Smart Pips

#HassettOilDropFedRateCutRoom 🛢️ Could an Iran Deal Unlock Fed Rate Cuts? White House advisor Kevin Hassett suggested energy prices could drop “significantly” once a deal with Iran is reached — and President Trump confirmed on social media that nuclear talks with Tehran are progressing in an “orderly and constructive” manner. The logic: Iran’s potential reopening of the Strait of Hormuz (a critical shipping lane whose blockage has been inflating energy prices), combined with possible production hikes from Saudi Arabia and the UAE, could push oil prices meaningfully lower. 🏦 The Rate Cut Case — Step by Step 1. Energy is driving inflation — Core CPI (ex-food & energy) remains relatively contained. April’s headline CPI came in at 3.8%, largely energy-driven. 2. Oil already dipped — On Monday, crude fell ~$5/barrel to $98.76. If that trend continues, inflation pressure eases. 3. Lower inflation = Fed room to act — Hassett argued the Fed would have “a lot of room to do the right thing with lower rates” under this scenario. ⚖️ Not Everyone Agrees Some traders are still pricing in potential rate hikes by late 2026 — a sharp contrast to Hassett’s optimism. Notably, Hassett also emphasized respect for Fed independence and praised newly appointed Fed Chair Kevin Warsh. Bottom line: If an Iran deal materializes and oil drops, the macro narrative could shift fast — watch energy prices as a leading indicator for rate cut expectations.