{"id":59113,"date":"2026-02-25T13:08:32","date_gmt":"2026-02-25T17:08:32","guid":{"rendered":"https:\/\/stockmarketwatch.com\/stock-market-news\/geopolitical-tensions-escalate-as-iran-warns-us-feds-schmid-defends-independence-amid-balance-sheet-shift\/59113\/"},"modified":"2026-02-25T13:08:32","modified_gmt":"2026-02-25T17:08:32","slug":"geopolitical-tensions-escalate-as-iran-warns-us-feds-schmid-defends-independence-amid-balance-sheet-shift","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/geopolitical-tensions-escalate-as-iran-warns-us-feds-schmid-defends-independence-amid-balance-sheet-shift\/59113\/","title":{"rendered":"Geopolitical Tensions Escalate as Iran Warns US; Fed&#8217;s Schmid Defends Independence Amid Balance Sheet Shift"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"#\" data-href=\"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/geopolitical-tensions-escalate-as-iran-warns-us-feds-schmid-defends-independence-amid-balance-sheet-shift\/59113\/#Key_Takeaways\" >Key Takeaways<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"#\" data-href=\"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/geopolitical-tensions-escalate-as-iran-warns-us-feds-schmid-defends-independence-amid-balance-sheet-shift\/59113\/#Iran_Warns_of_Strategic_Shift_Toward_%22Fierce_Retaliation%22\" >Iran Warns of Strategic Shift Toward &quot;Fierce Retaliation&quot;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"#\" data-href=\"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/geopolitical-tensions-escalate-as-iran-warns-us-feds-schmid-defends-independence-amid-balance-sheet-shift\/59113\/#Feds_Schmid_Defends_Independence_and_Outlines_Balance_Sheet_Future\" >Fed\u2019s Schmid Defends Independence and Outlines Balance Sheet Future<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"#\" data-href=\"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/geopolitical-tensions-escalate-as-iran-warns-us-feds-schmid-defends-independence-amid-balance-sheet-shift\/59113\/#Ukraine_Engages_Trump_Envoys_Ahead_of_High-Stakes_Geneva_Talks\" >Ukraine Engages Trump Envoys Ahead of High-Stakes Geneva Talks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"#\" data-href=\"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/geopolitical-tensions-escalate-as-iran-warns-us-feds-schmid-defends-independence-amid-balance-sheet-shift\/59113\/#US_Treasury_Adjusts_Sanctions_Policy_for_Venezuelan_Oil\" >US Treasury Adjusts Sanctions Policy for Venezuelan Oil<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"#\" data-href=\"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/geopolitical-tensions-escalate-as-iran-warns-us-feds-schmid-defends-independence-amid-balance-sheet-shift\/59113\/#Softening_Demand_in_US_Treasury_FRN_Auction\" >Softening Demand in US Treasury FRN Auction<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Key_Takeaways\"><\/span>Key Takeaways<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><strong>Iran has signaled a major shift in military strategy<\/strong>, warning of &quot;fierce retaliation&quot; and &quot;tangible costs&quot; against US forces and assets if Tehran is targeted.<\/li>\n<li><strong>Federal Reserve official Jeff Schmid<\/strong> emphasized the central bank&#39;s independence from politics and projected that it will take <strong>years<\/strong> to run off the Fed&#39;s mortgage bond holdings.<\/li>\n<li><strong>Ukraine is set to meet with <a href=\"https:\/\/thestockmarketwatch.com\/live\/trump-stock-market\" data-internallinksmanager029f6b8e52c=\"8\" title=\"Trump\">Trump<\/a> envoys<\/strong> Steve Witkoff and Jared Kushner in Geneva as the war enters its fifth year, ahead of critical trilateral talks with Russia.<\/li>\n<li><strong>The US Treasury Department<\/strong> announced a favorable licensing policy for the resale of <strong>Venezuelan-origin oil to Cuba<\/strong>, marking a significant adjustment in regional energy sanctions.<\/li>\n<li><strong>Demand for US 2-year Floating Rate Notes (FRNs)<\/strong> softened in the latest auction, with the bid-to-cover ratio falling to <strong>3.01<\/strong> from a previous <strong>3.16<\/strong>.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Iran_Warns_of_Strategic_Shift_Toward_%22Fierce_Retaliation%22\"><\/span>Iran Warns of Strategic Shift Toward &quot;Fierce Retaliation&quot;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Tehran has officially warned the United States of a <strong>major escalation<\/strong> in its military response strategy. Moving away from previously limited or symbolic retaliations, Iran now plans to impose <strong>tangible costs<\/strong> on US forces and regional assets in the event of an American strike. <em>This shift comes amid a massive US military buildup in the Middle East, including the deployment of multiple aircraft carrier groups.<\/em><\/p>\n<p>Iranian officials stated that all US military bases in the region are now considered <strong>legitimate targets<\/strong>. Analysts suggest this &quot;crushing response&quot; could involve direct strikes on warships or the activation of regional proxies to target US embassies and infrastructure. <em>The rhetoric has intensified as both nations prepare for indirect nuclear talks in Geneva, creating a volatile backdrop for diplomacy.