Quick Thoughts / Chart Dashboard Update

Pre-Central Bank State of Markets

A quick update from the engine room from me.

In last weekend’s ATW, I argued that we are either at the apex of this ongoing war or we find another trajectory with unknown but possibly devastating consequences.

Turns out a lot of hot air was poured onto markets on Sunday night’s open (the “Alliance to safeguard the Strait of Hormuz”), followed by acknowledgements that the upcoming China–US meeting in Beijing would happen only for it to be postponed by a month.

What struck me was what didn’t happen.

Markets didn’t panic. Oil was up, but not as much as the weekend market had anticipated. Bonds rallied. The USD sold off, and equities bounced from an initial small setback. That tone carried into the European open, and by the end of the day, we had one of those very bullish “risk-on” sessions that come as a relief to many — and confuses almost everyone.

The funny thing is that the rally happened without a meaningful “good” headline. Just more comedy from the US administration and the usual barrage of narrative confetti.

So what was the market actually trading?

If I zoom out, the signal that mattered may have been the China-US meeting itself — and the fact that it slipped. A postponement is not neutral. It often implies disagreement, or at least a lack of urgency, about sitting across the table and playing nice. And if that is the case, the question becomes: who blinked?

My instinct is that the hesitation didn’t come from the US. It came from China. That has implications, because the market has been quietly treating “talks” as the light at the end of a dark tunnel. If that light flickers, do we really want to be long optimism at tight spreads and low vol?

What does it all mean?

And where do we go from here?

I’m going to dig deeper into the cross-asset tape and analyse the likely central bank reaction functions before I share the updated Chart Dashboard as of Tuesday’s close.

Let’s go.