The Russell led. Nasdaq was close behind. Oil did the work. WTI fell sharply in Monday's thin session. The US and Iran had moved closer to a deal over the weekend. Oil stayed down into Tuesday.

Exxon Mobil (XOM) is soft in the pre-market. Airlines are catching a bid. The Nikkei hit a fresh all-time high overnight. Japan is the most exposed major market to a Hormuz reopening. It priced that view hard.

The dollar held firm. Yields dipped. Oil is pulling rates lower today. But one session doesn't undo the 30-year touching levels not seen since 2007. The S&P enters near record highs after eight straight weekly gains. This gap-up is a one-factor trade. Peace.

Market Implication

The gap assumes the deal closes. CENTCOM struck missile sites and mine-laying boats near Bandar Abbas on Monday. During the ceasefire. If the cash session holds the opening print, the rally has legs. If it fades by noon, the holiday gap was thin air.

The deal framework. Trump said Saturday the agreement was "largely negotiated." Sixty-day ceasefire extension. Hormuz de-mined and reopened. US blockade of Iranian ports lifted. Iran commits in principle to disposing of its enriched uranium. But Iran disputes the framing. State media says Hormuz stays under Iranian control. The nuclear program isn't part of the preliminary deal. The market priced the headline. It hasn't priced the gaps.

The bond divergence. The 30-year yield recently touched its highest since 2007. Michigan consumer sentiment cratered last week. One-year inflation expectations jumped. Oil falling should help. But lower crude doesn't fix inflation when expectations are already drifting higher. AI capital spending is still running hot. The bond market sees a problem oil alone won't solve.

The holiday reset. Three-day weekend. Thin volumes. Eight straight weekly gains. Underweight managers chasing into a gap. This setup rewards urgency. It also punishes it if the catalyst fades.

Structural Setup. Rates and oil moved together today. Both down. The daily signal says the peace trade works. The structural backdrop says inflation has settled in regardless. Warsh's first FOMC on June 16 is where those timeframes collide.

The Russell 2000 led as yields eased. Small caps are the clearest rate-sensitivity tell right now.

This morning's rotation is simple. Energy down. Airlines and transports up. That's the peace trade in its purest form. SoftBank (SFTBY) rallied sharply last week on Nvidia earnings and Arm momentum. Healthcare posted its best week in over six months. DexCom (DXCM) led the group higher.

Quantum names surged after reports the government plans to award billions in grants to nine firms. Rigetti (RGTI) and D-Wave (QBTS) each jumped double digits.

Sector Read

Watch the energy-airlines spread. If airlines give back their pre-market bid while energy stabilizes, the market is saying the deal isn't done. If the spread holds through the close, the peace trade is real. Russell breadth tells you whether rates are loosening underneath.

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Sixty days. Hormuz reopened. Blockade lifted. The conflict blocked roughly a fifth of global oil and LNG flows for three months. Even a full reopening today would leave crude inventories well below the tightest levels in recent history. The physical supply chain doesn't heal on a headline.

CENTCOM struck Iranian targets near Bandar Abbas on Monday. During the ceasefire. Mine-laying boats and missile sites. Brent rose in the Asian session after the strikes. WTI stayed down. The two benchmarks are reading different risks. WTI sees the deal. Brent sees the fight.

Kevin Warsh took the oath on Friday. He inherits inflation well above target, a closed Strait, and a divided committee. His first public signals will move markets. His first FOMC is June 16.

Watch Signal

Consumer Confidence lands at 10am. Michigan already showed sentiment falling and inflation expectations rising. If the Conference Board confirms that pattern, the bond market's warning gets harder to ignore. If it breaks the other way, the everything-rally keeps its case.

Japan gets nearly all of its crude from the Middle East. Most of it transits the Strait of Hormuz. Emergency reserves have been tapped since the war began. The index is the best-performing major market in the world this year. And its biggest single risk is a deal that hasn't closed.

No other major index has this much riding on one chokepoint. Today's surge isn't a growth bet. It's a Hormuz bet. If the framework holds, Japan gets its energy supply back. If it doesn't, the index that rallied hardest falls fastest.

The Read

The Nikkei is the highest-beta read on deal probability in global markets. Don't watch WTI for the real signal. Watch Tokyo. If the Nikkei holds its highs through the week, the smart money believes the Strait reopens. A reversal means it doesn't.

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Economic Data: S&P/Case-Shiller Home Price Index (9:00am ET), CB Consumer Confidence (10:00am ET), Dallas Fed Manufacturing Index (10:30am ET), 2-Year Note Auction (1:00pm ET)

Fed Speakers: Chair Warsh expected to make first public remarks this week

Earnings: Masimo (MASI), Chart Industries (GTLS) before open | Zscaler (ZS), BOX (BOX), Modine Manufacturing (MOD) after close

Overnight: Nikkei +2.87%, Shanghai Composite +0.96%, FTSE +0.22%, DAX +2.01%

The market opened long on peace. At 10am it finds out whether the consumer agrees. Conference Board Consumer Confidence is the next hard data point. If it holds, falling oil and steady spending give the everything-rally a ninth consecutive week. If it breaks, confirming what Michigan already showed, the bond market was right. And the gap that launched this session gets sold before lunch.

Warsh is watching too. His first FOMC is three weeks away. The market picks its timeline before he picks his.