• Israel and Iran launched fresh attacks on each other's major cities, with exchanges of fire continuing into a third day on Sunday, according to multiple media outlets; Initial strength in crude now pared amid potential ceasefire efforts but no progress yet.
• Israeli drones on Saturday targeted the South Pars Gas Refinery and the Fajr Jam Gas Refinery, according to Tasnim News Agency.
• US President Trump posted on Truth Social on Sunday: "Iran and Israel should make a deal, and will make a deal, we will have PEACE, soon, between Israel and Iran! Many calls and meetings now taking place."
• European bourses modestly firmer across the board; US equity futures also higher, ES +0.4%.
• USD is on the backfoot, Antipodeans lead benefiting from the risk tone whilst havens lag.
• Bonds fade overnight gains as inflation dictates recent action.
• Looking ahead, G7 meeting, US NY Fed, OPEC MOMR, Speakers include ECB’s Cipollone & Nagel, and Supply from the US.

TRADE/TARIFFS

• EU Commission is prepared to accept a flat-rate US tariff of 10% under clear conditions, according to Handelsblatt. EU negotiators hope that a flat tariff would avert higher us duties on cars, pharmaceuticals and microelectronics. US has not yet agreed to limit car tariffs vs. the EU to 10%. If the US waives higher car tariffs, the EU will lower its import tariffs on US vehicles and recognise certain American product standards in the future.
• The US-China trade agreement in London did not resolve export restrictions linked to national security, according to Reuters.
• US President Trump will have bilateral talks with Canadian PM Carney, Ukrainian President Zelensky and Mexican President Sheinbaum at the G7, according to a White House official.
• Japanese government said top trade negotiator Akazawa spoke by phone with US Commerce Secretary Howard Lutnick for 30 minutes on Saturday. Akazawa and Lutnick engaged in in-depth discussions and explored the possibility of a trade agreement.
• Indian Trade Official says bilateral talks with the US are progressing, maintain the timeline of signing a deal by fall 2025. Targeting the signing of an interim deal by July 9th.

EUROPEAN TRADE

EQUITIES

• European bourses (STOXX 600 +0.2%) are firmer across the board, amid the constructive risk tone. The improving sentiment seemingly stems from efforts to broker a ceasefire between Israel/Iran (no progress yet).
• European sectors are mixed and with a fairly wide breadth today. Travel & Leisure is by far the clear outperformer today, with sentiment boosted by upside in Entain. The Co. upped its FY25 guidance. Healthcare is found right at the bottom of the pile, and is the clear underperformer today.
• US equity futures (ES +0.4% NQ +0.4% RTY +0.7%) are modestly firmer across the board, attempting to pare back some of the hefty Israel-Iran induced losses in the prior session; upside which also comes amid a broadly positive risk tone.
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FX

• DXY has kicked the week off on the backfoot with the news cycle currently dominated by the Iran-Israel conflict. Focus is on how material any further escalations will be or whether the US will be able to engineer a ceasefire between both sides. Docket today is very light, with more focus on the FOMC on Wednesday. DXY is currently tucked within Friday's 97.62-98.58 range.
• EUR is a touch firmer vs. the broadly weaker USD with fresh macro drivers from the EZ light. Last week, a slew of ECB speakers failed to move the dial for ECB pricing with commentary echoing that of President Lagarde at the most recent policy announcement; maintaining flexibility but the Bank is likely at or near the end of the easing cycle. Aside from Italian CPI Finals (revised a little lower) and non-incremental commentary from ECB's Nagel, docket has been and will continue to remain light. EUR/USD has sat on a 1.15 handle throughout the session and within Friday's 1.1489-1.1614 range.
• A choppy start to the week for the JPY as a brief slip below the 144 mark in early European trade was subsequently reversed. JPY and the safe-haven CHF are both weaker vs. the USD despite the current geopolitical risk environment with some desks pointing towards hopes of a ceasefire and "peak" geopolitical risk. Traders are looking ahead to Tuesday's BoJ policy announcement which is widely expected to see policymakers stand pat on policy. USD/JPY is currently just above its 50DMA at 144.07 with a range of 143.90-144.74.
• GBP is fractionally firmer vs. the USD and weaker vs. the EUR. Newsflow from the UK is relatively light, with markets instead looking towards this week's upcoming risk events. As above, docket very light with focus on CPI on Wednesday and then the BoE on Thursday. GBP/USD is currently tucked within Friday's 1.3517-1.3632 range.
• Antipodeans are both firmer vs. the USD and at the top of the G10 leaderboard following a session of risk-led losses on Friday. From a macro perspective, focus this week will be on NZ Q1 GDP metrics on Wednesday and Australian labour market data on Thursday.
• PBoC set USD/CNY mid-point at 7.1789 vs exp. 7.1854 (prev. 7.1772)
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FIXED INCOME

• USTs are currently softer. A pullback that comes after a brief spike to a 110-26 peak just after trade resumed, as desks digested the weekend’s geopolitical escalation between Iran and Israel. Thereafter, the benchmark waned and has been gradually under pressure since, despite crude moving into the red this morning. Thus far, USTs are holding around Friday’s 110-14 base but did briefly move a few ticks below this to a 110-10+ low. Focus ahead on a 20yr supply later, which may also be factoring into some of the pressure so far.
• Bunds are in-fitting with USTs. Hit a 130.86 peak overnight before fading into the early European morning, the narrative much the same as outlined above in USTs. Pressure which exacerbated soon after the cash open, which came in tandem with some upside in stocks. Another point of pressure for EGBs comes on the back of European gas benchmarks, as Dutch TTF hasn’t been subject to the discussed pullback seen across the morning in crude benchmarks.
• Gilts are moving tandem with global peers. Opened with gains of 23 ticks, acknowledging the geopolitical tensions and gains seen in peers overnight. Thereafter, climbed another 11 ticks to a 92.53 peak, over a point shy of Friday’s best, before retreating into the red. Specifics for the region are light today.
• JGBs are counting down to the BoJ. Interest rate expected to be held at 0.50%. Focus much more on the tapering plans. Trading in-line with USTs overnight, briefly hit a 139.55 peak as geopolitical tensions flared and the latest tapering reports aired, since waned below 139.00 but is off its 138.75 base.
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COMMODITIES

