Before the market opens on Monday, news came in: Iran said that, because Israel violated the ceasefire agreement, it has closed the Strait of Hormuz. At the same time, however, Iran’s top negotiating delegation has already boarded a plane and is rushing to Switzerland to meet with the Americans.

Next Monday, the market may see a sharp bout of volatility—during the Asian trading session it may be relatively more dangerous, while after the U.S. stock market opens in the evening, it may look more optimistic.

When the market opens on Monday, oil prices and safe-haven assets will react immediately to “the Strait of Hormuz closing again,” and oil prices could gap higher by $2–$3. But in the absence of further evidence of renewed firing, it will most likely face the first wave of reversal within half an hour.

The key is the trend in the U.S. dollar and U.S. Treasury yields. Many traders are watching the 101 level closely; a break above it would indicate that the market is no longer treating the Middle East as the main contradiction, and risk assets are likely to see a wave of selling.

In essence, this is a performance of “the script has already been written, but the actors are adding extra lines.” Although they talk about a blockade, Iran’s Speaker of Parliament, the foreign minister, and the central bank governor all went to Switzerland—showing they urgently need U.S. dollars and economic recovery, and that the closure of the strait is merely a temporary added negotiating chip.

So, by the evening, Trump may once again release some positive negotiation news (highlighting the Swiss talks) to support the market. However, the focus of attention in the U.S.-Iran negotiations has changed. Many people are still watching the Iran nuclear deal, but more importantly, Lebanon.

Because the U.S. and Iran both actually have incentives to push for ceasefire, the problem lies between Israel and Hezbollah—neither side is willing to take a step back first.

In the coming weeks, the market may repeatedly experience a cycle like “ceasefire—fighting again—blockade of the Strait of Hormuz—negotiations—ceasefire—then renewed firing.” The news changes every day. The most worth watching is not whether Iran will truly block the Strait of Hormuz, but whether the Swiss negotiations can put a “safety rope” around the Lebanon front. As long as this rope does not break, Hormuz is more like a deterrence card rather than a bomb.

But if the Lebanon situation gets out of control, then today’s “wolf is coming” could one day really turn into a wolf.

What is truly worth watching is that—on Friday—the market’s probability for a Fed rate hike is heating up, while the U.S. and China’s financial markets have not yet reacted to it because of the holiday. Next week, the U.S. will release June manufacturing and services PMIs and May core PCE price inflation. These data will either push rate-hike expectations to the extreme, or confirm that the current rate-hike probability is overly aggressive.