Midnight tremor, the world is experiencing a "second cognitive upgrade"

——The market is going through a “second cognitive upgrade.”

Wild Monday has left global investors genuinely surprised:

Surprise one: Oil prices surged, and U.S. Treasuries also jumped in tandem. After gold and crude oil rose together last Friday, there was yet another market moving in sync with crude. But this time, “it’s a big deal,” because bond traders are the smartest traders in the world—something unusual has appeared in the bond market. The reason is that traders have quietly shifted from “inflation trades” to “recession trades,” while other markets haven’t caught up yet.

Surprise two: The U.S. stock market hit fresh lows not seen since the Iran war, and there are still no substantive actions to rescue the market. Speaking in an interview with Fox News, U.S. Treasury Secretary Bessent said the United States would gradually regain control of the Strait of Hormuz and achieve freedom of navigation—whether through U.S. escort or through multinational escort. Even so, traders remain skeptical; their strategy of downplaying the situation of the day has already become outdated.

Surprise three: The U.S. crude oil closing price is far above $100—closing at $104. This is its highest closing level since the Iran war (the intraday high on March 9 reached $119, but the day closed at $85). Oil prices staying this high clearly shows that we are not in a period of easing—on the contrary, facts are exactly the opposite. Still, both Iran and the U.S. have incentives to reach a ceasefire agreement, and we shouldn’t underestimate how quickly both sides could come to one. Major Wall Street investment banks are rushing to estimate the war and its impact on oil prices. Macquarie says that if the conflict continues into June and the Strait of Hormuz remains closed (with a 40% probability of this scenario), oil could reach $200.

Surprise four: The Federal Reserve remains extremely calm. On Monday, Fed Chair Powell said it can wait and see how the war’s impact on the economy and inflation evolves, with no need for action yet. But his seemingly casual remarks had the effect of a masterful stroke—moving the market almost entirely to remove rate-hike bets. Powell’s comments were very textbook-like and also consistent with what he had said earlier. Before the Fed clarifies the specific form, scope, and scale of the current energy shock, it is basically in a wait-and-see stance.

The market continues to be driven by news headlines, but slowly people will realize that the real trading main line is not the war, but what will get traded as the “final step”—how policy will respond.

If you want deeper insights into global markets, subscribe to “Global Market Notes: April Outlook, the Final Blow”—this isn’t a crisis yet, but it’s already a warning.

1. Exclusive analysis: Can Trump keep a lid on oil prices? If the war gets out of control, what will happen to the market? Will oil prices start another big selloff in the future?

2. Exclusive release: “Fear and Greed Index Report: The Most Dangerous Thing Isn’t the Decline”—the U.S. dollar, U.S. stocks, A-shares, gold, and crude oil. Taken one by one, none of them looks extreme, but together they’re a major signal.