• Meanwhile in markets, just when I thought I was out, they pull me back in. President Trump’s goal of securing a deal with Iran before the World Cup is on shaky ground as Israel and Iran continue to exchange blows throughout the morning. While Brent crude prices are up, broader market moves remain contained for now;

• Throughout the morning reports of blasts across Tehran and other Iranian cities have crossed our feed. Israeli strikes are reportedly focused on Iranian energy infrastructure. Tehran has threatened retaliation against regional energy assets – likely in the Gulf states – if these attacks persist. Given that Iran’s prior red lines regarding strikes on Beirut weren’t a bluff, I doubt they are bluffing now;

• While side-lined from offensive action the US is helping shoot down Iranian missiles targeting Israel. Washington reportedly remains in communication with Iran via Pakistani mediators. On Truth Social President Trump demanded an immediate end to the shooting from both sides, though diplomatic efforts have failed until now. Trump publicly urged Prime Minister Netanyahu to refrain from retaliation yesterday – an appeal Israel completely ignored;

• Shifting to some market commentary, Brent crude trades at $97 a barrel – up nearly $5 from Friday’s close but it remains within last week’s trading bandwidth. US Treasury yields are up 4bps across the curve this morning. The 2-year UST yield has now hit a war high of 4.186 percent. Driven by the recent escalation and May's relatively strong labor market report fed fund futures now price in 30bps of FOMC hikes by year-end. The broad dollar is up roughly one percent over the past week – as EURUSD is close to falling below the 1.15 mark for the first time since March;

• In our neck of the woods, Bund yields have climbed 2bps across the curve – leaving the 2-year yield only a hair below its recent war highs. ECB-dated ESTR forwards are close to pricing in three 25bps hikes by year-end, with Thursday’s hike fully priced in;

• Moving on to equities, the Stoxx 50 down half a percent this morning with S&P 500 futures holding steady near Friday’s close. While war worries weigh on sentiment, the AI trade also continues losing steam. Our own AI index – featuring hyperscalers like Nvidia – has entered correction territory after falling over 10 percent since last Tuesday. Year-to-date it still sits on a healthy 30 percent gain;

• Looking ahead, there is nothing of note on the calendar today but there are plenty of Iran headlines to keep an eye on. Tomorrow is set to be another quiet day – with some ECB-speak to break up to monotony.

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