Peace Got Priced | The Strait Didn’t | Stocks Rallied | The Shock Changed Shape

Trump signaled he could end the war without reopening Hormuz. Stocks surged. Oil held above $102. The market is starting to separate ceasefire risk from supply risk.

But it was not broad resolution. It was a repricing of one part of the problem.

The Wall Street Journal reported that Trump told aides he was willing to end the war without reopening the Strait of Hormuz. That gave paper markets what they wanted. Equities rallied hard. The Nasdaq jumped 3.8%. The S&P gained 2.9%. The Dow added more than 1,100 points. The VIX fell nearly 17%.

Oil did not confirm the same story. WTI fell only modestly and still closed above $102. Gold surged 3.36%. The 10-year yield fell again to 4.317%.

That mix matters.

If the market believed the whole shock was ending, oil would have broken harder and gold would not have surged. Instead, the tape priced a lower war premium in equities while still holding onto the supply and inflation risk underneath it.

Investor Signal

The market did not price peace. It priced a shorter war. Stocks rallied on the headline. Oil, gold, and bonds still priced the damage that can outlive it.

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The morning letter framed the right tension.

A ceasefire and an open strait are no longer the same trade.

By the close, that was clearer.

The WSJ report gave traders an exit path. Trump may be willing to stop the military campaign even if Hormuz stays largely closed. That was enough for paper to rally. But it was not enough to move the physical market the same way.

WTI still held above $102. More important, the traffic market only moved part of the way. Strait of Hormuz traffic returning to normal by end of April sits at 24%. That is still very low.

Now compare that with ceasefire pricing. Ceasefire by April 30 rose to 38%. By May 31, 54%. By June 30, 65%.

That is the split.

The crowd upgraded diplomacy. It did not fully upgrade supply.

Investor Signal

The spread that matters now is no longer just paper versus physical. It is ceasefire versus logistics. The war may end sooner. The supply shock may not.

March ended as the S&P’s worst month since 2022. One strong day did not erase that. It just interrupted it.

The macro structure still looks hard.

Oil is still above $100. Gold is surging. The 10-year is falling. The Fed is still locked.

Kalshi shows a 97% chance the Fed holds in April. Polymarket still shows zero cuts as the leading full-year outcome at 33.1%, with one cut at 25%.

That is not a market getting comfortable again.

It is a market saying this: maybe the war ends sooner than feared, but the inflation and growth damage do not vanish with the headline.

That is why the lower 10-year yield should not be read as relief. It looks more like weaker growth expectations moving ahead of the data. Kalshi’s CPI ladder keeps that risk alive. March CPI above 0.8% sits at 65%. Above 0.9% sits at 37%.

Investor Signal

The market rallied on the chance of a shorter war. It did not let go of the inflation problem. A lower 10-year here is about weaker growth, not a cleaner Fed path.

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Today’s rally did not clear the calendar.

Consumer confidence and JOLTS are here. ADP comes next. Payrolls land Friday into a closed market. The reaction waits until Monday. April 6 sits right behind it.

The fiscal side is still unresolved too.

Kalshi shows DHS funded before April 22 at 43%, before May 1 at 57%, and before June 1 at 78%. Tech layoffs above 2025 levels sit at 87%.

That is why this rally needs context.

The market got a better war headline. It did not get a cleaner macro calendar. Payrolls, April 6, fiscal deadlock, inflation risk, and a still-unresolved strait all remain in the same window.

Investor Signal

This is still a compression trade. A better geopolitical headline does not remove the overlap between payrolls, the April 6 deadline, fiscal drag, and a Strait that prediction markets still price at only 24% odds of normal traffic by end of April.

Today’s most important gap was between two probabilities.

Ceasefire by April 30 rose to 38%. Normal Hormuz traffic by end of April sits at 24%.

That difference is the whole letter.

The market is starting to believe the war may end before the supply chain does.

That changes the shape of the shock.

A war premium can come out of equities fast. A logistics premium does not. Tankers still need routes. Insurance still needs pricing. Traffic still needs coordination. If reopening the strait is no longer tied directly to U.S. military action, then it becomes a slower problem with weaker ownership.

That is why the year-end oil structure still matters.

Kalshi puts WTI above $135 at 58%, above $140 at 48.1%, and above $150 at 37%.

Investor Signal

The key question is no longer just whether the war ends. It is how long the physical constraint lasts after it does. That is why oil still looks like a regime story, not a one-week spike.

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This morning’s letter said a ceasefire and a reopened strait were not the same trade.

By the close, that was no longer a theory. It was the market.

Stocks rallied hard on the idea that Trump may end the war without forcing Hormuz open. The VIX collapsed. Escalation odds fell. Ceasefire odds rose.

But oil still held above $102. Gold surged. The 10-year kept falling. And normal strait traffic by end of April still sits at just 24%.

The market accepted the peace signal. It did not release the supply shock.