Why market pros think Trump's latest Iran-war turnaround won't be a TACO trade moment

• Oil prices fell on Monday and stocks rose after Trump said he had "productive" talks with Iran.
• Markets are hoping this could be the TACO-trade moment in the war, but the reality is complicated.
• Experts say Trump can't easily walk back the Iran war and reverse its disruptive impacts.

Oil prices tumbled on Monday after Trump called off strikes on Iran's energy infrastructure, saying there had been "productive" talks between the US and Iran.

The president's Truth Social post reignited investors' hopes that there's a simple off-ramp for the US from the conflict in the Middle East. The gains in stocks following Trump's remarks could signal the TACO trade is in play, but market experts think the reality is more complicated.

TACO, shorthand for Trump Always Chickens Out, proved to be a reliable way to navigate the president's trade-war threats, but real war is different. Here's why market pros think that Trump's cooler Iran rhetoric on Monday isn't a TACO moment.

War is a two-way street

For one, reestablishing stability in global energy markets cannot be done through a post on social media.

Oil prices saw double-digit percentage declines on Monday after Trump's post.

Following Trump's post around 7:20 a.m. ET, Iranian state media denied any talks had taken place, reminding investors that the outcome of the Iran war cannot be decided by Trump alone.

"No conversation has taken place between Iran and the US, and Trump's claim about having these talks is #false. Trump's false claim an attempt to #escape his recent threat on Iran's power infrastructure. Iran's stance on the Strait of Hormuz has not changed."

Just before noon, Mohammad Bagher Ghalibaf, speaker of the Iranian parliament, also denied Trump's claims in his earlier post.

"No negotiations have been held with the US, and fakenews is used to manipulate the financial and oil markets and escape the quagmire in which the US and Israel are trapped," the Iranian politician posted.

The Kobeissi Letter said that Monday's news on the potential for Iran talks followed a pattern similar to Trump's negotiations with China, which fueled the TACO trade amid last year's trade war.

They cited the China trade deal reached in May 2025, explaining that after markets hit a pain point—in this case, the 10-year Treasury yield rising above 4.45% at the end of April—Trump said China and the US were negotiating. Beijing denied that negotiations occurred, but weeks later, a tariff agreement between the two nations was announced.

"We believe Trump is following the same playbook now," The Kobeissi Letter said in a Monday post, adding , "That said, volatility will persist until there is a clear agreement in place, and broader market normalization after this historic shock will take months."

Trump has more problems than a resolution with Iran

Marko Kolanovic, JPMorgan's former quant lead, said Monday's events are a "net negative for markets." He explained, "Manipulation will cause liquidity to disappear and real problems will stay."

Following the mixed messages from the US, Iran, and third parties, Kolanovic said investors should narrow their focus to whether oil is flowing through the Strait of Hormuz.

The ex-JPMorgan quant said that Monday's update did not justify the sharp move down in oil prices.

There's no easy off-ramp for Trump

Investing legend Mohamed El-Erian highlighted that, despite what markets might want, there isn't a simple way for Trump to back out of the war in Iran.

"Many in the markets appear to believe that the US can immediately impose its will on the other two warring parties—Iran and Israel," he wrote. "I suspect it may not be that easy, especially at this stage of the War," El-Erian added.

Joseph Brusuelas, chief economist at RSM, said that even if Trump were able to negotiate a resolution, it will take months for oil and gas prices stabilize and investors should still expect them to be higher than prewar levels.

"It is important to note that when the conflict ends the tap of oil and refined products will not just be turned back on," Brusuelas explained.

Indeed, Qatar said that nearly one-fifth of the country's liquefied natural gas production could be offline for years following strikes by Iran.