Watch CNBC's full interview with PIMCO's Libby Cantrill

Summary

Libby Cantrill, PIMCO's head of U.S. public policy, discusses the fragile US-Iran ceasefire and the potential escalation over the Strait of Hormuz, including the possibility of tolling and its impact on oil and gas prices. She also analyzes the political incentives for President Trump to avoid an uncertainty premium ahead of the midterm elections, touches on the limited tools to restrict trade with Spain, and gives an outlook on the midterms where Democrats are favored to take the House but face an uphill battle in the Senate.

• US-Iran negotiations are fragile; the MOU was only halfway through its window and even basic terms were unsettled.
• Iran's theoretical leverage over the Strait of Hormuz has become practical, with tolling and control contested by the US.
• President Trump is incentivized to de-escalate and avoid a geopolitical risk premium in oil and gas prices before midterms.
• Tools to impose a trade prohibition on Spain are legally limited after a recent Supreme Court ruling on IEEPA.
• Democrats are currently favored to regain the House, while the Senate remains an uphill battle that likely hinges on Maine.
• Internal Democratic infighting and lack of a centrist message could have implications for the 2028 presidential election.