Beware of the "Ceasefire Bounce" Trap! Strategist: Iran Unlikely to Accept Deal, Recommends "Sell on Rallies"!

Rumors of a ceasefire negotiation between the US and Iran have boosted risk assets, but analysts warn that the likelihood of Iran accepting the agreement remains doubtful. Even if an agreement is reached, the damaged fundamentals of the global economy will limit the rebound potential.

According to CCTV News, the US has proposed a ceasefire plan with 15 items, claiming Iran has made concessions on some key terms. Following the announcement, Brent crude futures fell from Tuesday’s high of $105 per barrel to below $100, while US stock futures and Treasury prices rebounded in sync.

However, market optimism may be premature.

Peter Tchir of Academy Securities believes that Iran has little motivation to accept a ceasefire, and the substantial damage to the global economy—including rising recession risks in Asia and Europe, and potential deterioration in employment and private credit markets—will not dissipate simply because of a ceasefire agreement. His conclusion: “Short this rally on rallies.”

Ceasefire Framework: Trump Calls Negotiation Results a “Regime Change”

The political background of this ceasefire proposal warrants attention. In his latest statement, Trump explicitly claimed that Iran has effectively undergone a “regime change” since many senior leaders have been killed—regardless of who the negotiation counterparts are.

Tchir points out that this statement has strategic significance. He sees Trump as someone who tends to frame every outcome as a “victory”—from the “tariff day” to Greenland issues. This ceasefire proposal can also be seen as a “trial balloon”: if domestic opinion views it as a victory, the government can push forward and move on. The public opinion in the coming days will largely determine Washington’s next move.

This logic corresponds to the market’s so-called “TACO” (Trump Always Chickens Out) versus “TAW” (Trump Always Wins) narratives. Tchir believes understanding the switch between these two frameworks is key to assessing the current geopolitical risk premium.

It Still Takes 2 to 4 Weeks to Reopen the Strait of Hormuz

From a military perspective, several members of Academy Securities’ Geopolitical Intelligence Group (GIG) agree that it will take approximately 2 to 4 weeks for US forces to likely reopen the Strait of Hormuz.

GIG compares the current conflict phase to the final stage of a scripted football play—both sides are executing pre-planned objectives, with the US holding a dominant position. Currently, the US military has achieved “air supremacy” (above air superiority), and this advantage is unlikely to disappear within 30 days.

The main limiting factor is troop deployment time. Marines from Japan are en route, the “Boxer” amphibious assault ship has shifted to the region, and more airborne units and ships are assembling. It will take time for these forces to arrive and form a complete fighting force.

What Does a Ceasefire Mean for Iran?

The strategic value of a ceasefire for the US is relatively clear: use the 30-day window to complete resupply, strengthen deployments, and allow global markets to build energy reserves, thereby weakening Iran’s economic leverage.

However, whether Iran will accept is far from straightforward. Tchir lists core dilemmas Iran faces from a “red team” perspective:

First, Iran has suffered two strikes during the “negotiation period,” giving Tehran ample reason to doubt the credibility of any ceasefire agreement;

Second, after 30 days, US forces will be stronger, and global energy reserves will be more ample, further diminishing Iran’s economic deterrence;

Third, if key members of the Islamic Revolutionary Guard Corps (IRGC) lose power, they face severe personal consequences, reducing their incentive to compromise;

Fourth, Iran may believe that ongoing global trade disruptions will eventually force the US to offer better terms.

Notably, Iran recently launched missiles with ranges exceeding previously publicly acknowledged levels, indicating it still maintains certain strategic reserves.

Market Impact: Limited Rebound Space, Fundamental Worries Persist

Even if the ceasefire is finalized, Tchir believes the upside for the market’s rebound will be limited.

The reason is that geopolitical conflicts have already caused tangible damage to the global economy: high energy prices erode consumer and business purchasing power, recession risks in Asia and Europe continue to rise, and the US is not fully insulated—one domestic homebuilder CEO has cited Middle East conflicts as a headwind for home sales.

Meanwhile, structural issues like employment market pressures and private credit risks, which were already present, are quietly worsening amid the headlines of Iran tensions.

Tchir concludes that the rally driven by ceasefire news is more suitable as a window for reducing positions or shorting rather than chasing gains. The market’s near-zero reaction to the Strait of Hormuz reopening forecasts suggests a silent consensus that the fundamental outlook remains cautious.