In trader terms, the market has gone from “cover the stock shorts” to “show me the barrels.”TakeawaysThe peace dividend has been priced quickly, but the physical oil market still needs to validate it.The reopening of Hormuz is no longer just a headline risk. It is now the key transmission channel into oil, inflation expectations, and central bank patience.The BOJ hike was absorbed as expected, but the yen’s weak follow-through shows that rate differentials still matter more than policy symbolism.The Fed is the real gatekeeper this week. Lower oil gives it room to wait, but not enough evidence to declare the inflation threat over.Central Banks Take the WheelThe relief rally has moved from the easy-money lane into the central-bank checkpoint. After three strong sessions in which global equities effectively priced out the worst of the Hormuz shock, the tape is starting to breathe a little more heavily. The first move was simple. Oil down, inflation risk down, war premium down, equities up. But that was the reflex trade. Now the market has to trade the second derivative, and that is where things get more complicated.The US-Iran framework gave investors permission to take some air out of the energy risk balloon, but it has not yet delivered the one thing markets always demand after the first sigh of relief: proof. Flows through Hormuz still need to normalize, inventories still need to be rebuilt, shipping lanes still need to regain confidence, and the formal signing is still sitting out there on June 19 like a checkpoint the market has not crossed. That means the rally can keep some peace dividend in the price, but it cannot fully spend the cheque until the physical market confirms the paperwork.That is why stocks have started to wobble rather than extend cleanly higher. The first leg of the move was the market ripping out the panic premium. The next leg needs evidence. In trader terms, the market has gone from “cover the stock shorts” to “show me the barrels.” Brent slipping below $83 helps the disinflation narrative, but it also suggests the oil market is shifting away from battlefield insurance and back toward physical flows, export normalization, inventory repair, and the question of whether the reopening of Hormuz is smooth or messy.Japan added another layer to the story. The Bank of Japan lifted rates to 1%, the highest since 1995, but because the move was already largely priced in, Japanese equities treated it less as a hawkish shock and more as a known obstacle cleared. The yen’s inability to hold a stronger bid suggests the market still sees Japan through the lens of rate differentials and global risk appetite, rather than simply domestic policy normalization. The BOJ may be tightening, but it is not yet doing so in a way that changes the broader capital-flow map. ( more on this after the press conference)The Fed now becomes the main event. With Kevin Warsh chairing his first meeting and markets expecting rates to remain in the 3.5% to 3.75% range, the real trade is not the decision itself but the Fed’s new reaction function, if any at all.Oil has fallen, but the Fed will not be in a rush to declare victory on inflation just because the front end of the energy shock has cooled. The committee will want to see whether the Hormuz deal holds, whether oil flows normalize, and whether the inflation impulse fades before it spreads further into wages, services, and expectations.For equities, the implication is straightforward. The market has already priced the first round of good news. The pain trade was higher when everyone was still hiding under the Hormuz umbrella. But after three sessions of strong gains, the tape now needs confirmation from the real world. If oil keeps falling because physical flows normalize and the June 19 signing goes through cleanly, then equities can continue to trade the peace dividend. But if the deal gets delayed, shipping remains cautious, or oil snaps back on fresh headline risk, the market will quickly remember that this rally was built on a very fresh diplomatic foundation.Today it’s a central bank reduction tape day with an attached oil valve.For traders, the setup is cleaner than the headlines suggest. Equities can still grind if oil behaves and central banks stay patient, but the easy squeeze has already happened. The next move needs confirmation from Hormuz, discipline from oil, and a Fed that does not push back too hard on easing financial conditions. Until then, this rally should be respected rather than blindly chased. The first leg was relief. The second leg has to be earned.The good news is that Goldman Sachs cut its oil forecast; the bad news is that risk assets have bigger fish to fry.