• Barclays warns that market confidence in Trump’s policy stance is fading due to frequent reversals, creating "headline fatigue" and raising volatility risks.
  • The bank cautions that sustained tensions and higher oil prices could fuel stagflation, with slower growth and rising inflation into 2026.
  • Investors still expect gains, but may be underpricing the risk of prolonged conflict, as policy swings erode the perceived reliability of a safety cushion for equities.

Markets are losing confidence in former President Donald Trump’s support as constant policy reversals create what Barclays calls "headline fatigue," according to a recent note from the investment bank. The assessment highlights how shifting deadlines around Iran have briefly shaken oil, bonds, and equities, yet investors still anticipate gains—possibly underestimating the threat of extended geopolitical friction.

Barclays, one of the world’s largest investment banks, emphasizes that policy uncertainty is eroding the so-called "Trump put," a perceived market-supportive stance that has historically provided a cushion for equities. "Efforts to stabilize markets have hit a snag," one analyst familiar with the matter said, pointing to recent volatility in response to U.S.-Iran tensions. Without clearer direction, the bank warns, sustained uncertainty could keep risk premia elevated, complicating central-bank policy paths.

Oil markets have shown sensitivity to geopolitical headlines, with prices spiking on fears of supply disruptions from Iran-related sanctions changes, even without actual outages. This dynamic supports episodes of price increases that, if prolonged, could contribute to stagflation-like pressures—slower growth coupled with rising inflation into 2026. "What institutional investors are really focused on is regulatory stability," a source close to the discussions noted, echoing concerns about policy swings undermining economic forecasts.

In the short term, Barclays expects continued volatility as markets reassess policy clarity and geopolitical risk, with oil and rates likely to react to headlines and timing tweaks. Analysts stress that the reliability of a market-supportive policy stance depends on consistent messaging and execution, suggesting limited upside in equities if policy swings persist. Attempts to reach Barclays for further comment were not immediately successful.

Looking ahead, if volatility endures without a clear policy path, growth could slow while inflation remains stubborn, prompting a more gradual normalization for interest rates. The note implies that previous episodes of policy reversals and foreign-policy drama have led to intermittent rallies followed by sell-offs, creating a pattern of uncertain returns rather than a stable regime. As one market observer put it, "It’s much more of a convergence between risk-on and risk-off, keeping everyone on edge."

Correction: An earlier version of this article misstated the timeline for stagflation risks; Barclays projects potential impacts into 2026, not 2025.