6:01, suddenly went quiet for a second

Source: Wall Street Intelligence Circle

The market gave a gentle shake.

As the global market opened on Monday, a small “gap” appeared:

- The yield on the 10-year U.S. Treasury jumped higher, breaking above the 4.60% level, with the risk-free rate continuing to rise;

- Oil prices spiked and then retreated, with U.S. crude briefly dipping below $105, and the market has no immediate expectation of further escalation in Middle East tensions;

- Gold and U.S. stock futures gapped lower at the open but quickly recouped losses;

- The U.S. dollar index edged higher, moving in sync with Treasury yields.

Overall, market movement was relatively mild and quieted down shortly after opening, resembling more a “probe” rather than a true “storm.” Of course, today’s market focus is not limited to the opening; traders need to stay vigilant throughout the Asian, European, and U.S. sessions.

First, there is no clear speculative theme (no main line, but many accumulating contradictions); Monday’s volatility was more a result of Friday’s momentum (Friday was an unusually bruising trading session). But no one dares to make a bold bet yet—everyone is waiting for the next signal. As a result, volatility is limited, but this is a wait-for-volatility-to-explode mode—much like the mixed situations of Q4 2018 and the summer of 2022—temporarily low volatility, but rising tensions and extremely crowded fund positions.

Second, the Iran issue remains unresolved. According to a semi-official Iranian news agency Mehr, there are still significant differences in the negotiations to end the war. The U.S. “has not made any substantive concessions,” but is trying “to obtain concessions that it failed to get during the war, which will lead the talks to a deadlock.”

Third, compared to developments in Iran (which act more as background noise rather than a decisive variable), the trends of the Federal Reserve, economic data, and USD/JPY (which determines whether global arbitrage funds continue to expand) will have greater impact on the market this week. The main attention has shifted to the U.S. Treasury market, with high interest rates (“long-term rate out of control”) being the current resistance.

Today's focus is whether U.S. AI-linked stocks can rally in the evening (the market is still temporarily buying into the AI profitability narrative), and whether the 10-year U.S. Treasury yield can hold the 4.60% level.