<\/em><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Feds_Schmid_Defends_Independence_and_Outlines_Balance_Sheet_Future\"><\/span>Fed\u2019s Schmid Defends Independence and Outlines Balance Sheet Future<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Kansas City Fed President <strong>Jeff Schmid<\/strong> delivered a staunch defense of the Federal Reserve\u2019s independence, stating that <strong>&quot;politics do not enter Fed policy debates.&quot;<\/strong> He described Chair Jerome Powell as a &quot;patriot&quot; and argued that the system&#39;s layers of independence lead to superior economic decisions. Schmid\u2019s comments come at a time of heightened scrutiny regarding the central bank&#39;s role in national policy.<\/p>\n<p>Regarding the Fed&#39;s balance sheet, Schmid noted that the <strong>size of reserves<\/strong> remains the primary focus of current debates. He clarified that the Fed will <strong>never return<\/strong> to the balance sheet size seen before the 2008 financial crisis. Furthermore, he warned that it will take <strong>years<\/strong> to run off mortgage-backed security (MBS) holdings, noting that these holdings have historically <strong>lowered yields<\/strong> in the housing market.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Ukraine_Engages_Trump_Envoys_Ahead_of_High-Stakes_Geneva_Talks\"><\/span>Ukraine Engages Trump Envoys Ahead of High-Stakes Geneva Talks<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>As the war in Ukraine enters its <strong>fifth year<\/strong>, Ukrainian officials are scheduled to meet with President <a href=\"https:\/\/thestockmarketwatch.com\/live\/trump-stock-market\" data-internallinksmanager029f6b8e52c=\"8\" title=\"Trump\">Trump<\/a>\u2019s envoys, <strong>Steve Witkoff<\/strong> and <strong>Jared Kushner<\/strong>, in Geneva. The meeting is intended to coordinate positions before a high-stakes trilateral round of talks involving Russia. <em>The discussions are expected to cover postwar recovery plans and potential prisoner exchanges.<\/em><\/p>\n<p>While previous rounds of negotiations in Abu Dhabi and Geneva have failed to produce a ceasefire, the involvement of high-level US envoys signals a <strong>renewed diplomatic push<\/strong>. Ukrainian President Volodymyr Zelenskyy has tasked his security chief, Rustem Umerov, with leading the delegation. <em>The international community remains cautious, as neither side has yet shown a willingness to compromise on core territorial issues.<\/em><\/p>\n<h2><span class=\"ez-toc-section\" id=\"US_Treasury_Adjusts_Sanctions_Policy_for_Venezuelan_Oil\"><\/span>US Treasury Adjusts Sanctions Policy for Venezuelan Oil<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In a notable policy shift, the <strong>US Treasury Department<\/strong> announced it would implement a <strong>favorable licensing policy<\/strong> for specific applications seeking to resell Venezuelan-origin oil for use in Cuba. This move represents a targeted approach to sanctions relief, focusing on energy trade while maintaining regulatory oversight. <em>The policy appears designed to address humanitarian needs and regional energy stability.<\/em><\/p>\n<p>This adjustment follows recent licenses granted to major energy firms like Chevron (<a href=\"\/stock\/CVX\">CVX<\/a>), BP (<a href=\"\/stock\/BP\">BP<\/a>), and Shell (<a href=\"\/stock\/SHEL\">SHEL<\/a>) to operate in the region. Under the new framework, the Treasury will review applications that meet specific criteria for oil resales, though transactions involving blocked persons or the Cuban military remain strictly prohibited.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Softening_Demand_in_US_Treasury_FRN_Auction\"><\/span>Softening Demand in US Treasury FRN Auction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The US Treasury&#39;s latest sale of <strong>$32 billion in 2-year Floating Rate Notes (FRNs)<\/strong> saw a slight decline in investor appetite. The auction resulted in a <strong>discount margin of 0.099%<\/strong>, matching the previous sale, but the <strong>bid-to-cover ratio dropped to 3.01<\/strong> from 3.16. <em>This indicates a marginal decrease in the total volume of bids relative to the amount of debt offered.<\/em><\/p>\n<p>Indirect bidders, which include international central banks and institutional investors, accepted <strong>57.8%<\/strong> of the notes, down significantly from <strong>65.7%<\/strong> in the prior auction. Direct bidders took a minimal <strong>0.7%<\/strong>, while primary dealers were required to absorb a larger share of the issuance. <em>The results suggest a cautious tone in the fixed-income markets as investors weigh geopolitical risks against the Fed&#39;s long-term balance sheet plans.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Iran has signaled a major shift in military strategy, warning of &quot;fierce retaliation&quot; and &quot;tangible costs&quot; against US 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