The Treasury's much-hyped "economic D-Day" against Iran turned out to be a warning rather than action, which is mildly good for markets short-term but bad for Washington's credibility.

• Treasury Secretary Scott Bessent announced sanctions on 60 entities and ships, but held back the big measures and promised more later this week.
• The stated reason: give other countries time to stop trading with Iran, and avoid blowing up the global financial system.
• That hesitation reads as a bluff to markets, and long-term government bond yields have pushed to multi-year highs as trust in Treasury's moves fades.
• Iran appears to be betting Trump will not tolerate a falling stock market, so the pressure campaign has limited bite.
• The Nasdaq has been sliding since the threat surfaced, with Nvidia earnings and the Jackson Hole meeting both landing this week.

Outlook: Expect more sanction threats and choppy markets, with Jackson Hole and Nvidia earnings the next two things that could push stocks lower.