• Meanwhile in markets, it takes two to TACO. President Trump may be signaling that the war is nearing its end, but blinking in the face of surging oil prices has made it clear to Tehran how it can hurt the geopolitical superpower: through the oil markets;

• The favorite phrase on trading floors – Trump Always Chickens Out – took center stage on Monday. Brent crude broke above $120 a barrel, at which point the pain became too much for the White House, triggering a shift into damage-control mode to calm markets. That worked – for a while. But Iran’s continued strikes on tankers, ports, and oil infrastructure across the Middle East have pushed prices higher again. This morning, Brent crude climbed back above $100 a barrel– though at pixel time it sits just below that handle – and continues to dictate broader market moves;

• In bond markets, US Treasury yields are holding sideways this morning. Yesterday’s rise in yields means that across the entire curve yields now sit above the level we entered 2026 with. Year-to-date, yields have risen 3–18bps across the curve in a bear-flattening pattern. Bund yields have climbed even more sharply, rising 2–30bps year-to-date. The rise in the short end has been driven by rising rate hike expectations. ESTR forwards now fully price in a rate hike at the June ECB meeting;

• Moving to broader market commentary, S&P 500 futures have dropped three-quarters of a percent today but remain within five percent of their all-time high. In Asia, markets are also in the red: the Nikkei is down over a percent, while the Hang Seng has kept losses to just under three-quarter of a percent today. In FX, the broad dollar is firmer this morning, gaining nearly a quarter of a percent against major currencies – EURUSD is trading at 1.155. The Swiss franc has kept steady despite the surge in oil prices, EURCHF holds above the 0.902 handle for now;

• In overnight news, tariffs have returned to the spotlight as the US administration launches investigations under Section 301 to potentially implement new country-specific measures. The probes target countries including China, the EU, and Switzerland – though it will likely take several months to complete before tariffs are implemented. In the meantime, all countries continue to face the 10 percent section 201 tariff, though the White House may still raise that to 15 percent;

• Looking ahead, the calendar is light for the rest of the day. We have a little bit of ECB- and Fed-speak on deck, along with the obligatory US weekly jobless claims.

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