US markets surged on hopes of de-escalation in Middle East tensions, with the S&P 500 rising 2.5% after Iran's attack on Saudi Arabia's east-west oil pipeline. The index now trades just 1% below pre-conflict levels, suggesting investors believe the worst is over. Long Treasury yields have rebounded from crisis lows but remain below February levels, indicating lingering uncertainty.

Oil prices fell sharply but stayed a third above pre-war levels, complicating the ceasefire narrative. Market analysts note that even if hostilities cease immediately, restoring normal oil flow through the Strait of Hormuz could take months due to logistical challenges with equipment, insurance, and crews. The two-year Treasury yield barely moved, suggesting the ceasefire may not provide enough inflation relief for the Federal Reserve to cut rates this year.

Iran's proposal to collect tolls through the Strait in bitcoin raises practical questions about cryptocurrency's role in sanctions evasion. Despite claims of untraceability, experts note bitcoin's transparent ledger makes it vulnerable to US scrutiny when converted to fiat currency. The development highlights bitcoin's limitations as an alternative currency, particularly for state actors needing to access global markets. While markets price in reduced risk, analysts warn of remaining stagflation threats that could still materialize.