Your premarket read — what moved overnight, and what it means for long-term investors. A 3-minute brief from Kodiak Capital Advisors.

The Setup

The war premium is coming out of oil. President Trump called off a planned strike on Iran over the weekend and pointed instead toward talks on reopening the Strait of Hormuz, the narrow waterway that carries roughly a fifth of the world's oil. Crude is down sharply, yields are easing, and stock futures are pointing higher to start a jobs-report week.

Stocks

S&P 500 futures are up about 0.6% this morning, with Nasdaq-100 and Dow futures close behind. The driver is simple: less war risk means less inflation risk, and that lifts nearly everything. The rally that Big Tech earnings sparked last week now has a second leg under it. Our read: markets swung from fearing conflict to pricing in diplomacy inside of a weekend, a useful reminder that headlines move faster than fundamentals, in both directions.

Rates & The Fed

The 10-year Treasury yield slipped to around 4.67%, pulling back from the multi-month highs it hit last week, as falling oil prices took some pressure off inflation expectations. Markets still put roughly two-thirds odds on a quarter-point Fed hike in September, recall that three Fed officials dissented in favor of raising rates at last week's meeting. Plain English: cheaper oil helps the inflation picture, but the Fed hasn't declared victory, and yields on cash and short-term bonds remain the best they've been in years. Savers are still getting paid.

Commodities & The Dollar

This is where the action is. Brent crude dropped nearly 5% to around $84 a barrel and WTI fell about 6% to near $80, the steepest one-day declines in weeks, unwinding part of July's 20%-plus surge. Gold is holding firm near $4,050 an ounce as the dollar softens. If the diplomacy holds, the relief eventually shows up at the gas pump and in the inflation data the Fed watches.

What It Means For You

In five weeks, oil has priced in a war and now, perhaps, a peace. Anyone who repositioned their portfolio around either headline got whipsawed twice. That's the case for owning a diversified mix and letting it work: the energy spike helped commodity and energy exposure while it hurt bonds, and today the reverse is playing out, the portfolio balances what the headlines can't. This week's jobs report matters far more to your long-term plan than this weekend's geopolitics, and even then, no single data point should change a well-built allocation.

On Deck Today

• ISM manufacturing index, 10:00 a.m. ET — a monthly health check on U.S. factories; economists expect it to show activity picking up. The first of several readings this week on whether the economy is running hot enough to justify a September hike.
• Earnings week begins — Palantir, AMD, and Eli Lilly headline, and SpaceX delivers its first earnings report as a public company Tuesday.
• The main event is Friday — the July jobs report, the single biggest input into the Fed's September decision. JOLTS job openings (Tuesday) and ADP payrolls (Wednesday) are the warm-up acts.

A note from Kodiak

Markets give you a new reason to react every single morning. Our job is to help you tune out the noise and keep your plan on track. If you'd like a second opinion on how today's headlines fit your portfolio, book a 15-minute intro call →.

Written by Jeffrey Mansell, Kodiak Capital Advisors, LLC.