Axios

Iran's Parliament Speaker Mohammad Bagher Ghalibaf has emerged as a key figure in President Trump's push for peace talks with Tehran.

The big picture: Trump has pressed Iran to strike a peace deal as the war reaches its first month, but the regime has rebuffed and mocked the overtures. However, Ghalibaf has reportedly shown a willingness to engage.

Iran's military has taken a significant beating in the opening weeks of the U.S.-Israeli offensive — but Tehran continues to demonstrate a defiant disruptiveness.

The big picture: The U.S. is developing military operations for a "final blow," Axios' Barak Ravid reported, but some hypothetical next steps, like the use of ground forces, could risk intensifying the fight.

Secretary of State Marco Rubio told G7 foreign ministers on Friday that the war with Iran will continue for another two to four weeks, three sources with direct knowledge tell Axios.

Why it matters: This is the first time a senior U.S. official suggested the war would continue beyond the four to six-week timeframe President Trump has discussed since the war started.

The Iran war is sending longer-term borrowing costs surging amid prospects for higher inflation, fewer Federal Reserve rate cuts and more federal borrowing.

Why it matters: Higher rates create new pressure for an already-faltering housing sector, make the U.S. government's fiscal challenges worse and could weigh on business investment and consumers alike.

A hacktivist group that the U.S. has linked to back to Iranian intelligence services claims it has stolen "personal and confidential information" from FBI Director Kash Patel, including emails, documents and potentially confidential files.

Why it matters: The attack could be the most significant cyberattack of the ongoing war between the U.S., Israel and Iran, and could put an uncomfortable spotlight on Patel.

When the Iran war started, market analysts issued reassuring notes: Short-lived geopolitical shocks don't typically rattle the stock market, they said.

Why it matters: We're now into month two of conflict. Equities are wobbling, and investors are growing increasingly skeptical of President Trump's assurances.

Where it stands: The tech-heavy Nasdaq index is now down 11% from its record-high close on Oct. 29 — officially entering correction territory.

• The Russell 2000, an index tracking smaller companies, landed in correctionville last week.
• The S&P 500 has held up a bit better, but it's down 7.2% from its closing high.

Catch up quick: Minutes after the market closed Thursday, Trump posted that he was extending the deadline for Iran negotiations.

• "As per Iranian Government request, please let this statement serve to represent that I am pausing the period of Energy Plant destruction by 10 days." That would bring his latest deadline to Monday, April 6.

The latest: That statement didn't calm the markets for long. Oil prices spiked to around $110 a barrel when the market reopened.

• "While the delay might reduce some of the immediate escalation risk, it offers no new visibility on the path toward resolution," Deutsche Bank analysts wrote in a note this morning.

The big picture: If the market does take a another leg down, the effects on American households would be more pronounced than in previous oil price shock moments.

• Nearly 40% of household wealth in the U.S. is tied up in stocks — compared with about 10% during the 1990 oil price shock, UBS economist Arend Kapteyn said in a note yesterday.
• That means Americans would be hit with a double whammy from the geopolitical conflict: higher energy prices and lower brokerage account balances. That in turn would be a drag on overall economic growth, as households cut back on spending.
• It would also be another downer to the consumer mood.

Zoom out: The stock market doesn't typically take kindly to long periods of high oil prices stemming from Middle East Conflict.

• Over the past 50 years, there were nine oil price shocks, where prices rose 20% or more, according to an analysis from Joe Seydl, a senior markets economist at JPMorgan Private Bank.

Zoom in: Four of those shocks led to a selloff in stocks — an S&P decline greater than 10%:

• The 1973 oil embargo, the Iranian hostage crisis, the 1990 Gulf war and the Russian Invasion of Ukraine in 2022.
• In each case, oil prices rose more than 50%.

Stunning stat: The price of Brent crude is up nearly 40% from the beginning of the war.

Yes, but: It's not just the oil price that triggered the selloff, Seydl writes. Each of those selloffs coincided with either a recession in the six months after the shock or Federal Reserve interest rate increases.

• The past doesn't predict the future.

What to watch: Weekend postings by Trump. The president has had a tendency to escalate the conflict with Iran with social media posts on Saturdays and Sundays that in turn has driven a lot of market volatility.

Vice President JD Vance is preparing to take on the most important assignment of his career: steering U.S. efforts to end a war he'd been concerned about waging in the first place.

Why it matters: Vance has already had multiple calls with Israeli Prime Minister Benjamin Netanyahu, met Gulf allies about the war and been involved in indirect communications with the Iranians. He's expected to be the top U.S. negotiator in potential peace talks.

China's emergence as a second hub of pharmaceutical innovation could trigger massive changes to the global drug market, including how treatments are regulated and priced in the U.S.

Why it matters: More cutting-edge therapies are generally a good thing for patients, regardless of where they come from. But the new world order could spark questions over who'll access those therapies and where money flows.

The White House and the Pentagon are considering sending at least 10,000 additional combat troops to the Middle East in the coming days, according to a senior U.S. defense official.

Why it matters: If the Trump administration decides to send extra troops, it will significantly increase the number of combat soldiers the U.S. has in the region. It is another signal that a U.S. ground operation in Iran is being seriously prepared.

President Trump's political team is meeting with his Cabinet late Thursday to discuss plans for top officials to fan out across the country to stress what the administration is doing to help the economy, sources tell Axios.

Why it matters: Trump's team believes the economy — above all other issues, including any anxiety over the president's actions on Iran or immigration — will drive voter sentiment heading into the November elections.

President Trump extended the deadline for negotiations with Iran and paused his threat to bomb Iranian energy facilities by another 10 days.

