Good morning Traders, Investors, & Quants — and welcome to a high-stakes week.

The headlines are hot, but the market’s resolve is… oddly cool.

The speculation of what Trump would do in Iran was answered over the weekend, now bond yields are rising, and another volley of Trump tariffs are on the table, yet the S&P 500 remains within 2% of its all-time highs.

But beneath the surface, the signals are getting murkier:

We’re entering an era where sentiment and reality are diverging. Volatility is subdued, but uncertainty is climbing.

Are markets simply hardened… or mispriced?

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Markets Float on Hope, But Cracks Keep Forming

The S&P is stuck in the mud — rangebound for weeks, despite a +20% surge from April lows.

Economic data has slowed: job growth is softening, housing is stalling, manufacturing is slipping.

But the market remains in “buy the dip” mode, and for now, every pullback gets scooped up.

Morgan Stanley notes that despite tariff tensions and geopolitical risk, the macro backdrop hasn’t broken — yet.

But the tariff clock is ticking (July 9), Iran’s response to U.S. strikes is still coming, and Powell’s rate path is less friendly than bulls hoped.

If yields spike, oil surges, or tariffs stick… this market narrative could flip fast.

Iran Weighs Its Next Move as Oil Markets Watch the Strait of Hormuz

The U.S. strike on Iran’s military assets sparked global condemnation — but also hesitation.

Iran’s parliament has authorized blocking the Strait of Hormuz, a vital oil chokepoint, but hasn’t yet acted.

Tehran is playing for time, weighing retaliation that avoids direct escalation.

Trump, meanwhile, is betting that shock-and-awe plus economic pressure will force Iran to the table.

So far, oil markets remain surprisingly calm. But strategists warn that a single miscalculation could push Brent crude well above $90.

Markets are pricing in diplomacy — not disaster. That’s a fragile bet.

Domestic Politics Heat Up: Trump’s Tax Bill, Clean Energy Cuts, and SALT Revenge

The Senate is advancing a slimmed-down version of Trump’s “One Big Beautiful Bill” — with tax cuts intact but major concessions on clean energy.

The new bill includes provisions aimed at repealing the SALT deduction cap and reintroducing “patriot tax” incentives, though holdouts remain.

What’s striking: clean energy projects in Republican districts are getting hit hardest by funding rollbacks.

Markets haven’t flinched — yet. But if tax changes pass without clarity on offsets, deficits could widen sharply, potentially pushing bond yields higher.

With GDP forecasts already trimmed and core PCE projections rising, the Fed will be watching this bill closely.

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Stocks ended last week in the red, pressured by rising geopolitical risk and mixed macro signals.

Markets are betting on diplomacy.

They’re betting tariffs won’t stick.

They’re betting the Fed will cave.

They’re betting the soft data isn’t real.

That’s a lot of bets.

Sometimes what doesn’t happen… matters just as much as what does.

Stay nimble, stay sharp — this week will test the narrative.