The toll got walked back; the war did not.

Two things happened at once, and the market chose which to price. President Trump WALKED BACK his proposal for a 20% toll on cargo transiting the Strait of Hormuz - the 'TACO Tuesday' retreat, in the market's shorthand - and that, layered on a benign June CPI, sliding Treasury yields and a run of upbeat US bank earnings, gave Wall Street a modest, tech-led rally on Wednesday and held the relief into Thursday: the 10-year eased toward 4.55%, the VIX fell back near 15.7. The market is trading the acute risk as though it has peaked.

But the war did not retreat with the toll. Overnight brought a FOURTH consecutive night of US strikes around Hormuz - explosions reported at Bampur, Chabahar and Bandar Abbas, casualties on the ground - while Iran kept the Strait blocked and kept firing on tankers. Our prediction signals still put the odds that fewer than 150 ships transited the July 6-12 window at roughly 99.7%, and the odds of even 30 transits on any single day by month-end near one-in-three. Oil is off its peak but not down - about $79 WTI and $84 Brent - because the thing that spiked it, a shut Strait, is unchanged. The toll retreat removed a headline TAX; it did not remove the supply SHOCK.

The forward risk is still loading, in fact. MarketWatch warns Americans should 'brace for $4 gas' as the tensions threaten to end the price break at the pump, US refiners could 'more than triple profits' on the dislocation, and the Wall Street Journal notes China's crude-buying pause - which had cushioned the market - 'might be changing', which would tighten it further. And the structural response is already forming: the US is backing an Iraq-Syria pipeline to route crude around Hormuz, and analysts argue passage 'fees are likely inevitable' even if this particular toll was withdrawn. The Economist's judgment stands - there are no good options for reopening the Strait.

The tell is in the metals. Gold and silver sat roughly flat - refusing to bid even as the conflict grinds on - not a haven rally but a haven UNWIND, the acute war-fear premium quietly bleeding out as the toll retreat calms the tape. That is consistent with the whole risk-fade: yields down, VIX down, havens down, equities steady. It is a market pricing the de-escalation of the RHETORIC while the supply shock stays in place - which is precisely the gap to watch.

The steelman for the risk-on read: the toll was the most acute, most self-inflicted piece of the shock, and its withdrawal plus a benign CPI, a Fed off a July hike and an upbeat earnings start is a genuine catalyst. The read is wrong if the market is fading a war that is still escalating - a fifth night, a tanker sunk, a China-buying resumption, or a '$4 gas' headline re-prices the oil the metals are now ignoring. Conviction is high that the toll retreat and the earnings start are real and supportive; medium that the risk-fade is right, because the Strait is still shut. The near-term arbiters are concrete: today's retail sales and jobless claims, and Netflix earnings after the close. The read to carry: the headline tax is gone but the supply shock isn't, so take the relief while watching the Strait and the pump - the metals are fading the war, but the war is still on.