Donald Trump Rejects Iran Peace Deal and Launches Strikes

President Donald Trump rejected a peace offer from Iran based on a June memorandum of understanding, stating he intends to "hit them hard" instead. The expired MOU proposed an end to hostilities and sanctions, $300 billion in reparations, and a ban on nuclear weapons development in exchange for limited nuclear enrichment. While Iranian President Masoud Pezeshkian expressed readiness to reciprocate if the U.S. honored its commitments, the Trump administration instead authorized limited strikes over the weekend to degrade Iran's ability to target ships in the Strait of Hormuz.

The military escalation has led to immediate friction in the Strait of Hormuz. The Islamic Revolutionary Guard Corps claimed to have shot down a U.S. MQ-9 drone, while reports indicate a Saudi VLCC was struck by projectiles. Despite these incidents, Trump asserted that the strait remains in "extremely good shape."

The geopolitical instability has caused significant global economic volatility. Brent crude oil rose to $92 per barrel, and government bond yields spiked in the U.S., U.K., and Japan, with the U.S. 10-year Treasury yield reaching its highest level since January 2025. In response to the volatility, U.S. Treasury Secretary Scott Bessent urged Japanese officials to implement rate hikes, a suggestion the Japanese Ministry of Finance countered by stating that Bank of Japan policy must be driven by the domestic economy.