Stocks, bonds, and gold all rallied at the same time on Wednesday, which doesn't usually happen.
The driver was a real chance the Iran war ends, and the trade lined up across every major asset class.
The S&P 500 added 1.46% to close at a record 7,365.12, while the Nasdaq Composite jumped 2.02% to a fresh high of 25,838.94.
The Dow added 612 points, or 1.24%, to 49,910.59, and the European Stoxx 600 surged 2.1%, with London, Paris, and Frankfurt each up more than 2%.
Asian futures pointed higher into Thursday's open, tracking the Wall Street rally.
The catalyst was an Axios report saying Washington and Tehran are closing in on terms, including a halt to nuclear enrichment.
That's the news markets had been waiting for, since the war is now in its tenth week and is the main reason oil and inflation worries have been front and center.
Oil moved the other way, hard.
WTI crude fell 10.5% to $91.54 a barrel, while Brent dropped 9.8% to $99.12 and European natural gas slid as much as 14%.
The trade is simple: a ceasefire reopens the Strait of Hormuz, energy flows return, inflation pressure eases, and the Fed has less reason to hike rates.
Risk assets win, oil loses, bonds rally, which is exactly what played out Wednesday.
The dollar fell back to pre-war levels and gold climbed at the same time, both signs the market is starting to price the war out of the system.
The deal isn't signed.
The next move sits with Tehran, and the framework reportedly links a Hormuz reopening to sanctions relief and Iran's nuclear program.
President Trump told PBS NewsHour the war has "a very good chance of ending," possibly before his Beijing trip next week, and China's top diplomat called for a swift Hormuz reopening in a meeting with his Iranian counterpart.
Iran's IRGC said "safe, stable passage" was possible with new protocols in place.
Pepperstone strategist Michael Brown told clients de-escalation is bumpy but still moving the right way, and as long as that holds, "risk appetite should remain underpinned."
Two things can break this rally, either a breakdown in talks or a re-escalation in the Gulf.
Until then, every drop in oil reads as a tailwind for stocks and bonds, and the April ADP private payrolls report came in stronger than expected, which means the labor market is cooperating too.
Trump told reporters at the White House that Iran "agreed" not to pursue a nuclear weapon, adding "we've had very good talks" and a deal is "very possible."
That's the same kind of language that has moved markets all week, but the deal is still not signed and several shipowners said they remained cautious about sending vessels through Hormuz even after Iran laid out a new transit process.
Fed officials are split on what to do next, with St. Louis Fed President Alberto Musalem flagging more inflation risk than employment risk, and Chicago Fed President Austan Goolsbee warning against cutting rates just because productivity is rising.
Watch the next U.S.-Iran headline, the May jobs report on Friday, and any move on Hormuz.
