June's CPI print gave the Bank of Canada exactly the improvement it said it was waiting for when it held on July 15. Five days later, the sector most exposed to that decision sold off harder than any other on the index, and traders are still pricing a hike by year end, not a cut.

Gold's failure to rally on the biggest escalation of the US-Iran war in weeks is not a fluke. It is the clearest sign yet that oil-driven inflation fear, not geopolitical fear, is now setting the price of the safe-haven trade, and Canadian portfolios showed the same pattern in miniature on Friday.

Oil climbed to a one-month high and gold fell to an eight-month low on the same day Iran struck civilian infrastructure in Kuwait and Trump dated the next round of strikes to next week. That combination, read against this morning's five desks, says more about how this war is being priced than either asset does alone.

A live production-risk event hit Iran's main export terminal this morning. The safe-haven trade that should have followed did not arrive, and the reason runs through four other desks.

June's inflation cooling to 3.5 percent, the number both central banks leaned on Wednesday, was driven by a ceasefire-era gasoline decline that ended July 8. WTI has already priced the difference, posting its largest single-session jump of the disruption six days later.

Trump dropped the twenty percent Hormuz transit fee this afternoon. Fed Chair Kevin Warsh refused to call June's cooler inflation print mission accomplished. Gold's recovery of almost exactly Monday's loss shows which of those two stories it was actually pricing.

Monday's announcement of a toll on Strait of Hormuz shipping produced a bigger crude move than four rounds of military strikes did this week, while gold barely reacted. The Federal Reserve's own report to Congress last Friday explains why the two are no longer separate stories.

June's FOMC minutes showed nine of twelve officials favouring higher US rates, the first hawkish signal of Kevin Warsh's chairmanship. The Bank of Canada meets the same day, expected to hold for a sixth consecutive time. The distance between the two paths is the story this week.

As the US and Iran traded a fourth wave of strikes and Tehran declared the strait closed again, gold slid to a two week low. The move exposes which narrative investors are actually pricing.

Brent crude gained about 5 percent after simultaneous strikes on Bahrain, Kuwait, Qatar and Jordan, a fraction of the surge that followed the war's opening moves in February. The TSX closed the week near its highs anyway.

Wednesday's escalation drove a synchronized selloff across equities, oil, and gold. By Thursday afternoon, four of those five moves had already reversed. The Government of Canada 10 year yield is the one that stayed put.

The jump followed hawkish Fed minutes under Chair Kevin Warsh and an oil driven bond selloff, and it happened six days before the Bank of Canada's blackout period lifts.

Nine of 18 Fed officials wanted a hike in June. Wednesday's oil shock just made markets believe them again, and gold's afternoon reaction confirms which mechanism is actually driving Canadian portfolios today.

The safe-haven trade clients expect broke down exactly when the news looked most alarming, and the availability heuristic explains why they will not see it coming next time.

WTI is up about a percent from Monday's four week low after Iran's Revolutionary Guard fired on two vessels in the Strait of Hormuz, the first breach of the June 17 memorandum of understanding. The Bank of Canada's blackout for the July 15 decision started this morning, before either the attack or the market's tepid reaction to it could enter the public record.

The communications blackout ahead of the July 15 decision begins this morning, the same day Iran's Revolutionary Guard fired on shipping in the Strait of Hormuz. The Bank will decide with May's inflation data, a week before June's number arrives.