Iran Deal Signed | Oil Holds Low | Congress Targets Prediction Markets | The Discount Still Has a Delay

Stocks closed the week higher. Oil stayed near $77. Hormuz normal by June sits at 15%. Congress and Kentucky moved on prediction markets.

The Nasdaq rose over 2%. The S&P gained 1.1%. The Dow closed marginally higher. The VIX fell 11.0% to 16.41.

Oil barely moved, closing just over $75. Gold fell 3.4%. The 10-year yield eased to 4.45%.

The market bought the peace dividend again.

The Nasdaq is set to gain about 2% for the week. The S&P and Dow are up near 1%. Investors returned to AI-linked names and chipmakers after Wednesday’s Fed shock.

Oil is still about 9% lower for the week. Gasoline slipped below $4 a gallon for the first time in more than two months.

But the discount has limits.

Hormuz normal by end of June sits at only 15%. July 31 sits at 56%.

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The Iran MOU is signed. Oil is near its lowest level since March. Brent sits near $79.61. WTI is near $77.

That is the market’s relief channel.

The rate channel is different.

The Fed held this week, but Warsh’s first meeting pushed the path more hawkish. The 2-year jumped after the statement. Markets now see a high chance of a Fed hike by September. July no-change sits at 76%, but a 25 basis point increase is now 23%.

That is not a cut setup.

The deal lowered future oil risk. It did not erase CPI at 4.2% or PPI at 6.5%. The Fed is still reading the bill from the war period.

The Split Discount

Oil priced peace. Rates priced the residue. The market can rally on lower energy, but it still has to discount a Fed that sees inflation first.

The deal ended the political fight. It did not normalize shipping.

Polymarket now puts Hormuz traffic normal by end of June at 15%. That is lower than the morning read and lower than yesterday. July sits at 56%.

The direction matters.

Oil stayed low because traders believe supply risk is falling. But the physical market still needs mines cleared, insurers back, tankers rerouted, and crews willing to transit.

The gap is not small. Over 100 oil-laden ships still sit in the Gulf. Shipping firms remain cautious. A few vessels may try the route, but full confidence takes longer.

The Transit Lag

The oil price moved on the signature. The shipping odds moved on the work left behind. Signed is not shipped. That gap is the risk below $80 crude.

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Kentucky sued Kalshi and Polymarket, accusing them of running illegal sports betting businesses in the state. Attorney General Russell Coleman said the platforms use legal fictions to avoid gambling rules.

The lawsuit adds Kentucky to the list of states challenging event contracts. Kalshi and Polymarket argue they fall under CFTC oversight as federally regulated derivatives. The Trump administration supports that view.

The courts are split. In the Sixth Circuit, two district judges have sided with states while one backed prediction markets. The issue looks headed toward the Supreme Court.

The timing matters. Prediction markets are now central to Fed odds, Iran timelines, sports contracts, and political risk.

The Jurisdiction Fight

The market uses prediction contracts as data. States see gambling. Federal regulators see derivatives. The product cannot scale cleanly until that fight clears.

Rep. Bryan Steil is adding a provision that would restrict members of Congress and their families from betting on prediction markets tied to policy, politics, and elections.

The measure joins a broader bill that would ban lawmakers from buying new individual stocks, except shares bought through dividends from existing holdings. Speaker Mike Johnson and Trump support the stock bill.

The penalty would be $2,000 or 10% of the transaction value, whichever is greater, plus any gains.

The proposal still allows non-political bets, including sports. Steil said those markets do not create the same insider risk.

The Senate already banned senators and staff from prediction-market betting. House passage is not guaranteed, but the direction is clear.

The Insider Line

Prediction markets are becoming too important to treat as a side product. The more they price policy, the more Washington has to police itself.

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The first is trust in peace.

Oil below $77 says traders believe the Iran deal lowers future supply risk. Gas below $4 says the consumer should get some relief. Stocks rising into the holiday says buyers still trust the macro reset.

The second is trust in the signal layer.

Prediction markets helped frame the week. They priced Hormuz, Iran, Fed, tariffs, and rate risk. Now Kentucky and Congress are moving against the same tools.

That matters because the market has started using these contracts as early data.

If the legal fight grows, the signal may become noisier. If federal rules win, the signal becomes stronger. Either way, the next phase is not just volume. It is legitimacy.

The Trust Gap

Peace needs ships. Prediction markets need permission. Both are priced before they are fully settled.

Stocks rebounded. Oil stayed low. Gas broke below $4. The Nasdaq recovered part of the Fed selloff.

What is priced: peace, lower oil, a July Fed hold, and prediction markets as useful signals.

What is not priced: Hormuz still at 15% for June, a September hike path, Kentucky winning its case, or Congress limiting political-market participation.

The deal is signed. The discount is still delayed.

Capital moves early. Coverage catches up. The gap between the two is worth watching.