• Meanwhile in markets, the bond market sell-off has hit the brakes, but equities continue to slide. However, it might be time to Buy The F’ing Dip, as the Trump Admin clearly is starting to worry over the nearly 40% YTD surge in Brent crude oil prices;

• Brent crude is trading at $83.50 a barrel after hitting $85 yesterday. While Iran hasn’t physically mined the Strait of Hormuz, their strikes on tankers have spooked major maritime insurers into pulling war risk coverage – creating a de facto blockade. To counter the squeeze, President Trump announced that the U.S. International Development Finance Corporation will offer maritime insurance guarantees to try and get the flow going. Simultaneously, the U.S. is weighing naval escorts for tankers to keep energy flowing. However, these convoys could become enticing targets as they have to get in close to the Iranian coast;

• Shifting to equities, we’re seeing a slide in the US, but we’re far from the pain caused by the April tariffs saga that resulted in Trump TACO-ing (Trump Always Chickens Out). S&P 500 futures have slipped half a percent today, keeping total losses since Friday to a manageable percent and a half;

• Asian markets are taking a bruising: the Nikkei has shed nearly eight percent since Friday, while South Korea’s KOSPI has officially skidded into a bear market with a twenty percent plunge. These losses are sharp, but context is key: this is a retreat from the unsustainable gains, and with extraordinary heavy retail involvement in the Korean market. The Nikkei remains up seven percent YTD despite its drop, and the KOSPI was up a staggering 60% at its peak, fueled by the AI-driven memory boom;

• Moving to bonds, US Treasury yields are 3-6bps below yesterday’s highs with the 10-year yield at 4.07%. In our neck of the woods, Bund futures also remain above yesterday’s lows. The war has led to the multi-year tightening of Bund spreads finally hitting a wall. Spreads gap wider, with French, Spanish and Italian Bund spreads up just under 10bps from their recent lows;

• In broader market commentary, the broad dollar is now up a percent and a half against major currencies this week and over two and a half percent against emerging market currencies. EURCHF has slipped back below the 0.91 handle, though it is not yet flirting with 0.90 – a move that triggered verbal intervention from the SNB on Monday. Meanwhile, gold is hovering at $5,170, somewhat recovering from yesterday’s sell everything panic where it nearly breached the $5,000 mark. European natural gas prices (Dutch TTF) are trading 80% above Friday’s close at pixel time;

• Touching on overnight news, the Trump administration is pivoting to use so-called Section 301 tariffs to replace the 10% - which reportedly are still being hiked to 15% - blanket tariff rate, which are set to expire within 150 days. The Section 301 tariffs offer a more bureaucratic, less indiscriminate approach to trade compared to the prior country-specific tariffs recently struck down by the Supreme Court. More importantly, the administration looks like it will follow the spirit of the law and let the 150-day tariffs expire without a sneaky renewal. Meaning that there are limits to executive (trade) power that the White House will abide to;

• Looking ahead, the calendar is packed: watch for today’s US ISM Services PMI and a couple of ECB- and SNB-speakers – keep your eyes peeled for further jawboning to cap the Franc's strength. We also have Eurozone unemployment, PPI data, and the Fed’s Beige Book on tap to round out the session.

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