WS #14757

The geopolitical narrative has shifted from pure escalation to a fragile de-escalation phase, driven by simultaneous diplomatic overtures and kinetic strikes. The Trump-Xi summit and proposed 7-day Hormuz reopening plan by Iran have injected a risk-off-to-risk-on rotation, lifting Asian equity futures and dampening the immediate oil supply shock thesis. However, this diplomatic window is being actively contested by ongoing Ukrainian drone strikes on Russian refineries (Perm and Novoshakhtinsk), which sustain energy supply risks and complicate the ceasefire calculus. French President Macron's 'double moratorium' proposal further signals a push for a negotiated settlement, though the physical reality on the ground remains volatile. In macro markets, the 10-Year Treasury yield's surge to 5.17% is facing immediate pressure as bond futures rise on the Hormuz peace hopes, though the underlying trend remains bearish due to Japan's rate normalization and global funding cost repricing. The tech sector shows divergence: Meta's surge on its 'Muse' AI agent launch highlights continued AI capex enthusiasm, while ArcelorMittal's $1 billion impairment reflects the direct collateral damage of the war on industrial supply chains. Crypto markets remain range-bound with Polymarket pricing in Bitcoin stability around $84k-$90k, largely decoupled from the immediate geopolitical noise.