The War Isn't Over Yet—But Investors Are Already Betting on Back to Normal

• The S&P 500 posted its longest winning streak of the year at seven consecutive days, while the VIX 'fear index' dropped below 20 and safe-haven assets like the dollar declined
• Goldman Sachs forecasts Brent crude averaging $80 per barrel in Q4 2026 if traffic recovers, but warns prices could hit $100-$115 if the ceasefire fails or Strait of Hormuz reopening is delayed
• Markets show only 8% probability of a Fed rate cut in September, with the central bank transition seen as the 'final hurdle' before investors can anticipate more accommodative policy in the second half

Summary

Market Rally Amid U.S.-Iran Ceasefire Optimism

Investors are demonstrating strong bullishness despite ongoing uncertainty around the U.S.-Iran conflict, with markets pricing in a rapid return to normalcy.

Key Market Movements:

• The S&P 500 posted seven consecutive days of gains through Thursday—its longest winning streak of 2025
• The VIX volatility index dropped below 20, signaling market stability
• The U.S. dollar weakened while risk assets like bitcoin rallied
• Prediction markets assign 80% odds that President Trump will announce an end to military operations by June 30

Oil Market Outlook:

Goldman Sachs projects Brent crude will average $80/barrel in Q4 2025, assuming Strait of Hormuz traffic normalizes within a month. However, downside scenarios exist: a one-month delay could push prices to $100/barrel, while extended disruptions could result in $115/barrel. Prediction markets place 75% probability on crude falling to $85 or lower by end-June—levels last seen mid-March.

Key Risks:

• Uncertainty over Strait of Hormuz reopening timeline
• Federal Reserve leadership transition and monetary policy direction
• Persistent inflation concerns
• Current trader estimates show only 8% probability of Fed rate cuts in September

Expert Perspectives:

Morgan Stanley's Mike Wilson emphasized markets are forward-looking, suggesting the "final hurdle" is Fed transition clarity before anticipated second-half rate cuts. Macro Risk Advisors notes mid-term election year corrections typically occur in September-October, though there are "high odds the market low is in."

The consensus reflects cautious optimism, with investors accepting remaining risks in favor of positioning for recovery.