This morning, the Behavioral Desk described the availability cascade: eight weeks of Hormuz headlines making the worst-case scenario feel more probable than base rates support. By close, the data reveals the cascade has done something the morning framework anticipated but could not yet see in the numbers. It inverted. The same mechanism that amplified fear in early March is now suppressing it.

The Market Is Now Underpricing the Risk It Was Overpricing Two Weeks Ago

Trump extended the Iran ceasefire indefinitely after Tuesday’s close. The S&P 500 gained approximately 0.8% today, the Nasdaq hit a new all-time intraday high, and the TSX recovered to roughly 34,010, reclaiming most of Tuesday’s 551-point loss. That is the headline.

Here is what the headline obscures. While markets were buying the ceasefire extension this morning, Iran’s Revolutionary Guard seized two container vessels in the Strait of Hormuz, the MSC Francesca and the Epaminondas, and attacked a third, the Euphoria. These are the first ship seizures since the war began in late February. WTI crude surged past $92 per barrel. Brent briefly topped $101. The strait is not opening. It is becoming more dangerous. And equities rallied anyway.

The sell reaction is disappearing
TSX reaction magnitude by Hormuz cycle, late Feb to Apr 22, approximate %
Sell Buy Sell Buy Sell Buy Cycle 1: Late Feb Cycle 2: Mid Mar Cycle 3: Apr 17-22 +3% +1.5% 0% -1.5% -3% -2.8% +2.1% -1.8% +1.6% ~0% +1.6%
Source: Yahoo Finance, TMX Money, HDQ analysis

The Behavioral Desk’s availability cascade framework explains the mechanism precisely. Three cycles of closure-then-reopening have conditioned the market’s reflexive response. In Cycle 1 (late February), the TSX sold off roughly 2.8% on the initial closure. In Cycle 2 (mid-March), the sell reaction compressed to approximately 1.8%. In Cycle 3, which includes today’s ceasefire extension, the sell reaction has effectively disappeared while the buy reaction held steady. The asymmetry is the signal. Investors have been trained by the pattern to expect resolution, and that expectation is now overriding the incoming data about ship seizures, IRGC aggression, and oil above $100 Brent.

This is not a story about whether the ceasefire will hold. It is a story about what happens when a market’s behavioural conditioning diverges from the underlying risk trajectory. The Geopolitical Desk established this morning that the negotiating deadlock is structural: the U.S. will not lift its blockade, Iran will not reopen the strait until it does, and Iran’s top negotiator said today that reopening is “impossible” under current conditions. The market heard “ceasefire extended” and bought. It did not hear “ships seized” with the same volume.

What the Warsh Hearing Means for April 29

The second connection the morning desks could not have made lives at the intersection of the Economy Desk’s April 29 preview and Kevin Warsh’s Senate confirmation hearing, which took place yesterday afternoon. Warsh, Trump’s nominee to replace Powell as Fed Chair next month, told the Banking Committee he plans to reduce FOMC meeting frequency, scale back forward guidance, and adopt a new framework for addressing inflation. He explicitly declined to say that tariffs are driving prices higher. He suggested AI-driven productivity gains give the Fed room to cut rates that traditional models do not capture.

Two visibility anchors degrading into April 29
Forward guidance inputs for Bank of Canada rate path calibration
Hormuz sell-reaction signal Fed forward guidance clarity Mar Apr May+ Strong Fading Inverted Powell era Transition Warsh era Both inputs narrowing simultaneously into BoC April 29 MPR
Source: CNBC, NPR, Bank of Canada, HDQ analysis

For Canadian advisors, the practical consequence is specific. The Bank of Canada calibrates its rate path partly against Fed signals. The Economy Desk’s framework this morning assumed the April 29 Monetary Policy Report would provide the clearest official view of the year. That remains true from the BoC side. But the Fed side of the equation, which the BoC uses to assess the interest rate differential and capital flow expectations, is about to become materially less transparent. A Warsh Fed that speaks less frequently and provides less forward guidance makes the BoC’s job harder. It makes advisor conversations about rate expectations harder in turn.

The Tax & Wealth Desk flagged clients with mortgage renewals in the May to September window as the highest-priority group heading into April 29. After the Warsh hearing, that priority escalates. These clients are making fixed-versus-variable decisions with two fewer anchors than they had last week: the market’s Hormuz risk signal is behaviourally inverted, and the Fed’s forward guidance is about to compress. The 5-year Government of Canada bond yield, which directly prices fixed mortgage rates, rose to 3.09% yesterday. That yield is the practical transmission mechanism between everything discussed here and what a client pays monthly on a renewed mortgage.

What an Advisor Should Do Differently Tomorrow

The morning articles established the right frameworks. This synthesis does not change them. It adds one variable: the complacency signal. When an advisor calls a client tomorrow, the conversation should not centre on Tuesday’s 551-point decline. The TSX recovered most of it today. The conversation should be about why that recovery is not the reassurance it appears to be.

Ships were seized in the strait while the TSX rallied. Iran’s negotiator called reopening “impossible.” Oil topped $101 Brent. The market’s pattern-matching reflex, conditioned by three cycles of open-then-close, has replaced its risk-assessment function. The advisor who names that distinction tomorrow morning, calmly, with specific data from today, is the one the client will remember when the next Hormuz headline arrives and the market does not bounce.