By Jules Rimmer
Signum Advisors predicted a policy pivot on Iran last week. Then hostilities were paused this weekend.
An uneasy truce looks in recent days to have settled over the Persian Gulf region.
Signum Global Advisors, a geopolitical-risk consultancy, created a mathematical formula to quantify the propensity of President Donald Trump to pivot on policy – or, as the markets commonly refer to it, TACO, the acronym for “Trump always chickens cut.”
Using the consultant’s calculations, a reversal in the U.S. bombing campaign on Iran was forecast to occur between July 22 and July 30.
Over the weekend, an uneasy ceasefire established itself across the Persian Gulf, suggesting Signum’s theories had been borne out and validated by events. As a consequence, oil prices (BRN00) have plummeted 10%, U.S. Treasury yields have declined and stock-market futures (ES00) have rallied ahead of Monday’s opening on Wall Street.
The formula derived by Signum’s analysts weighted a variety of components including the market price of Brent crude oil, the S&P 500 SPX, 10-year Treasury yields BX:TMUBMUSD10Y and the number of crossings through the Strait of Hormuz to ascertain the likelihood of a Trump de-escalation.
Last week pressure mounted on the White House as Brent topped $100; the S&P 500 tracked lower; and, most alarmingly, the real yield on the U.S. 30-year BX:TMUBMUSD30Y, or long, bond reached 3%. For a notoriously market-sensitive president like Trump, the implications for the midterm elections in November were inauspicious, and it now appears he has bowed to the dictates of risk assets and taken a step backward.
In an update to previous analysis for clients sent out Sunday, Signum noted that on Wednesday the index had broken through the previous precedents for a TACO on March 22, May 18 and June 11, and the risk consultancy observed that, according to Axios, “Trump’s mindset began to change on Thursday evening.”
Last Wednesday, the index created by Signum signaled a possible change in policy direction toward the conflict with Iran.
Andrew Bishop’s base case remains that a face-saving compromise will be achieved by the U.S. and Iran. Bishop, global head of policy research at Signum, predicts the tacit agreement may allow the U.S. to claim that Iran will (a.) not shoot at any ships (emphasis his) and (b.) not levy any tolls, while, however, allowing Iran to create “a consequential precedent of visibility and management of Hormuz shipping flows.”
The TACO trade developed as a trope in the markets in 2025, after a series of high-profile episodes of brinksmanship from Trump, most notably surrounding the imposition and then deferment of his “liberation day” tariffs.
-Jules Rimmer
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