The market is pricing peace through live ammunition.

US Central Command confirmed overnight strikes in Bandar Abbas, near the Strait of Hormuz. Targets included missile launch sites and boats attempting to lay mines. CENTCOM called the action self-defense and said forces were "using restraint during the ongoing ceasefire."

Here's the thing. Laying mines in a shipping lane is not what a ceasefire looks like. Both sides are treating the truce as a ceiling, not a floor. Iran sent its parliament speaker to Qatar for talks the same day.

Polymarket prices a permanent peace deal at roughly 62% by May 31 and 91% by December 31. That is a prediction market where traders bet real money on news outcomes. Total volume on the contract: $183 million. A separate contract on a new ceasefire agreement trades at 63% by June 7 and 78% by June 30.

The odds barely moved overnight. Strikes during a ceasefire, and the market shrugged.

Brent crude is the global benchmark for oil. It closed last week near $103. By Monday it had dropped to $95. Tuesday it bounced to about $98 on the strike headlines, but the bounce barely dented the weekly slide.

The drop is the market pricing one thing: the Strait of Hormuz back open. The strait is the narrow waterway between Iran and the Arabian Peninsula that carries about a fifth of the world's seaborne oil. It has been effectively closed since February.

But open is not the same as clear. A Nikkei report said Iran would reopen Hormuz 30 days after a deal. The Royal Navy is loading mine-hunting drones onto RFA Lyme Bay in Gibraltar right now. British officials said clearing the strait could take months. Iran deployed mines, naval assets, and a toll-like transit authority since the war started.

The price says Hormuz is reopening soon. The logistics say otherwise.

The S&P 500 closed Friday at 7,473, its eighth consecutive weekly gain. The Dow hit a record at 50,580. Futures are pointing higher again this morning, up about half a percent before the bell.

Meanwhile, short interest across US equities is sitting at multi-month highs. That means a growing number of traders are betting stocks will fall. If a peace deal lands and oil drops further, those shorts get squeezed. That is when bearish bets get forced into buying, which pushes prices even higher.

Think about that setup. Equities are at record highs. Shorts are crowded. The market is trading as if the Iran deal is done. If it is, the squeeze could add another leg up. If it is not, the same crowding works in reverse.