Yesterday's US session closed in the red across the board, with the S&P 500 down 0.56% to 6,830, the Dow off 1.61% to 47,955, and the Russell 2000 dropping 1.91% to 2,586 — the small-cap underperformance flagging genuine risk-off, not sector rotation. WTI crude surged 3.48% to $83.83, gold added 0.51% to $5,091, and the 10Y yield climbed 6.6bps to 4.146% while the USD index barely moved at 99.24, a flat dollar alongside rising oil and gold pointing to a supply-shock read rather than a simple risk-off dollar bid.

The driver is unmistakable: the Iran war is escalating and markets are being forced to assign a real probability to sustained Strait of Hormuz disruption. Maersk suspending two key shipping services is not a headline — it's a bellwether operator making an operational decision, the maritime equivalent of a canary in the coalmine. When the world's largest container shipper pulls routes, supply chain repricing follows with a lag of weeks, not months. Oil topping $87 Brent is the market's current forward read; bonds never bought the rally — yields rising alongside gold means traders see stagflation risk, not a growth shock that warrants duration.

For ETF investors, the playbook splits cleanly. Energy trade is back on the table — XLE, XOP, and the leveraged UCO all benefit from sustained $80+ crude, but beware the geopolitical premium unwind risk if headlines shift toward ceasefire. GLD and IAU deserve a position or trim-up here: gold at $5,091 with a rising yield backdrop means real money is buying insurance, not yield-chasing. On the defensive side, TLT is a trap until yields stabilize — the stagflation read punishes long duration. Rotate toward short-duration or floating rate (FLOT, JAAA) over Treasuries. Small-cap exposure via IWM should be trimmed: Russell 2000's near-2% drop signals domestic-economy sensitivity to oil cost-push and credit tightening fears.

Going into today, S&P futures are pointing down 0.28% to ~6,816 pre-open, Europe is muted with DAX/FTSE up fractionally — no relief rally to import. The single biggest swing factor is NFP at 8:30 AM ET: a hot number (~+200K+) stokes the stagflation narrative and hammers both bonds and equities simultaneously; a weak number (<+100K) gives the Fed cover to cut and could spark a relief bounce, but that same weakness in the context of oil at $87 is its own problem. The technical level to watch on S&P: 6,800 round number support — a clean break below on volume today opens the door to a test of 6,700.