The market is making a big bet on ending the Iran war

If endless Middle East wars were on the ballot, it's safe to say how it would have gone. Republicans are openly blaming the war for the midterm rout and the market is taking that at face value. The indication is that Trump will be forced out of Iran, and possibly soon. That will mean a reopened Hormuz and oil will be flowing again.The market is aggressively pricing it in with WTI down $7.69 to $88.39 today in one of the largest plunges of the war. The close was the lowest since August 31. Given the oil hit $105 late last week, that's a huge turn. It's a big drag for inflation too and you can see that in the Treasury market with yields down 3-6 basis points, though there are certainly puts and takes there with Democrats now looking like they're destined to hold the Senate for the next 4-6 years.I fear that a deal to end the war may prove difficult. Trump has been trying to extract the US from it for months with little success and I wonder how eager Iran will be to deal after the vote. If a deal is made, I also wonder how fast the oil can move and how quickly inventories can be rebuilt. Refineries are already running full-tilt and inventories have been drawn down heavily. Looking out the oil and gasoline futures curves, today's drops have been consistent so there is some real optimism there, but so many times during this war, that optimism has proven misplaced. There are leaks today about positive developments and there seems to be a deal on the table. The easiest thing right now may be for Trump to take what's available. His own party is likely to back any deal to extricate themselves from this blame game.There is talk of a pre-emptive Iranian strike at the moment but it's tough to believe they would let this moment to negotiate go to waste. This article was written by Adam Button at investinglive.com.