Futures are lower. The three-day weekend delivered more than the market expected.

Iran warned ships away from Hormuz on Saturday. The reason: Lebanon strikes breached last week's MOU. Oil spiked overnight. Then Sunday's talks at Bürgenstock produced a roadmap and a joint monitoring cell for Lebanon. Oil reversed. Brent erased a sharp early gain and settled near Thursday's close. WTI pared most of its jump.

Asia didn't flinch. The Nikkei hit an all-time intraday record. SoftBank and Tokyo Electron led. The Kospi held near its own highs.

Futures point to a softer US open. Treasuries dropped as cash trading resumed. The dollar holds near its 13-month high. Carnival (CCL) reports before the bell.

Market Implication

Ships are still moving. CENTCOM reported 55 vessels transiting Saturday. Called safe passage "intact." That fact is doing more work than any diplomat. But Iran showed it can shut Hormuz within 48 hours of a Lebanon flare-up. The market is pricing the tanker count. Not the threat count. That holds until ship numbers drop.

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Iran re-closed the strait. The US military said it didn't. Two versions of reality ran over the weekend. Iran called the closure the "first step" after MOU breaches. CENTCOM said passage was intact. Oil traders chose the physical version. WTI's overnight spike faded as Sunday's session wore on.

The Bürgenstock session. Vance, Witkoff, and Kushner sat across from Iran's delegation at the Swiss resort on Sunday. Pakistan and Qatar mediated. Iran had said the meeting would only cover MOU basics. It covered more. The session produced a joint cell for Lebanon and a 60-day roadmap. The framework advanced. Trump posted he'd strike Iran "only harder." The market read the session. Not the post.

Structural Setup

Lebanon is the bottleneck now. Not the nuclear question. Not Hormuz tolls. Iran set a condition: stop the Lebanon strikes or the strait stays closed. Israel ordered a hold-fire except at Ali al-Taher Hill. Hezbollah hasn't hit Israeli soil in a week. Israel and Lebanon resume direct talks Tuesday. If that session calms things down, Iran loses its stated reason. Lebanon quiets. Hormuz reopens. Oil resumes its unwind. The hawkish dot plot loses its energy-cost support before PCE Thursday.

The Nikkei hit an all-time intraday record overnight. SoftBank and Tokyo Electron led. The Kospi held near its own record. The AI bid that powered last week's rally didn't pause. It moved to Asia.

US futures are softer but the move isn't dramatic. The session absorbed a Hormuz re-closure, face-to-face talks, and a threat. Then it pared the reaction. Asia hit records. The US opened lower. Two themes collided. Asia traded the AI story. The US traded the geopolitical one.

Sector Read

Energy names face a fork. If oil holds its overnight gains, the group that sold off on peace reclaims ground. If oil fades as talks progress, rate-sensitive names get a second look. Watch airlines and homebuilders relative to crude. That spread tells you which story the tape picks.

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While Vance talked at Bürgenstock, Trump posted he'd hit Iran "only harder." He told Fox if Iran closed the strait, "you won't have a country." Iran's top lawmaker shot back: watch your words. The talks moved forward. The threats got louder. The market has to choose which one to price.

Israel-Lebanon talks resume Tuesday. The prior round led to a truce Hezbollah rejected but largely kept. This round matters more. Iran has tied Hormuz to Lebanon. A step down there removes the stated basis for the strait's closure.

Watch Signal

Watch Tuesday's talks and daily tanker counts. Ship traffic above 50 daily plus a tighter Lebanon truce? Iran's closure is just words. Ship counts falling or Lebanon flaring? It's real. PCE Thursday lands in a different world based on which one wins.

Carnival reports this morning. The peace-trade name.

The stock ran hard last week. Record Q1 bookings. Double-digit growth at record prices. A fresh buyback program. Demand isn't the question.

Cost is.

Carnival burns fuel. The Hormuz re-closure shifts the fuel-cost path the market priced last week. Management raises fuel guidance? The margin math changes. Management holds fuel guidance and says bookings absorb the pressure? The peace trade has real backing.

The oil story and the consumer story meet in one earnings call this morning.

The Read

Carnival's fuel guide is the peace trade's first test. Higher fuel costs mean the rally priced in a world that changed over the weekend. Steady fuel costs mean the corporate sector is betting the deal holds. Watch the guide. Not the beat.

Economic Data: No notable releases

Fed Speakers: Waller 

Earnings: No notable reports

Overnight: Nikkei +1.55%, Shanghai Composite +1.78%, FTSE +0.23%, DAX -0.22%

Two timelines run through this week. Both start with Lebanon.

Tuesday's talks produce a de-escalation. Iran reopens Hormuz. Oil resumes its unwind. PCE Thursday gets a deflationary energy tailwind. The dot plot looks stale. Rate-sensitive names thaw.

Or Lebanon escalates. Iran holds the strait. Oil bounces back toward levels the hawks already priced. PCE lands in a different world. The cost of capital rises. Last week's sort gets retested from the supply side.

Carnival's guide this morning is the first read. Waller speaks at 3 PM into a rate debate that oil just reshuffled. Tuesday's tanker count is the third. PCE is the verdict.