Things were on track for a rough start to the week amid the escalation of the Iran conflict that threatens global energy supplies. Then, soon after 7am ET, President Trump dropped an all-caps social media post that suggested that all will be fine, sending markets ripping.

The big picture: That's good news for today's prices of risk assets, but it speaks to a more tumultuous backdrop for global commerce that decision-makers across the global economy are only starting to recognize.

• In effect, an entity that has for generations been a source of stability in the world economy — the U.S. government — is now a source of chaos.

• These developments have had echoes of last year's on-and-off "Liberation Day" tariffs, though with vastly higher life-and-death stakes.

Catch up quick: In his post this morning, Trump said on Truth Social that "I AM PLEASED TO REPORT THAT THE UNITED STATES OF AMERICA, AND THE COUNTRY OF IRAN, HAVE HAD, OVER THE LAST TWO DAYS, VERY GOOD AND PRODUCTIVE CONVERSATIONS REGARDING A COMPLETE AND TOTAL RESOLUTION OF OUR HOSTILITIES."

• He said that based on the "TENOR AND TONE" of these conversations, he had postponed his previously issued threats of military strikes against Iranian power plants.

Yes, but: Iranian media denied any direct negotiations were underway and called Trump's statements "psychological warfare."

• Trump later told reporters that the U.S. is speaking to a "top person" in Iran, but not its supreme leader. Iran "very much wants to make a deal," he said.
• He said the Strait of Hormuz, which Iran has largely blockaded since the attacks, will be open very soon "if this works" and may be jointly controlled by him and the unnamed Iranian leader.

By the numbers: Despite the mixed evidence on how real these negotiations are, traders worldwide liked what they heard.

• Brent crude oil futures that were trading at around $113 per barrel before the post were under $100 immediately thereafter (and about $98 by midday).
• The S&P 500 was up 2.1% as of 11:30am ET.
• Global bond yields fell as investors priced in less inflation — and less risk of central bank rate hikes — ahead.

Between the lines: The surge in markets appears less a reflection of deep-seated confidence in the accuracy of Trump's proclamations than relief at the evidence that he is seemingly taking an off-ramp rather than escalating things further.

• If you're trading oil or stocks of the Asian nations that depend on raw materials shipped from the Persian Gulf, you don't really care about the finer points of whatever political arrangement results in Iran loosening its grip on the Straits.
• You just want the shipping lanes open, and if that means Trump proclaiming victory and backing away from threats to destroy Iranian power plants and deploy U.S. ground troops to try to reopen the straits, so be it.

Reality check: As of this morning, "it is impossible to tell whether this signals genuine progress toward an off-ramp for the war, or Trump zigzagging to buy time and keep oil from breaking out toward $150," Evercore ISI's Krishna Guha and Gang Lyu wrote in a note.

The latest global fallout from the U.S.-Israel-Iran war: skyrocketing borrowing costs in the U.K.

Why it matters: Yields on its benchmark government bond hit the highest level since 2008 — an uncomfortable surge for the nation that has seen a historic backlash from bond investors over its fiscal backdrop in recent years.

• It is also a global warning about a sharp repricing of inflation risk that can slam economies already grappling with higher energy costs.

The backdrop: British yields are higher now than they were at the height of the 2022 Liz Truss fiasco, when the nation's then-prime minister proposed a fiscal budget with billions of pounds in unfunded tax cuts.

• The difference now, of course, is the source of the panic — now, it has been triggered by inflationary concerns from a war it did not start and is not directly involved in, instead of domestic fiscal proposals.

Zoom in: The U.K.'s reliance on imported oil makes it especially vulnerable to the types of supply shocks that have been common in the 2020s.

• The surge in energy prices risks rippling through the British economy. It has heightened bets that the Bank of England will increase interest rates several times this year, a reversal from previous expectations of easier monetary policy.
• That's despite Bank of England chief Andrew Bailey's attempt to calm markets last week: "I would ​caution against reaching any strong conclusions about us ​raising interest rates," he told reporters on Thursday.

The bottom line: The bond sell-off is leaving the British government with even less headroom to maneuver through the crisis. The European Union is considering temporary measures to ease the burden on consumers.

• "[W]hat's happening now is a reminder that reckless fiscal policy leaves you vulnerable when unexpected shocks hit," Robin Brooks, a senior fellow at the Brookings Institution, wrote in a blog post over the weekend.

Go deeper: Washington ignored America's fiscal cliff