• Meanwhile in markets, despite the war of words it remains quiet on the Middle Eastern front. Crude oil has edged higher this morning, putting European bonds and equities under pressure;

• Brent crude is trading just under $110 per barrel, still holding below Friday’s highs. Tehran has sharpened its rhetoric, threatening to target any military vessel entering the Strait of Hormuz after President Trump’s announcement of Project Freedom – a mission to escort hundreds of stranded ships out of the Persian Gulf. The Wall Street Journal suggests the ‘mission’ will not involve a military escort but instead focus on providing the logistics for ships to safely transit through the Strait of Hormuz. That hardly feels like a resolution to the Mexican standoff in the Strait and a path to restoring oil flows;

• Shifting to broader markets, Bund yields are up 1-3bps in a bear flattening pattern. The Stoxx 50 is down nearly three quarters of a percent compared to Thursday’s close, while S&P 500 futures trade marginally above both Thursday’s and Friday’s closes. The Stoxx 50 now sits less than one percent above its 2025 closing level – the S&P 500 is up six percent;

• In our neck of the woods, Swiss PMI printed strong for a second month in a row, but the subindices raise doubts about how sustainable that momentum really is. Activity in both services and manufacturing is solid, but the strongest subcomponents are higher input/sales prices and longer delivery times – a sign that Swiss firms are grappling with delays and costs from the disruption in the Strait of Hormuz. Employment remains in contraction across both sectors while new orders continue to grow – though at a slower pace than last month;

• SARON forwards imply a 50/50 chance of a Swiss National Bank hike in September, but that feels premature. The PMI does point to building price pressures, yet Swiss inflation is starting from near zero, giving it room to rise. Given that the Swiss economy remains fragile and my belief that the Iran conflict won’t escalate again, I expect the Swiss National Bank to remain on hold throughout 2026;

• Looking ahead, we have a couple of ECB-speakers and John Williams – President of the New York Fed, not the conductor – lined up. Tomorrow is more data-heavy, with the US ISM Services PMI for April and the March job openings (JOLTS) report. Besides that, the Reserve Bank of Australia will publish its interest rate decision – consensus is a 25bps hike – and there is plenty more Fed- and ECB-speak.

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