Is a US-Iran Ceasefire Difficult? Wall Street Warns: Iran Conflict Different from "Trade War" - Far More Complex Than Imagined!

On Monday, as U.S. President Trump hinted at progress in ending the war with Iran, markets rebounded sharply. However, even with signs of easing in the U.S.-Iran conflict, market professionals still believe the situation is complex.

Citadel Securities, a top market maker on Wall Street, believes that the U.S.-Iran war is more complicated than the market perceives, and investors may be underestimating its impact.

Nohshad Shah, Head of Fixed Income Sales for Citadel Securities in Europe, Middle East, and Africa, previously pointed out that the market is overly complacent when assessing the risks of escalating geopolitical tensions. In a report on Monday, he further emphasized that investors should not view the current conflict as a simple geopolitical shock.

Shah specifically noted that holding a particular belief during such highly uncertain times is dangerous.

“Recently, investors have become accustomed to downplaying geopolitical shocks and are relatively optimistic about the impact of this current conflict… This mindset is based on the assumption that President Trump can end the war at any time and withdraw. In my view, this is a misjudgment,” he wrote.

Shah compared the current Iran conflict to the broad tariffs measures implemented last year, adding that this war differs from other events that caused market panic because it involves multiple parties. Trump can revoke tariffs imposed on many U.S. trading partners at any time; however, ending the Iran conflict requires consensus among multiple parties.

According to reports from CCTV News and other media, U.S. President Trump posted on social media platform “Real Social” on Monday that, “The U.S. and Iran have had very good and productive talks over the past two days.” But Iran publicly denied having negotiations with the U.S.

This precisely confirms Shah’s view: Trump cannot easily extricate himself from this conflict and expect its impact on the global economy to stop.

Shah also emphasized that Iran may lack the motivation to quickly reach a ceasefire agreement with the U.S..

“For Iran, this is a life-and-death conflict,” he pointed out. “Therefore, even if it cannot last for years, Iran has a strong incentive to sustain months of asymmetric warfare. Despite being militarily weaker, Iran has proven it can cause enough damage with astonishing efficiency to trigger widespread economic chaos. This raises the bar for any ceasefire agreement.”

Many prominent figures in the economy and finance sector have highlighted the broad economic impacts of the Iran conflict, almost all of which are negative. U.S. leading economist and 2008 Nobel laureate Paul Krugman recently warned of rising stagflation risks, while Moody’s chief economist Mark Zandi said that soaring oil prices could push the U.S. economy closer to recession.

Shah stated that investors should evaluate this conflict from a macro perspective to fully understand its implications for the global economy. He sees a dangerous new situation for markets: Trump is caught in a conflict he cannot easily extricate himself from, and other countries may also lack the motivation to quickly end the war.

“Although the strategic logic of escalating the war is gradually breaking down, both sides continue to escalate because the costs of compromise—whether political, military, or psychological—are continually rising,” he said.

In fact, at the early stages of the U.S.-Israel-Iran conflict, Wall Street strategists warned against relying on so-called “Trump put options” regarding Iran. One reason they cited is that war is different from trade wars; once it starts, it’s difficult to press the “pause” button.

Bob Elliott, Chief Investment Officer of New York-based investment firm Unlimited, said at the time: “As the famous saying goes, once a war begins, it develops on its own momentum. The impact and pain in the market today are not as easily managed as during the liberation period. Back then, President Trump had almost complete control over policy choices.”