Oil surged past $106 on the first shots since April. The 30-year crossed 5%. Gold fell. Equities barely cracked.
THE DAILY PULSE
Monday's session closed lower. Tuesday's futures opened higher anyway.
S&P futures are up 0.3%. Nasdaq futures gained 0.6%. The Dow is adding over 100 points. The market is buying the dip before the open.
Oil pulled back. Brent retreated to near $113 after closing at a multiyear high Monday. WTI trades near $104. The 30-year yield stayed above 5%. The 10-year sits at 4.43%. Gold is rebounding slightly. The VIX dropped back under 18.
That is the surface.
Underneath, the ceasefire is still contested.
Iran struck ships, US naval forces, and the UAE's Fujairah oil hub Monday. US helicopters sank six Iranian boats. Trump stopped short of calling it a ceasefire violation. That framing gave futures permission to recover.
The market is treating escalation like a pop-up ad. Earnings are the browser window behind it.
Palantir beat and fell 3% in premarket. Pinterest surged 17% on guidance. AMD reports after the close. The Department of War holds a press conference at 8am. ISM Services, JOLTS, and new home sales land at 10am.
The recovery in futures is real. So is the 30-year above 5%. One of those reads is wrong by the close.
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THE LEAD SIGNAL
The ceasefire was 26 days old.
Trump told Congress last week that hostilities had ended. Then he launched Project Freedom on Sunday. The mission was guiding stranded ships through the Strait of Hormuz. Iran answered with cruise missiles, drones, and small boats.
The UAE intercepted 19 missiles and drones. A drone struck the Fujairah oil facility and sparked a fire. Three workers were injured. A South Korean cargo ship caught fire off the UAE coast.
US helicopters sank six Iranian boats. Two US-flagged merchant ships made it through. The path opened. The shooting started with it.
Oil repriced within hours. WTI jumped over 4% to settle near $106. Brent climbed nearly 6% to $114. Energy producers rallied across the board.
Norwegian Cruise Line (NCLH) cut its full-year outlook and shed over 8%. Travel names sold off broadly.
Polymarket prices around 15% odds of Hormuz normalizing this month. The market isn't pricing a quick resolution. Diplomacy and escalation are running in parallel.
The 10-year yield jumped 6 basis points to 4.44%. Duration sellers arrived. The oil shock is feeding directly into the rate complex. The transmission from energy to bonds is live.
The Transmission Gap
The gap between energy pricing and equity pricing is wide open. Oil and bonds repriced Monday. Equities absorbed the shock without adjusting. If oil holds here, something gives.
THE ARCHITECTURE
The 30-year yield crossed 5% Monday for the first time since July.
The 10-year sits at 4.44%. The 2-year climbed to 3.95%. The entire curve repriced around one input: oil-driven inflation.
Energy costs feed directly into inflation expectations. Duration reprices to match. If the oil shock persists, bonds price it as structural. That shift is already underway.
Kalshi shows 56% odds of zero rate cuts in 2026. The market has moved past hoping for relief. It's pricing a Fed that can't act.
Friday's jobs report adds pressure from the other side. Consensus expects around 55,000 new jobs. March delivered 178,000. The labor market is softening while energy costs accelerate. A soft print eases yields. A hot one reignites the spiral.
The Box
The Fed can't cut because oil won't let inflation normalize. It can't hike because the labor market is cooling. The 30-year above 5% prices that paralysis. The limiting variable is how long oil stays here.
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THE CROSS-CURRENTS
The equity surface held Monday. Three signals test whether it holds this week.
Palantir (PLTR) posted its strongest quarter after the bell. Revenue surged 85% year over year. Guidance jumped to $7.65 billion. AI earnings are the current shock absorber. But the stock barely moved after hours. Last quarter, a similar beat triggered an 11% decline. AMD, Disney, and Arm report this week too.
Friday's payroll print arrives into a market pricing no Fed help. The number matters less than what bonds do with it.
The government shutdown passed 60 days. No resolution in sight. Fiscal drag compounds the energy shock quietly. Nobody is pricing the combination. Oil above $106 and fiscal drag sit in separate boxes.
The Absorber
Palantir's 85% revenue growth is doing real work for equities. It underwrites the idea that the cycle has its own engine. But earnings growth doesn't neutralize cost-of-capital pressure. The 30-year above 5% reprices every duration bet.
THE FORETELL LENS
Gold is down 13% since the war started. In a geopolitical crisis, that breaks the old pattern.
In past conflicts, gold rallied on fear. This time, the war made inflation worse. Higher oil pushed rate expectations higher. Higher rate expectations lifted real yields. Real yields crushed gold. The transmission path ran through inflation, not safety.
The war premium went entirely to oil. The traditional safe haven missed the mechanism completely.
Kalshi's economy contract captures the regime question. Overheating sits at 35%. Stagflation sits at 33%. Both outcomes keep rates restrictive. Neither favors gold. The market is split on the diagnosis. It's unified on the constraint.
Central banks kept buying in Q1. Financial markets kept selling. That divergence reveals a time-horizon gap. Sovereigns price decades. Markets price quarters.
The Wrong Hedge
Gold fell because the war worsened inflation, not because it reduced risk. The asset built to hedge crisis got repriced by the crisis itself. The old playbook missed the transmission path.
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FINAL FRAME
Hormuz is contested. Oil sits above $106. The 30-year crossed 5%. The ceasefire is cracking after 26 days.
Friday's jobs report is the week's catalyst. Consensus expects a sharp slowdown from March. The bond market will decide whether softening labor offsets the energy surge.
The equity surface runs on two assumptions. AI earnings hold up under the weight. Hormuz stays open enough to prevent a second closure. Both face direct tests this week.
Capital moves early. Coverage catches up. The gap between the two is worth watching.
