WS #14764

The geopolitical narrative has shifted from active conflict to a fragile diplomatic off-ramp. Iran has submitted a formal proposal to the US to reopen the Strait of Hormuz, a move that has successfully pressured oil prices down 1.4% to $105. This development counters the previous escalation thesis, dampening the immediate risk of a supply shock while maintaining a cautious market environment. The US Senate's rejection of a resolution to end military involvement signals that the US remains engaged, but the diplomatic channel is now the primary driver of asset pricing. In the technology sector, Google's Project Suncatcher marks a significant expansion of AI infrastructure into orbit, leveraging SpaceX for data collection on space radiation and vibration. This reinforces the long-term bullish thesis for cloud and AI hardware, though it is overshadowed by the broader macro theme of rising Treasury yields. Bitcoin has found a liquidity bottom, erasing a $5.8 billion deficit in ETF flows, which provides a floor for risk assets despite the pressure from yields jumping above 5%. European markets are reacting to the easing oil tensions with a rally, particularly in tech and energy sectors, while Hungary's central bank signals potential rate cuts. However, the backdrop of rising yields and persistent geopolitical risk keeps investors cautious. The narrative is transitioning from 'war premium' to 'diplomatic monitoring,' with markets pricing in a lower probability of immediate supply disruption.