Wall Street has spent months pricing in the worst for Iran, but Citadel Securities thinks the opposite trade is the one to watch.
The firm's strategist Frank Flight told clients a US-Iran deal could be close - and the stocks that would jump aren't the ones everyone's been buying.
Two things tipped Flight off: Iran's internet is back to 86% of pre-conflict levels after months of near-total blackout, while senior Iranian military officials are showing up in public again after going dark during the worst of the fighting.
Both moves matter because governments under fire tend to lock down communications and pull leadership out of the spotlight when they expect more attacks. Tehran lifting both signals suggests it thinks the worst is behind it.
Combined with growing reports of progress in talks, Flight says a deal could be "potentially imminent."
The signals aren't clean - the US and Iran spent Thursday accusing each other of breaking a fragile ceasefire, before Axios reported that both sides had agreed to extend the truce by 60 days pending President Trump's sign-off.
Oil markets have already been swinging on the headlines, with Brent crude bouncing roughly between $95 and $115 a barrel as each ceasefire rumor pulls prices down and each new strike sends them back up.
Every morning, Market Briefs breaks down the trades Wall Street is actually watching - in five minutes a day, with a free investing masterclass when you sign up.
The biggest swing factor is the Strait of Hormuz - the shipping lane that carries roughly 20% of the world's oil supply and has been the main source of energy market jitters since the conflict started.
If the strait fully reopens by the end of July, Flight estimates 10-year Treasury yields would fall more than 12 basis points - one basis point equals one-hundredth of a percentage point.
That same scenario would lift the S&P 500 by 1.7% while pushing the dollar down 0.5%.
The bigger story is which stocks lead - Flight pointed to airlines, retailers, and homebuilders as the biggest winners, three sectors that have been left out of the AI rally.
Why those three? Airlines benefit directly from falling jet fuel costs, while homebuilders feed off lower mortgage rates that follow Treasury yields down.
Retailers gain when consumers have more cash in their pockets and less of it going to gas.
All three groups have been trading at a discount while money flowed into AI names, leaving them well-positioned if investors start rotating out of the small group of tech stocks that have carried the market.
Flight isn't fully bullish on bonds for the long haul, since a strong job market and heavy AI spending could bring inflation back into the picture once the relief rally fades.
By 2027, he thinks the bond market could start pricing in Fed rate hikes again.
For now though, the setup is clear: if the deal lands, the sectors no one's been buying get their moment.
Join 350,000+ investors reading Market Briefs every weekday - plus a 45-minute investing course thrown in as a bonus.
