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The U.S. move to blockade the critical Strait of Hormuz has led to a familiar market response: surging crude prices, rising bond yields and a firmer dollar.

But this time, the reaction has been notably restrained, barring oil movements. Equities fell relatively modestly Monday, suggesting investors have priced in much of the geopolitical risks and are growing less reactive to headlines.

“There’s a belief that a lot of this is negotiation tactics,” said Billy Leung, investment strategist at Global X ETFs, referring to Trump’s announcement. “Markets have reached peak uncertainty. The reaction function is no longer as extreme as before.”

Asia stock markets were trading broadly lower, but the magnitude of moves was notably muted, with most major benchmarks down around 1%. Futures for key U.S. indexes were also down under 1%.

Spot gold prices lost about 0.5% to $4,720.28 per ounce, while the U.S. dollar index added 0.38%. A stronger dollar makes greenback-priced gold expensive for holders of other currencies, reducing bullion’s appeal.

Leung said recent market moves suggest investors are becoming more accustomed to geopolitical shocks, with volatility easing compared to earlier weeks. “So I think the market now has a better price and better understanding of the Trump motive,” he said.

Similarly, Ten Cap’s lead portfolio manager, Jun Bei Liu, said that volatility indicators suggest the worst of the panic may have passed. “We saw the VIX pick up a few weeks ago, and that’s probably the peak fear and sell off… from here on, it’s really the market trying to work [itself] out.”

A key near-term risk, however, lies in the political timeline surrounding the U.S. military action. Leung pointed to the war powers resolution, which effectively gives the administration a limited window to secure congressional approval. “In the next few weeks, we are going to see a rising desperation from Trump’s administration,” he said, adding that markets may not yet fully appreciate this constraint.

U.S. lawmakers are reportedly again looking to pass a resolution to stop the Iran war and force Trump to seek ​Congress’ approval before any more attacks.

Oil expected to fall, equities to recover

The U.S. move to blockade the Strait of Hormuz, which has already seen traffic drop to a trickle since the war started, has reinforced expectations of tighter energy supplies, pushing crude prices higher and lifting inflation concerns globally.

Inflation concerns have also clouded rate-cut expectations, driving bond yields higher while the U.S. dollar has strengthened and equities have declined. Yields on the 10-year Treasury added more than 333 basis points since the war started. The dollar index has gained about 1.4% over the same period.

U.S. oil prices have surged over 55% since the war started. U.S. crude oil futures for May delivery jumped more than 8% to $104.93 per barrel by 10.50 p.m. ET. International benchmark Brent for June delivery advanced 7% to $102.17.

Analysts expect oil prices to eventually retreat as the geopolitical situation stabilizes, even if near-term volatility persists.

“I’m pretty confident that oil is going to go down from here … we’re going to see oil at $80 a barrel again,” said Michael Yoshikami of Destination Wealth Management, citing expectations that the U.S. and Iran will eventually reach a negotiated resolution, which could quickly unwind the current risk premium.

Standard Chartered’s Steve Brice said that higher oil prices push back any prospects for easier monetary policies, putting upward pressure on bond yields and the U.S. dollar. “However, we see these as temporary phenomena as we believe the U.S. is looking for ways to de-escalate.”

Gold has behaved less predictably, falling despite heightened geopolitical tensions. Brice attributed that to emerging-market central banks selling bullion to stabilize currencies, though he expects demand to return if Mideast tensions ease.

For now, markets appear to be balancing elevated geopolitical risk with expectations that hostilities will eventually ease, taking Trump’s statements in their stride.

“We believe stock market positioning favors a rally and, therefore, as long as things do not get materially worse, then stocks should continue to rally near term,” Brice said. Investors are still positioned defensively even as the macro backdrop remains relatively constructive, leaving room for equities to rebound if the conflict begins to de-escalate, he added.

That offers investors a delicate environment, one where geopolitical shocks still matter, but no longer trigger the same level of panic-selling seen earlier during the conflict.

“It’s not such a binary outcome. It’s going to be a bit of a gray area for a while,” Yoshikami said.