The strait stayed closed into week eleven as oil rallied sharply and Apollo moved to sell a stressed credit fund.

Futures drifted near flat after last week’s breakout rally. Traders came in cautious after Trump rejected Iran’s latest proposal, sending WTI back toward the upper-$90s and pushing yields higher again.

Tech held up better than the broader market, with chip names still carrying momentum from last week’s AI surge. But the tone was slower overall. Markets are now waiting for inflation data and the Fed transition story to shape the next move.

Investor Signal

Momentum is still intact, but the market is entering a tougher stretch. Higher oil and sticky inflation could test how far this rally can extend without fresh earnings fuel. For now, investors are still buying strength, especially in AI-linked names.

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Last week, markets rallied because a peace deal seemed close. Sunday night, that hope fell apart. Trump called Iran's counter-proposal "totally unacceptable" and oil jumped within hours.

The strait enters its eleventh week closed. No deal is in sight.

Iran demanded the U.S. lift all sanctions, pay financial reparations, and formally recognize Iranian control of the strait. The U.S. cannot agree to those terms publicly. The gap between both sides got wider over the weekend, not smaller.

What This Resets

JPMorgan's June timeline now matters more than any diplomatic update. Six weeks away. The hole in global oil supply grows daily.

Last week's calm was borrowed time. WTI is back near $100 and the week has no clear path to a deal.

The Baseline

Ceasefire optimism drove last week's gains. That optimism reversed Sunday night. The week opens where it should have started, with the strait still closed and no deal on the table.

Trump and Xi sit down in Beijing on Wednesday. The agenda includes trade, Taiwan, the Strait of Hormuz, AI rules, and rare earth export controls. No prior meeting between these two leaders has had this many live problems at once.

China recently stopped exporting rare earths. These are the materials needed to make semiconductors and military equipment. That one move disrupted supply chains for car makers and weapons manufacturers worldwide. It gives Beijing real leverage heading into the meeting.

Treasury Secretary Bessent meets China's Vice Premier in South Korea the same day, working through details before the leaders sit down.

The most important outcome for markets is any language specifically about the strait. Chinese backing for a ceasefire would move oil prices more than any other single event this week.

A deal on everything is unlikely. But even one issue resolved shifts the week's direction.

The Joint Statement

Any mention of the strait in the official joint statement moves oil, shapes inflation expectations, and sets the conditions Warsh inherits on his first day as Fed chair Thursday.

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For three and a half years, Chinese factories kept their prices low. That kept the cost of goods down for everyone who buys from China. Electronics, appliances, and industrial parts all stayed cheap because Chinese factories were absorbing rising costs instead of passing them on. That just changed.

China's factory price index rose 2.8 percent in April. The fastest pace since July 2022. The war caused most of it. Oil, chemicals, and metals got more expensive and Chinese factories felt it immediately.

Right now, factories are still absorbing more than they are passing on to buyers. But that has a limit.

What's Feeding Through

When factories stop absorbing and start raising prices, the cost of almost everything imported into the U.S. rises. That process has started but is not complete.

The Arrival

Unlike oil, this kind of inflation does not go away when the strait reopens. Warsh inherits this problem Thursday on his first day as Fed chair.

Private credit stress has been building for two weeks. Oaktree marked down software loans. BlackRock cut its fund value 5 percent. Now Apollo (APO) is trying to sell an entire fund outright.

Apollo's fund, called MidCap Financial Investment Corp. (MFIC), saw its default rate jump from 3.9 percent in December to 5.3 percent in just one quarter. Defaults mean borrowers stopped repaying their loans. The fund lost $61 million in Q1. Investors asked to withdraw 11 percent of the fund last quarter.

The fund currently trades at 85 cents on the dollar because buyers expect more losses ahead. Apollo stopped making new loans entirely and is using incoming cash to buy back its own shares instead.

No cash buyer exists at the fund's stated value. Any sale would likely happen with another fund paying in its own shares instead of cash. That spreads the problem rather than solving it.

The Sequence

Oaktree marked down. BlackRock marked down. Apollo is now trying to exit entirely. Three major managers in the same week following the same path. The stress is not isolated anymore.

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Cerebras makes chips specifically designed for AI inference. Inference is what happens every time someone uses an AI tool and gets a response back. Every new AI agent deployed needs inference chips to run. That demand only grows.

Cerebras set its IPO price range at $115 to $125 per share. Then investor orders came in at 20 times the available shares. The company raised its range to $150 to $160, a 30 percent increase. At that price it would raise $4.8 billion, the largest IPO globally so far in 2026.

Amazon (AMZN) and OpenAI are both existing customers. A national security review that previously blocked this IPO has been resolved. Pricing is expected Tuesday.

Cerebras prices before SpaceX, before Anthropic, before OpenAI. It is the first real test of what investors will pay for AI chip infrastructure with real customers behind it.

The Benchmark

Every AI IPO that follows gets measured against Cerebras's first-day trade. That one number sets the floor for the entire AI infrastructure IPO wave still to come.

Monday opened with the week's tension already visible.

The Iran deal collapsed overnight. China's factory prices are rising for the first time in years. Apollo is trying to exit a fund nobody will buy with cash. And a chip company priced 20 times oversubscribed before the market opened.

The pressure and the optimism are moving at exactly the same speed.