Good morning. On Friday reports of the reopening of the Strait of Hormuz sent oil tumbling and the S&P 500 to its third straight day of record highs. Follow-up reports showed that the Strait may not be as open as hoped for, however, and the Iran news flow around the situation continues to zig-zag. Over the weekend President Trump said a second round of talks would take place in Pakistan on Tuesday, while also warning of airstrikes on infrastructure if a deal wasn’t accepted. In today’s early morning hours Iran’s Foreign Minister Baghaei said there was no plan for a second round of talks, but the AP reported a little later that Iran was in fact willing to attend a second round of talks. The uncertainty around Hormuz and a second round of negotiations have put a bid back into crude this morning, which is weighing on equity futures. The S&P is currently down ~0.4% but off its lows.

Crude gapped up from Friday’s decline as Iran uncertainty picked up over the weekend. Precious metals and copper are lower though gold is off its worst level. Crypto is lower with Bitcoin down 3% from Friday, having slipped lower after making a run at its 100d ma ~78.8K on Friday. A $300m exploit of the ether holdings of Kelp DAO is not helping the complex (Eth down 5%), though negotiations for the CLARITY act were reported to be progressing.

Treasury yields are 2-3bp higher out to the 10y while the 30y is flat. The US Dollar Index is back above 98 and testing resistance at its 200d ~98.35. The UAE has proactively reached out to the US Treasury about an FX swap line in case financial stress increases in the country according to the WSJ.