Trump extends the ceasefire — unilaterally

Only three of the Magnificent Seven are up on the year — and the group as a whole is trailing the S&P 500. Tesla enters tonight’s earnings print as a 19-point outlier to the downside.

The group that carried 2025 has become dispersion. Amazon and Nvidia are still pulling their weight, with AMZN +8% and NVDA +5% year-to-date. But Apple and Microsoft are flat-to-down, and Tesla is down nineteen percent. The aggregate Mag 7 is −1.3% on the year while the S&P 500 is +1.8% — a rare inversion of a three-year pattern where the seven drove the index.

Why it matters tonight. Tesla’s Q1 print lands after the US close. Consensus is $22.3bn revenue, $0.25 EPS. The tell is auto gross margin: a print below 17% tips the profitability narrative further, per Trading Key. Prediction markets (Polymarket via Yahoo) assign a 37% probability to a clean beat.

The textbook post-2009 assumption is that Treasuries hedge equities because the dominant shocks are demand-driven: growth surprises move stocks and rates in opposite directions. That relationship breaks under supply-side shocks. When the binding constraint is energy or goods availability — a Hormuz disruption, an OPEC cut, a tariff-induced cost push — inflation is re-priced higher without offsetting growth support. Bonds sell off on the inflation channel at the same time equities sell off on the margin and demand channel, and the correlation goes positive. That is the cleanest read of Tuesday’s cross-asset tape: a 4bp rise in the 10-year yield into a 0.63% S&P drawdown is not a failed hedge — it is the signature of a cost-push regime being priced.

The implication is about signal rather than instrument. Two sessions this month of correlated sell-offs are not enough to declare metals the “new” 60/40 hedge; the post-GFC regime of negative stock–bond correlation was anchored on disinflation plus demand-side shocks and could re-assert itself. The more useful read is symmetric: if the 2026 shock complex stays supply-side (Hormuz risk premium, tariffs, energy policy), correlation stays high and the next rally will also be correlated — stocks and bonds lifting together on de-escalation, not re-diverging. If the shock rotates back to demand, duration takes back the hedge role. The correlation itself is the signal; allocation follows from it.

The Gulf cash session tracked Monday’s steady-to-soft global tape. Saudi Arabia’s Tadawul All Share (TASI) held at 11,344.96 (−0.19%) per Yahoo Finance, paring its Monday decline as Aramco stabilised. ADX General closed 9,871 (+0.30%) the session before and opened firmer Tuesday, with DFM and Qatar’s QE Index broadly flat on the ship-seizure-plus-ceasefire cross-currents. The regional read is noticeably calmer than the European one: Gulf bourses are not pricing a new Hormuz escalation so much as an extension of the status-quo risk premium in Brent.

The constructive through-line holds. TASI is still up roughly 8% year-to-date; regional energy cashflow remains supportive at mid-$90s Brent; and the Gulf’s petro-surplus keeps bid-under for select blue-chips. The watch-item into Wednesday is whether Aramco and Adnoc refiners give back the post-ceasefire bump if Tesla disappoints US tech and risk appetite thins overnight. AGBI and Gulf News both continue to frame the tape as “ceasefire-under-stress” rather than broken — a description Tuesday’s session did nothing to change.

The more useful Tuesday takeaway is not about metals leadership; it is about the regime the market is pricing. Rising stock–bond correlation is the signature of supply-side inflation — the equity market and the bond market agreeing that the binding constraint on 2026 is cost-push, not demand weakness. That signal is what matters for positioning: it affects how duration is sized, how cyclicals are priced, and what the next rally is likely to look like (also correlated, and in the opposite direction). A 4bp back-up in 10-year yields into a 0.63% S&P drawdown is not a hedge failure; it is a diagnosis.

A note of discipline on the data. Two risk-off sessions with falling bond prices are not enough to declare precious metals the “new” 60/40 hedge. The post-GFC regime of negative stock–bond correlation was anchored on a very specific macro mix — disinflation plus demand-side shocks — and that mix can re-assert itself as quickly as it has receded. The right read is conditional: if the 2026 shock complex stays supply-side (Hormuz, tariffs, energy), equity–bond correlation stays high and physical hedges help at the margin. If the shock rotates back to demand, duration takes back the hedge role. The correlation is the signal. The hedge instrument follows from it.

Rising stock–bond correlation is not a hedge problem. It is the market telling you the marginal shock is being priced on the supply side — and that the next rally will be correlated too.