As tensions surrounding the Iran conflict escalate, US President Donald Trump has focused on steadying financial markets, aiming to prevent a sharp rise in oil prices, deeper stock market losses, and increasing borrowing costs. His approach has largely revolved around public messaging, with frequent statements suggesting the conflict could wind down soon.
When volatility has intensified, Trump has responded quickly with social media updates and public remarks, projecting optimism about market resilience. Despite a recent slide in equities and a surge in global oil benchmarks, he has maintained that the situation is not as severe as initially feared despite S&P 500 declining over the past five weeks and global oil benchmarks rising by roughly 60 per cent.
“I thought oil prices were going to go up higher than they are now,” Trump said at a Friday investor summit. “And I thought that we would see a bigger drop in stock. It hasn’t been that bad.”
While markets continue to react sharply to developments in the conflict, the administration has avoided directly addressing the economic strain on households, instead concentrating on limiting financial instability. Investors remain caught between hopes of de-escalation and fears of further escalation, creating a highly unpredictable environment.
Critics say messaging fails to address economic pain
Trump’s communication strategy has drawn scrutiny for sending mixed signals. In one instance, he spoke of progress in peace talks, while also warning of possible strikes on critical infrastructure if an agreement is not reached soon. This dual messaging has added to uncertainty in both financial markets and public sentiment.
The White House appears to view movements in stocks, energy prices, and bond yields as indirect indicators of public confidence. Trump has consistently linked his economic agenda to low fuel costs, strong retirement savings, and affordable housing loans. However, recent surveys suggest that public approval of his economic management and handling of the Iran situation has weakened.
Gene Sperling, a former economic adviser, argued that the administration’s approach overlooks the direct impact on citizens already facing higher fuel costs.
“Most advisers would say the president has to speak directly to the American people and fully acknowledge the economic pain that his policy has so directly caused in a short amount of time and make the case for why the national security concerns justify it,” Sperling said. “Instead, you have a strategy of not recognizing or even dismissing people’s economic pain.”
White House press secretary Karoline Leavitt, however, described the rise in oil prices as a temporary fluctuation. Still, analysts warn that repeated reassurances without visible improvement may be losing their effectiveness.
“The uncertainty is now soaring,” Sonnenfeld said. “As the messaging to calm markets with false reassurances is having diminishing credibility in financial markets, so, too, has Trump diminished public confidence.”
Policy flexibility clouds outlook as confidence weakens
Trump’s preference for maintaining flexibility in handling the conflict has made it difficult to present a clear roadmap, further unsettling markets. While he has alternated between signalling openness to negotiations and threatening further military action, this approach has left investors uncertain about future developments.
At the same time, officials have suggested that global oil supply disruptions may ease gradually, with some shipments continuing through key routes. Treasury Secretary Scott Bessent indicated that certain countries are negotiating temporary arrangements to maintain supply flows.
“We are seeing more and more ships go through on a daily basis as individual countries cut deals with the Iranian regime for the time being,” Bessent said. “But over time, the US is going to retake control of the straits, and there will be freedom of navigation, whether it is through US escorts or a multinational escort.”
Economists note that while markets initially reacted strongly to policy signals, their sensitivity to such messaging has diminished over time as underlying uncertainties persist.
“We saw a lot of the volatile market reactions initially, when he kept announcing these things and then walking them back,” Steele said. “The market reaction now is just a steady trend upward in prices,” he noted, adding that markets are “not responding to it in the same way anymore.”
Recent data also points to weakening consumer confidence, with concerns over rising fuel costs and market instability weighing on sentiment. Experts say a sustained improvement in economic conditions will likely depend on tangible developments rather than verbal assurances.
“The proof is in the pudding,” Faucher said. “People need to see some substantive improvements before they feel better about conditions.”