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Last week the cut came off the table; this week oil came off the boil. A signed peace memorandum, a reopening Strait, and a 35% oil crash to pre-war levels have markets unwinding the entire war trade — and quietly putting a Fed cut back in play, even as May inflation printed a three-year high. The crowd that read the escalation early is now reading the all-clear. — The Editor

What the markets think this week — the war-and-Fed cluster up top, repriced hard as peace took hold and oil fell. Bars are colored by category; figures are verified live at send.

The story this week is an unwind. After President Trump and Iran’s president signed a memorandum to end the war on June 17, the Strait of Hormuz began reopening, Kuwait lifted force majeure, and the U.S. blockade ended — and Brent crude fell to about $73, down more than 35% from its ~$114 peak and back near where it sat before the war.

That reversed the Fed trade in days. “Fed cut by September,” left for dead at 6% last week, rebounded toward 28%; “zero cuts in 2026” slid from 78% to the low 60s; and the “Fed hikes” bet halved. The oil collapse did what the dot plot couldn’t — it reopened the door to easing.

The counter-pressure is in the data. May PCE landed at 4.1% headline and 3.4% core on June 25, a three-year high — but that’s the rear-view mirror; June’s oil crash isn’t in it yet, and economists call May the peak. Markets are trading the future they expect over the inflation they just saw. The crowd, as ever, is early.

One market is betting this peace is different. The contract on no renewed Strait closure before October has climbed to around 72% — a confident bet on durability for a ceasefire whose three predecessors this year all broke.

Why the conviction? The June 17 memorandum is a signed, head-of-state document, not a verbal pause; oil trading back at pre-war levels means the futures market has priced the war premium all the way out; and the physical signals — lifted force majeure, a wound-down blockade, tankers moving — are harder to fake than a press release. The skeptic’s case is the track record itself. The focus isn’t whether 72% is right; it’s that real money is treating the all-clear as real before the diplomats have inked a permanent treaty. Resolution: September 30.

We grade the markets, including when they miss — and this week hands us a fresh one.

The hits: markets read the war’s onset with eerie accuracy, pricing a strike at 83% back in January and correctly fading recession fears that peaked near 37%. They also, eventually, got the reopening right after months of false starts.

The miss worth owning: just last week “zero cuts in 2026” sat at 78% — and within days an oil crash reopened the case for a cut, exposing that number as an overshoot at the exact moment sentiment peaked. Markets that nailed the war’s start over-extrapolated its economic grip at the end. And a darker note for the ledger: a Financial Times investigation found roughly $2 billion in bets on falling oil placed minutes before three of Trump’s policy announcements — a reminder that some “forecasts” weren’t forecasts at all. Calls flagged in On the Radar enter the log.

Strip out the geopolitics and here’s the unwind at your kitchen table. The clearest win is at the pump: with the Strait reopened and oil down by a third, gasoline is already falling — economists peg it near 56 cents a gallon off the May high — and May’s inflation spike is likely the peak, not the trend.

The bigger question is your mortgage. The same oil crash has markets pricing a real chance the Fed cuts by September, which would be the first borrowing relief of the year. But temper it: core inflation is still 3.4%, the Fed is still hawkish, and rates near 6.5% don’t fall overnight. The realistic read — cheaper gas now, possibly cheaper credit by autumn. None of this is advice; it’s the translation. When oil moves this hard, it moves your whole budget.

The war exposed a darker side of these markets: when policy itself is tradable, whoever hears first can cash in. A Financial Times probe found about $580 million, then $950 million, then $750 million in bets on falling oil placed 15 to 20 minutes before Trump’s ceasefire and Strait announcements — the wartime echo of this spring’s prediction-market insider cases. Regulators are now asking who knew what, and when.

Meanwhile the domestic fight reaches a milestone: Minnesota’s outright ban takes effect in days, on August 1, unless the CFTC’s suit blocks it, and roughly 18 states remain in litigation over who gets to regulate. The map of what — and on whom — you can legally trade keeps shifting.

The FT’s oil-bet findings put a sharp question on the table: can you insider-trade a president’s announcement?

Yes, it’s insider trading: acting on material, non-public knowledge of an imminent government action is the textbook definition; $2 billion in perfectly-timed bets isn’t analysis, it’s a leak; and letting it slide tells every official’s circle that policy is a profit center.

No, it’s just reading the room: anticipating a public figure’s next public move is what analysts and journalists do all day; political information isn’t corporate inside information under the law; and criminalizing well-timed forecasts would chill the very price discovery that makes these markets useful.

No verdict from us — but note the tell: the harder it is to distinguish a brilliant call from a criminal one, the more the integrity of every market depends on the answer.

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Prediction Markets Alert provides general-interest readers, forecasters, journalists, and professionals with weekly analysis of prediction-market movements, forecasting trends, and the events that move the odds.

Disclaimer: This publication is for informational and educational purposes only. It does not constitute investment, trading, betting, or financial advice, and does not recommend any position. Prediction markets carry risk, and participation is restricted or prohibited in many jurisdictions — readers are responsible for knowing and complying with the laws that apply to them. Market-implied probabilities reflect crowd sentiment, not certainty. Past accuracy does not guarantee future results.