The April's Fool joke is over for Markets – A look around assets in the morning chaos

Trump's address at the White House yesterday evening brought back old Market demons.

A more positive narrative was just nascent as the tone surrounding the US-Iran war seemed to ease significantly in recent days. But the US President's behavior is erratic, if not completely frantic.

Since last Monday morning, his communication on the war has increasingly expressed an ambition to get things over with, pushing for negotiations. But the Iranian side did not seem to agree to some heavy demands during indirect exchanges, and the US side could be losing patience.

As highlighted in our past day's Wrap, after a first leg higher, investors would have needed to see more concrete progress – if it's not diplomatic, it at least needs to be seen in commodity prices.

Failing to remain below $100, and with Trump reawakening rumors of a potential ground operation, traders quickly cut out their hopes for peace, which now almost looks like an April Fool's joke, this time stealing investors' time and money.

WTI spiked to $114 overnight and has remained above $110 since, with tensions still elevated and volumes lower due to the Passover Holiday – Not many will want to fight this pricing ahead of Good Friday (Stock Markets closed tomorrow), which combines with the NFP release and Easter Monday.

The energy commodity spiked an impressive 14% overnight after Trump's speech, which, quite frankly, did not add much to what had been said previously, but the fact that his tone grew more threatening again definitely reignited uncertainty.

For those interested, you can check out these highlights from his speech. Nothing really new there, apart from the possibility that a ground operation could come closer (the risk was already known, maybe voluntarily cast aside by Market participants).

After the speech, global assets took a huge turn to the downside, while volatility and the US Dollar did the exact reverse.

Reactions have been massive – Check out the inverted Oil and Dow Jones (inverted) correlation still holding strong, particularly on WTI rallies.

The pricing had been optimistic in Metals, which are now acting as if they were traditional risk assets. Still, fragile pricing leads to catastrophes – particularly when neither side has confirmed the narrative.

Buy the rumors, sell the rumors, they said.

With WTI slightly easing off its overnight highs, precious metals are attempting to rebound.

Still, they will be met with weak positioning, as the largest traders are standing on the sidelines, awaiting tomorrow's stormy Market conditions to abate(as mentioned in the introduction).

Silver remains the most reactive to movements in commodities and is more volatile than its Yellow counterpart, making it the best Metal to observe to test Market mood.

Rejecting its Momentum Pivot, the action remains more bearish than bullish.

Bulls will want to see the mini-uptrend holding to withhold further selling pressure.

These Markets are losing their heads after a gigantic gap lower at the open. Buyers are stepping back in, pricing another Trump TACO ahead of a long weekend.

But this shouts a bull trap as long as prices fail to breach 47,000 on the Dow Jones. With fewer players trading Markets, such brutal up-and-down moves tend to see fewer participants reprice the narrative.

For now, with Oil retracting further and an Iran-Oman protocol for Hormuz drawing out, the action is turning again.

Watch out for high volatility and potential large swings, as Markets have only been moving on erratic headlines over the past 24 hours – the action could only get clearer on Tuesday when Volumes pick up again!

Bonds are rallying (Yields, and inflation expectations drop) as persistently elevated Oil levels could now be priced to drag the global economy further.

US Treasuries could also be getting lifted by the Blue Owl Credit stress that has now been drawing for a little while, and remains one of the most ignored risk catalyst (acknowledged by Powell in his recent speech).

This narrative could only be confirmed after tomorrow's NFP and once again, Tuesday will be the decisive timing to see if the Market is really serious on its optimism or if this entire theme is just a large bull-trap.

Keep a close eye on the headlines and make sure to control sizing in such an erratic environment.

Safe Trades and good luck for the rollercoaster trading ahead!

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