Iran seems to be winning the battle of the year against the United States, politically trapping Donald Trump and increasing the risks to the American economy. Liberal Global believes that the recent talks between Washington and Tehran not only did not lead to progress, but also highlighted the strategic impasse the United States has reached.
Tehran has chosen a strategy of prolonged decay, knowing that the U.S. government does not want a large-scale military operation similar to those in Iraq and Afghanistan.
The failure to reach an agreement in the contacts held in Switzerland last weekend further reinforced the feeling that Washington is failing to enforce its terms, while Iran appears determined to exhaust its opponent politically and economically.
War of Attrition Targeted at Trump
For us – The Liberal Globe – the Iranian leadership thinks that time works in its favor. War involvement is not particularly popular inside the US, and 2026 is a crucial political year due to the midterm elections. Therefore, every month that passes without a solution increases the pressure on Donald Trump.
We believe that Tehran is seeking to prolong the crisis as long as possible, expecting that the political cost will eventually become unbearable for the U.S. government.
Markets are afraid of inflation, not war
But beyond the geopolitical dimension, investors are mainly concerned about the economic consequences of a protracted crisis in the Middle East.
The market can absorb a temporary energy shock. But it cannot easily manage a long period of high oil prices.
Oil is a key cost factor for almost all economic activity and its rise gradually passes to transport, industry, production and ultimately to the consumer.
For its part, Trust Economics – Economics and Business Research firm- is turning its attention to the producer price index (PPI) in the US, which it considers a more reliable precursor to future inflationary pressures than the consumer price index (CPI).
The latest figures give rise to serious concern. In May 2026, the producer price index increased by 1.1% month-on-month, reaching 6.5% year-on-year, the highest level since November 2022.
Inflationary pressures are already accumulating in the U.S. economy, even before they are felt by the end consumer.
If the Iran crisis continues and energy prices remain high, the next wave of inflation may prove stronger than markets currently expect.
Warning from the bond market
At the same time, the bond market is sending out its own warning signals.
The yield on the US two-year government bond, seen as a key indicator of Federal Reserve interest rate expectations, is on the rise, a development traditionally associated with heightened inflation fears.