Why it matters: The Trump administration through a group of mediators, Pakistan, Egypt and Turkey, has asked Tehran to hold a high-level meeting this week to discuss a U.S. proposal for ending the war.

President Trump is considering a range of options for military escalation with Iran, several of which center around strategic islands in the Persian Gulf.

Why it matters: The importance of the islands comes from their proximity to the Strait of Hormuz, a critical energy chokepoint, and in some cases their role in Iran's own oil industry or military defenses. But taking and holding Iranian territory would be far riskier than anything the U.S. has attempted thus far in the war.

House Democrats chose not to force a vote this week to block President Trump from unilaterally waging war with Iran in part out of fear that they still lacked the votes to pass the measure, Axios has learned.

Why it matters: The move is frustrating the Democratic grassroots, with some progressive groups and lawmakers fuming over the fact that another vote won't be possible until mid-April.

President Trump said Wednesday he won't call the conflict in Iran a "war" because "you are supposed to get approval," suggesting the label itself could trigger congressional authority the administration says it doesn't need.

The big picture: But the fiery operation has been widely characterized as a war (one that's cost hundreds of lives and billions of dollars), including by the president himself as recently as Thursday.

The U.S. Postal Service is seeking to add its first-ever fuel surcharge on packages — an 8% increase — as oil and diesel prices surge.

Why it matters: The Iran war is now pushing up shipping costs — and retailers and consumers are next in line to feel it.

The International Olympic Committee said Wednesday it is banning transgender women from competing in the female category, while also instituting DNA-based sex testing for all female athletes.

Why it matters: The move revives sex testing, which was previously dropped in part due to the emotional distress inflicted upon female athletes who discovered their biological makeup was actually more complicated than they were aware of.

Rep. Nancy Mace (R-S.C.) told Axios she will "most likely" vote for House Democrats' resolution to constrain President Trump from waging war with Iran the next time it comes up for a vote.

Why it matters: The vote is symbolic — even if the measure passed both chambers, Trump could veto it — but Mace's support puts the House one step closer to a major rebuke of the administration's Middle East operations.

HOUSTON — The stunning Middle East supply disruption could lower hurdles to building a long-planned Alaskan gas pipeline and export project that the White House covets.

Why it matters: "That's probably our single most important energy infrastructure project of this whole administration," Energy Secretary Chris Wright said at CERAWeek on Tuesday.

President Trump on Thursday called on the Iranian regime "to get serious soon" in negotiations with the U.S. "before it is too late."

Why it matters: The Trump administration through a group of mediators — Pakistan, Egypt and Turkey — has asked Iran to hold a high-level meeting this week to discuss a U.S. proposal for ending the war.

At a Senate hearing earlier this month, economist Martha Gimbel compared a wonky thing, the U.S. Treasury market, to something very relatable, a Hallmark rom-com.

Why it matters: She hit at the essence of what's confounding experts in government debt:

• Why haven't bond investors penalized the U.S. for its erratic policymaking and weakening institutions by meaningfully driving up the country's borrowing costs?

The big picture: Gimbel and other experts believe that the answer is that there's not yet a good alternative to the enormous market for Treasurys, so investors stick with the "cleanest dirty shirt."

• "People think that U.S. Treasurys are the only large safe asset, so people are still buying them," Ugo Panizza, an economist and director of the International Center for Monetary and Banking Studies, told Axios earlier this year.

The U.S. is "currently the boyfriend at the beginning of the Hallmark movie in the big city, where the girlfriend is still going out with him, even though she knows that it's wrong," Gimbel, executive director of the Yale Budget Lab, put it.

• "But at some point, it, she's going to go home to the small town and find the nice firefighter and realize that there's another option."
• "And we don't know when that will happen."

Between the lines: Metaphors are good for getting people's attention on issues that are hard to grasp.

• Gimbel even got a laugh out of the room — no small feat at a hearing before the Senate Subcommittee on Fiscal Responsibility and Economic Growth.

What to watch: If investors ever find a better option than Treasurys, that would be a huge problem given that we are borrowing a lot of money right now.

The latest: The energy shock driven by the Iran war has helped drive up the yields on U.S. debt.

• The MOVE Index, which tracks volatility in the Treasury market, is spiking above its 52-week average — as it has during other moments of economic shock.
• "Investors' concerns include an unsustainable American fiscal position, rising inflation risk and a growing uncertainty about war," RSM chief economist Joseph Brusuelas wrote in a note Wednesday.

How it works: There are reasons for investors to be wary of buying sovereign debt.

• Governments are hard to sue, and it's difficult to enforce your claims against them.
• "They can do things that private companies can't, like pass laws and inflate their currencies," Panizza and University of Virginia international law professor Mitu Gulati explained in a piece for Reuters last summer.

Zoom out: That's why the countries that attract the most investors are the trustworthy ones with strong institutions. They are rewarded with lower borrowing costs.

• 17th-century England is the textbook example. It was able to borrow more because it had effective institutions that checked the king's temptations, per a well-known paper from 1989.
• This helped the country become a superpower.

What they're saying: The U.S. is still considered exceptional among investors, says Layna Mosley, a professor of politics and international affairs who directs the Princeton Sovereign Finance Lab.

The bottom line: Investors still see the U.S. as the safest bet around, but if ever a new hometown hottie materializes — watch out.

The Pentagon is developing military options for a "final blow" in Iran that could include the use of ground forces and a massive bombing campaign, according to two U.S. officials and two sources with knowledge.

Why it matters: A dramatic military escalation will grow more likely if no progress is made in diplomatic talks and, in particular, if the Strait of Hormuz remains closed. Some U.S. officials think a crushing show of force to conclude the fighting would create more leverage in peace talks or simply give Trump something to point to and declare victory.