A U.S.-Iran Peace Agreement Appears Imminent as U.S. Inflation and Interest Rate Pressures Intensify

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Summary:

The final draft of the U.S.-Iran agreement has reportedly been completed and could be announced within hours; Barkin said repeated supply shocks are testing the anchoring of inflation expectations...

Key Highlights

1. Trump again threatens Iran to hand over enriched uranium, saying it may be destroyed once obtained

2. Iranian Foreign Ministry: The current focus of negotiations is ending the war on all fronts

3. The final draft of the U.S.-Iran agreement has been completed and may be announced within hours

4. U.S. mortgage rates rise to the highest level since August as the war fuels inflation

5. The United States may need to refund $149 billion in tariffs

6. Barkin: Repeated supply shocks are testing the anchoring of inflation expectations

Detailed News

Trump Again Threatens Iran to Hand Over Enriched Uranium, Says It May Be Destroyed

Speaking to reporters at the White House on May 21, U.S. President Donald Trump said Iran must surrender its stockpile of highly enriched uranium, adding that the United States would likely destroy it once obtained. Negotiations between Washington and Tehran are ongoing, and the outcome remains uncertain. Trump has repeatedly threatened Iran over its enriched uranium stockpile. According to U.S. media reports on May 10, Trump stated that the United States has been monitoring Iran’s enriched uranium buried beneath rubble, with the U.S. Space Force overseeing the operation.

Iranian Foreign Ministry: Current Negotiation Focus Is Ending the War on All Fronts

On May 21 local time, Iranian Foreign Ministry spokesperson Baghaei said in a media interview that the current priority of negotiations is ending the war across all fronts, including Lebanon. He described media speculation surrounding nuclear issues, including debates over enriched uranium, as unreliable conjecture lacking credibility. He added that accurate information regarding the negotiations would be provided by authorized officials and spokespersons from the negotiating team.

Final Draft of the U.S.-Iran Agreement Completed, Announcement Expected Within Hours

According to reports, with mediation from Pakistan, the final draft of the U.S.-Iran agreement has been completed and is expected to be announced within the next few hours. The draft reportedly includes an immediate and comprehensive ceasefire across all fronts; mutual commitments not to target infrastructure; guarantees of freedom of navigation in the Persian Gulf and the Strait of Hormuz under a joint monitoring mechanism; the gradual lifting of sanctions on Iran in exchange for compliance with the agreement; and negotiations on unresolved issues to begin within a maximum of seven days.

U.S. Mortgage Rates Rise to Highest Level Since August as War Fuels Inflation

U.S. mortgage rates surged this week to their highest level since August, threatening the recently improving spring housing market. Freddie Mac reported on Thursday that the average rate on a 30-year fixed mortgage jumped from 6.36% to 6.51%, marking the largest weekly increase since late March. The housing market has been constrained by geopolitical tensions, as the Iran conflict has driven up oil prices, inflation, and bond yields. The yield on the 10-year U.S. Treasury remains near a one-year high, while the 30-year Treasury yield is approaching levels not seen since 2007.

Analysts who had previously expected the Federal Reserve to cut rates are now weighing the possibility of rate hikes. Even so, the market has shown greater resilience than expected. The National Association of Realtors said Tuesday that pending home sales rose for a third consecutive month in April. Data from Realtor.com showed that both new listings and signed contracts reached their highest levels since 2022. Compared with the weak spring market last year, homebuyers at least no longer face the average mortgage rate of 6.86% seen a year ago.

United States May Need to Refund $149 Billion in Tariffs

Trump claimed on Thursday that, depending on an upcoming Supreme Court ruling, the U.S. government may have to refund as much as $149 billion in tariffs. He said the administration is awaiting the Court’s decision and reiterated that previous tariff rulings had been extremely damaging to the United States. Trump argued that the issue could have been avoided with clearer legal wording. He also stated that the White House is exploring alternative methods of imposing tariffs, emphasizing that tariffs remain an important source of fiscal revenue and help strengthen the U.S. economy.

Barkin: Repeated Supply Shocks Are Testing the Anchoring of Inflation Expectations

Richmond Fed President Thomas Barkin said in remarks on Thursday that the ability of businesses and consumers to absorb the latest round of supply shocks will determine whether the central bank can continue to tolerate higher inflation without resorting to rate hikes. He noted that inflation has remained above the Fed’s 2% target for more than five consecutive years, raising concerns about whether the cumulative effects of repeated shocks could loosen the “anchor” of inflation expectations.

Barkin added that there is growing concern the United States may be entering a new phase in which supply shocks become more frequent. These shocks could stem from multiple factors, including heightened geopolitical tensions, fragmentation of the global trading system, increasingly extreme weather events, rising government debt, and other structural forces.

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