For six months, equities treated the Iran war as background noise. Yesterday the noise got louder and the market listened. The S&P 500 fell 0.52% to 7,745. Brent crude closed above $90 for the first time in a week. The 30-year Treasury yield touched its highest level since 2007 for the second session in a row. President Trump rejected extending the expired ceasefire and threatened to bomb Oman if it interfered with US objectives. This morning, Home Depot reports before the bell, the first of four major retailers that will tell us whether the American consumer is still standing.

There is a pattern in how markets absorb geopolitical risk. First, they sell on the shock. Then they price it in. Then they stop reacting. Then they forget. Since the Iran war began on February 28, the S&P 500 has risen roughly 16%. Every escalation since April has been met with the same response: a day or two of selling, then a recovery, then new highs. The market internalized the conflict as a known risk and moved on.

Yesterday broke that rhythm. The S&P fell 0.52%, its worst session in three weeks, and the catalyst was not one headline but three arriving at once. First, Tehran told Reuters it had shifted to a fully offensive posture. Second, Trump went on Fox News and said he would not extend the expired ceasefire, claimed a backchannel with the IRGC that Tehran denied, and threatened to bomb Oman. Third, Kpler tracking data showed ship traffic through Hormuz grinding toward zero on Sunday. The aggregate effect was a day when the market could no longer price the conflict as stable.

What oil above $90 means. Brent closed above $90 a barrel yesterday for the first time in over a week. At that level, oil functions as a tax on everything. The EIA’s August forecast assumed Brent would average about $85 for the third quarter. Every dollar above that flows into higher gasoline, higher shipping costs, and eventually higher shelf prices. For a consumer that already told the University of Michigan it expects 4.3% inflation over the next year, $90 Brent is confirmation.

The bond market keeps sending the same message. The 30-year Treasury yield hit 2007 highs for a second consecutive session yesterday. The iShares 20+ Year Treasury Bond ETF fell to about $81.68, a 22-year low for the most widely held long-duration bond fund. Weaker economic data last week did nothing to pull yields down. The long end is no longer trading on growth expectations. It is trading on supply: the federal government is servicing $857 billion in annualized interest payments, the deficit projection for fiscal 2026 sits near $1.95 trillion, and the May auction of 30-year Treasuries was the first since 2007 to clear above 5%. When the government borrows this much, even a slowing economy cannot make long bonds cheap.

Home Depot reports this morning. Before the bell, Home Depot publishes Q2 results. The consensus is $4.71 in earnings per share on $47.5 billion in revenue, roughly flat earnings on 4.9% sales growth. The sales growth is largely driven by acquisition, not comparable-store traffic. In Q1, same-store sales rose 0.6%, and the company guided the full year to flat-to-2% comps. The quarter is being presented by interim leadership after CEO Ted Decker began medical leave on August 12. Tomorrow, Target and Lowe’s report. Thursday, Walmart. What they say about traffic, pricing power, and forward guidance will matter more than anything the Fed says until Wednesday’s minutes.

Where that leaves you. Futures are pointing to another lower open this morning, with S&P 500 contracts down 0.41% and Nasdaq futures off 0.76%. The Polymarket crowd gives a 27% chance of a higher open, the most bearish reading in weeks. The setup is uncomfortable but specific: oil above $90, the 30-year at a 19-year high, retail earnings starting in an hour, and the FOMC minutes tomorrow at 2:00 p.m. ET. A six-month T-bill near 5.1% still pays more than the S&P 500’s forward earnings yield. The people who have been patient all year are still being paid for it.