Analysts at Signum Global Advisors developed a mathematical formula to predict when President Trump would reverse course on military escalation with Iran.
The term “TACO,” short for “Trump always chickens out,” has become a widely used shorthand among market strategists tracking the president’s foreign policy pivots.
Signum analyst Andrew Bishop led a team that selected four core market indicators to build the predictive model around Trump’s known sensitivity to financial conditions.
The four components are Brent crude oil prices, the U.S. 10-year Treasury yield, vessel traffic through the Strait of Hormuz, and the S&P 500 Index.
The team used March 7 as its starting point, one week after the United States and Israel first carried out strikes against Iran.
Analysts then mapped Trump’s subsequent pivot to ceasefire negotiations on March 22, his acceptance of one on April 7, and his focus on a memorandum of understanding on May 18.
The data revealed that it takes a 2.3 to 3.4 standard deviation move in the model’s components for Trump to act, with an average threshold of 2.9 standard deviations.
Using linear extrapolation, the team forecast that “a TACO could happen as early as July 22 and ‘should’ happen no later than July 30 (unless conditions materially improve, which seems unlikely) — with history suggesting July 26 as most likely.”
That prediction proved broadly accurate when global markets opened the new week with a powerful relief rally tied to U.S. and Iran pausing military strikes for a second consecutive night.
The mutual pause stripped a significant geopolitical risk premium from energy markets, pulling Brent crude sharply lower while lifting bond prices and equity sentiment broadly.
The S&P 500 benefited from the improved risk outlook, as reduced fears of a wider Middle East conflict eased pressure on central-bank rate pricing.
Strategists cautioned, however, that diplomats described the lull as a tactical pause rather than a formal ceasefire agreement between the two sides.
Houthi forces continued attacking Saudi oil infrastructure through the weekend, complicating the picture for energy traders and regional security analysts alike.
The Strait of Hormuz also remained effectively closed to normal tanker traffic, meaning the full relief in oil markets could be short-lived if diplomacy stalls.
The Signum formula nevertheless demonstrates how closely financial markets are now tracking Trump’s historical pattern of pulling back from escalation under sustained market pressure.
