Crash starts at 22:00, the world is trading the worst-case scenario

Source: Wall Street Intelligence Circle

—You don’t need to win today, you just need not to lose the future.

After 22:00 (Beijing time) on Friday, the global market situation deteriorated:

- U.S. stocks plunged across the board, the Nasdaq fell more than 2%, and the S&P 500 index broke below the 6600 warning line (closing at 6506);

- Gold and Silver switched from rising to a sharp plunge, with gold prices falling below $4,500 and a weekly cumulative loss of over $500;

- The US dollar once again rose together with US Treasury yields, with the 10-year Treasury yield approaching 4.4%;

- Brent crude closed at its highest point since the Iran war, surpassing $112.

From the closing situation, this looks more like a “starting point” rather than an “endgame”; things are getting worse, but it’s not the worst time yet.

First, oil prices are on the verge of losing control—not a question of rising or not, but of “whether they’re out of control,” with volatility completely dominated by the “news flow.” The market isn’t trading supply and demand, but the “worst-case scenario.”

Second, the market is finally starting to accept the view that the conflict will last longer than expected—it may not last just weeks, but months, or even more, and this is the main reason for the sell-off. The US military is deploying an amphibious assault ship to the Middle East, sending thousands more marines and sailors, while Iran’s new supreme leader praises Iran’s “unity” and “resistance.”

Third, the interest rate cut narrative has been dashed—the US interest rate futures market now, for the first time, expects that by the end of 2026, the probability of the Federal Reserve raising rates is higher than cutting them. So, the biggest loser this week is not equities, but bonds; US Treasuries plummeted (yields shot up), and European bonds did even worse. In the past, when stocks fell, people would buy bonds, assuming the central bank would always backstop. Now, even bonds are falling, indicating the bond market is saying “stop dreaming.”

Fourth, this drop in gold doesn’t necessarily mean it’s lost its safe haven property—more likely, it shows the market now lacks not a sense of security, but dollar liquidity. The difference is big: the former is an emotional issue, the latter a capital issue, and capital problems are usually more severe. In other words, gold is falling not because the world is safer, but because there is a greater shortage of money.

What really pains the market is not necessarily a major slump on a certain day, but the gradual acceptance of “higher oil prices for longer.” A one-off plunge tends to clear the market quickly. But if it’s this kind of “oscillating at high levels, protracted war, hope for rate cuts gradually fading,” then the market enters a particularly painful state—not doomsday every day, but each day is more expensive, slower, and harder than the last.