breakthrough" and "the reality that supply remains constrained." On September 25, Brent crude futures settled down 2.1% at $104.32 per barrel; WTI fell 2.3% to $92.41. The decline that day was affected by factors such as ceasefire hopes and the possibility that the United States might restrict diesel exports. Therefore, the latest news that Trump rejected the proposal cannot be retroactively treated as the reason for that day's oil price increase. More noteworthy is that after the decline, Brent was still near a historic high above $100, which is enough to show that the market does not yet fully believe that Middle East energy supply can quickly return to normal. From the perspective of physical supply and demand, restoring shipping requires solving not only whether vessels can pass through the strait, but also port loading and unloading, insurance underwriting, transportation arrangements, and the restoration of upstream production. In its September outlook, the U.S. Energy Information Administration estimated that global oil inventories have already fallen by about 400 million barrels this year and expected Middle East export constraints to persist for some time, with regional crude production not returning to the pre-conflict average until the second quarter of 2027; the cutoff date for the data in this forecast was September 3. The decline in inventories means less buffer against supply shocks and also makes new attacks, changes in the blockade, and progress in negotiations more likely to trigger price volatility. At the same time, transportation alternatives beyond Hormuz are also affected by regional conflict. Houthi attacks on Saudi Arabia have increased market concerns about the safety of oil production facilities and export routes. The economic implication is that even if some crude oil can bypass Hormuz, alternative routes still need to operate stably in order to continuously ease global supply tightness. By extension, the prolonged failure to implement a ceasefire arrangement may extend the coexistence of high freight rates, high insurance costs, and inventory drawdowns, turning energy inflation from a short-term price shock into more lasting pressure on corporate costs and household purchasing power. From the heavy burden of energy inflation to rising long-dated U.S. Treasury yields Persistently high energy prices will have an impact on financial markets that is further amplified through inflation persistence and monetary policy expectations. The Federal Reserve announced a 25 basis point rate hike on September 16 as expected, raising the target range for the federal funds rate to 3.75%4.00%, and stressed that inflation remains elevated. What policymakers are really focused on is whether the energy shock continues to pass through to other goods, services, and public inflation expectationsthat is, once companies repeatedly pass on transportation and input costs, the market may raise the expected path of future policy rates while also demanding more compensation to hold long-term bonds. This pricing pressure is already reflected in long-end U.S. Treasuries with maturities of 10 years and above. On September 25, the 10-year U.S. Treasury yield briefly touched about 5.23% intraday, the highest since 2007, before falling to about 5.16% as oil prices retreated; the 30-year Treasury approached 5.53% intraday, the highest since 2004, and was later around 5.49%. Long-end yields are affected by both expectations for future short-term rates and the term premium, and cannot be attributed 100% to oil prices, but the slow recovery of energy supply does increase uncertainty around the inflation path. As the "anchor of global asset pricing," a 10-year U.S. Treasury yield that remains high will also further affect corporate financing, household mortgages, and equity valuations. From a theoretical perspective, the 10-year U.S. Treasury yield is equivalent to the risk-free rate indicator r on the denominator side of the DCF valuation model, an important valuation model in the stock market. If other indicatorsespecially cash flow expectations on the numerator sidedo not change significantly, for example during earnings season when the numerator side is in a vacuum period due to a lack of positive catalysts, then if the denominator level is higher or continues to operate in the historically extreme high range above 5%, the valuations of risk assets that are at historic highs, such as AI-related technology stocks, high-yield corporate bonds, and cryptocurrencies, face the threat of collapse. The dollar is also supported by relative interest rate expectations. A market snapshot on September 25 showed that traders priced about a 66% probability of a Fed rate hike in October, up from about 58% a week earlier; the dollar index fell that day to about 100.95 as oil prices retreated, but was still on track for a second consecutive weekly gain. This means that what the market is trading is not simply a single risk-off sentiment, but the combined effect of energy inflation, the U.S. interest rate path, and cross-border capital allocation. In terms of investment strategy, the support that high oil prices provide to energy companies' cash flows and the constraint that high interest rates place on other asset valuations may exist at the same time. For upstream energy companies with stable output, controllable costs, and reliable transportation channels, higher realized oil prices are expected to expand operating cash flow and provide room for debt repayment, dividends, and buybacks; for aviation, transportation, and some manufacturing industries, fuel and logistics costs directly enter the cost side. The main macroeconomic impact on technology and AI infrastructure companies is the rise in financing costs and the discount rate for future cash flows. Therefore, the most valuable points to watch going forward are whether actual transportation volumes through the strait continue to improve, whether inventories can stop falling, and whether inflation expectations and long-end yields ease in tandemthese variables will determine how the market reallocates valuations between energy stocks and AI infrastructure and computing-power-related growth stocks.