At 5:00 a.m., a strange scene occurred

Source: Global Market Watch

The essence of “everything rallying” is not chaos, but “hedging.”

At 5:00 a.m. Beijing time, global markets closed with strange volatility, and it seemed everything was on the rise:

- All major U.S. stock indices were up moderately. The Dow Jones Index rose 0.66%, the S&P 500 Index gained 0.54%, and the Nasdaq Index climbed 0.77%.

- Oil prices rebounded, with U.S. crude back above $90, while Brent crude once again approached the $100 level.

- The U.S. Dollar Index recouped all losses for the week, now just one step away from the 100 mark.

- Gold rallied alongside U.S. Treasuries, with the 10-year Treasury yield falling to 4.33%.

This is the first “all-up” scenario since the Iran war. However, the underlying logic is not difficult to comprehend:

· Assets other than oil rising – because Iran is currently weighing a U.S. proposal to end the war. A senior Iranian official said that while Iran’s initial reaction was not positive, it is still considering the U.S. proposal for ending the Gulf war (this suggests Iran has not completely rejected the offer thus far; though Iran still holds some leverage, the situation is extremely unfavorable for them).

· At the same time, oil prices are also rising – because signals from peace talks are highly contradictory. Trump is trying to highlight ongoing negotiations, while Iran refuses to acknowledge any progress in discussions, which will limit the room for significant oil price declines.

But from the market perspective, an “everything rally” is usually not a good sign; rather, it reflects the market “losing consensus and losing benchmarks”—with no coherent logic, and each party trading on different scenarios.

Currently, there are three trades happening simultaneously:

· First, the peace trade – equities rise and some funds are bottom fishing. The logic: Iran hasn’t “completely refused,” and there’s still room for negotiations, so the market is betting the worst-case scenario won’t unfold.

· Second, the war trade – oil prices move up. The logic: negotiations can’t be trusted, Strait of Hormuz risks persist, and the market remains concerned over possible supply shocks.

· Third, the stagflation trade – the market is starting to fear “growth” more than “inflation.”

So, this is not yet a trending market, but rather a phase of “high volatility” and “low confidence” where bulls and bears are locked in a struggle. People no longer trust “news,” but are waiting “for a signal they can believe in.” This means volatility increases, correlations break down, and both bullish and bearish narratives coexist.

This is not the start of stability, but the “final phase of chaos” before a directional decision is made.