• Meanwhile in markets, it is All Quiet on the Middle Eastern Front following four days of tit-for-tat strikes between the US and Iran. As always, punters are choosing to look through the escalation – at $71.90 Brent crude is trading within sight of its post-war lows;

• The renewed escalation started on Thursday following an Iranian strike on a container ship transiting the Strait of Hormuz, triggering US retaliatory strikes on Friday. On Saturday Iran then hit a vessel carrying Qatari oil – drawing another round of American attacks. Sunday saw Tehran launch missiles and drones at US bases in Kuwait and Bahrain – though no injuries were reported – as President Trump warned that Washington may be forced to complete the job they started in March;

• According to Axios (as always), the US and Iran agreed to halt further strikes on Sunday evening – stopping the escalatory spiral before markets opened. Officials from both sides will now meet on Tuesday in Qatar to try to resolve their dispute over the Strait of Hormuz. The Strait remains open, with a handful of transits recorded over the weekend. While this marks a decline compared with traffic levels earlier in the week, activity remained above the levels seen during the hotter phase of the conflict;

• The tension in the Strait of Hormuz is reportedly driven by competing interpretations of the memorandum of understanding. The US argues that vessels should be able to move freely through the Strait, while Iran maintains that ships must coordinate their transit with Tehran. Notably, the deconfliction hotline between the IRGC and the US military, announced after last week’s talks, was not yet operational over the weekend. It remains unclear whether it is currently online;

• Shifting to broader market commentary, US Treasury yields are up 1bp across the curve this morning. In equities, S&P 500 futures are up three-quarters of a percent, while Stoxx 50 futures are up a quarter of a percent. AI worries appear to have cooled somewhat, with South Korea’s Kospi erasing earlier session losses of 3.5 percent and returning to where it closed on Friday. In FX, EURUSD continues to trade a hair below the 1.14 handle, while USDJPY remains parked at the upper end of the 161 handle;

• Looking ahead, today is set to be a quiet day, though the ECB’s Forum on Central Banking in Sintra kicks off and will provide plenty of central bank speak throughout the week. We are also set to get plenty of data releases – culminating with the US labor market report on Thursday.

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