Good morning! Today started interesting as we saw national addresses from Albanese (Australian PM), Starmer (UK PM), ahead of Trump that is expected to speak at 9PM ET. Both PMs were rather vague when it comes to their message, but at the same time both highlighted that difficult times are coming and announced some energy tax cuts to lessen the pain.
From our point of view this screams escalation. Both PMs look like they tried to front-run Trump's address, expecting bad news.
With that in mind, let's look at prediction markets.
Iran Tracker
#1 The Ceasefire
Ceasefire chances remain stable at 36% and 52% for end of April and end of May respectively.
A lot depends on next actions from the US as traders expect either a quick operation, followed by an exit with a claim of victory or a major escalation that would indicate we have months of fighting ahead.
For now, the only good news is that China seems to have gotten involved in the peace process, which is probably why the Yes price remains fairly high despite hawkish messaging from the US.
#2 The Strait Of Hormuz
The Strait of Hormuz remains effectively closed, but traders are still bullish we will see 20+ ships passing it in a single day by the end of the month.
It is in Iran's interest to resume traffic - for one, it (barely) sustains the global economy while imposing massive costs, but more importantly it affirms its control of the strait. And with each day passing, traders are less and less bullish on the US escort operation. Seems like the current consensus is some other type of operation that would give the US leverage over Iran:
Energy is flat due to the general uncertainty, however take a look at Urals price. It's way above Brent and WTI now, showing that Asian countries are keen on tapping Russian oil, as its composition (API gravity and sourness) is very similar to the Gulf oil:
#3 Boots On The Ground
Chances for the US forces to enter Iran dropped significantly as traders were expecting an imminent announcement.
However, even more troops are moving to the region as we are awaiting Trump's address. It is a classic spike we see on all geopolitical markets. Traders are starved for a definitive information and any lack of momentum in the media immediately tanks the Ys price. That being said, the situation on the ground now is even more indicative of an imminent US action on the ground.
And everything points to it not being Kharg Island:
#4 Regional Expansion
UAE inched above Saudi Arabia in countries that are most likely to join the war, based on recent reporting on its willingness to engage and lack of rumors from Saudi Arabia.
However, both countries moved lower, most likely on lack of coordination from the US. Usually, the US was open when waging war and often it gathered a wide coalition of countries to give its action legitimacy. Trump operates differently, which often leads to alienation, unless others are forced to join.
We also see a general drop in regional escalation markets, however we believe the strong downward move is an overreaction of the market on confusing messaging from the US as ceasefire markets stayed flat:
#5 Iran Regime Fall
Lastly, Iran regime fall market moved close to our fair value assessment as recent messages from the US indicate they might resign from their goal of regime change.
Maybe our message of Iranian resilience finally hit the White House. We wil nevertheless continue to monitor the situation on this market.
Wrap up
That's all for today. We are awaiting Trump's announcement as well as the long weekend. We hope for the best, but prepare for the worst.
Make sure to follow prediction markets live to get fresh information on the conflict. Stay strong and see you tomorrow for another Morning Brief!
This is not official investment or life advice. Do your own research. This are only my opinions and I encourage anyone to do their own research before putting any money anywhere.