• Crude benchmarks initially posted gains, though are now subdued, lower by around USD 0.2/bbl, Brent within a USD 73.52-78.32 range. The downside today could be assigned today; a) US President Trump suggesting there are ceasefire efforts between Iran/Israel, b) analyst commentary that attacks focused on domestic energy rather than on exports to international markets.
• Spot gold is in the red and trickling further away from its USD 3500/oz ATH. The yellow metal is moving in tandem with crude, and unusually, the Dollar, on value concerns as traders digest weekend updates, with commentary from the US President potentially aiding. Currently trading in a USD 3,409-3,451/oz parameter.
• Copper futures are modestly in the green and, unlike the yellow metal, are benefitting from a softer dollar (DXY -0.3%). 3M LME Copper trades within a range of USD 9,607-9,705/oz, and currently nears session highs.
• EU said to plan an immediate ban on new Russian gas contracts using a new trade law, according to FT citing sources; measure aimed at avoiding a potential veto from Hungary and/or Slovakia.
• Citi sees Brent continuing to trade between USD 70-80bbl in the near-term. Sees Brent trading around current levels in the very near-term as the conflict in the Middle East continues, but holds its USD 60-65bbl longer term oil price forecast.
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NOTABLE DATA RECAP

• UK Rightmove House Prices MM (Jun) -0.3% (Prev. 0.6%); Y/Y 0.8% (Prev. 1.2%).

NOTABLE EUROPEAN HEADLINES

• S&P affirmed Germany at a 'AAA' rating; outlook stable.
• S&P affirmed Sweden at 'AAA' rating; outlook stable.
• ECB's de Guindos says EUR/USD at 1.15 is no big obstacle as appreciation is not rapid and volatility is not extreme. Markets understood perfectly well the ECB post-decision message: ECB very close to target. The risk of undershooting the inflation target is very limited; risks to inflation are balanced. In the medium term, tariffs reduce both growth and inflation.
• ECB's Nagel says it is not sensible to signal either a rate pause or cut, given the exceptional uncertainty.
• Swiss SECO forecasts: GDP adjusted for sporting events is expected to grow by 1.3% in 2025, followed by 1.2% in 2026 (March forecasts: 1.4% and 1.6% respectively) Inflation is expected to stabilise at 0.1% for 2025 (March forecast: 0.3%). 2026 inflation 0.5% (March forecast: 0.6%).

NOTABLE US HEADLINES

• Trump administration reportedly weighs adding 36 countries to the travel ban, according to Reuters citing a memo.
• Today, US Senate Finance Committee Republicans will release long-awaited legislative text for its portion of Trump’s “One Big Beautiful Bill.”, via Punchbowl.

GEOPOLITICS - IRAN/ISRAEL

EUROPEAN SESSION UPDATES

• Iran's Foreign Ministry Spokesperson says parliament is preparing a bill to leave the Nuclear Non-Proliferation Treaty; says Tehran remains opposed to weapons of mass destruction.
• UKMTO says it received multiple reports of increasing electronic interference within the waters of the Gulf and Strait of Hormuz. The levels and intensity inside the Gulf have significant impact on vessels positional reporting through automated systems.
• Israeli Military Spokesperson says they will continue to move east and hit the "Iranian nuclear threat and missile programme".
• US Envoy Huckabee says Iranian missile hit "near" the consulate in Tel Aviv; "Some minor damage" but no injuries to US personnel.
• Journalist Stein says Israel is expected to order citizens from various neighbourhoods in Tehran to evacuate.
• Israeli Military Spokesperson says Israel struck more than 20 targets in Iran overnight, targeted one third of Iranian missile launch sites since the conflict began. Targets include nuclear programme HQ, located in multi-story buildings. Achieved aerial superiority over Iran. Tehran's residents will be forced to evacuate areas where attacks are necessary.
• IAEA Chief Grossi says there has been no additional damage at Iran's Natanz fuel enrichment plant site since the Friday attack. At Isfahan, four buildings were damaged in Friday's attack: the central chemical lab, a uranium conversion plant, Tehran reactor fuel manufacturing plant and the UF4 to EU metal processing facility. The agency will remain present in Iran, safeguard inspections will continue as the condition. All is required under Iran's NPT safeguard obligations. No damage seen at the Fordow fuel enrichment plant or at the Khondab heavy water reactor, which is under construction

OVERNIGHT UPDATES

• Israeli Air Force planes launched a pre-emptive strike before an Iranian attack, attacking missile launchers in the centre of the country, according to Kann news.
• IDF says it struck surface-to-surface missile sites in central Iran. "Israeli media: interception of a missile launched by the Houthis from Yemen towards Israel", according to Al Arabiya. IDF at that also said it was under a new missile attack from Iran, according to Al Arabiya.
• "Iranian Foreign Minister: The fire ignited by Israel may get out of control... If the aggression stops, the ground for a return to diplomacy will be available", according to Sky News Arabia.
• "Israeli media: reports of a 2.5-magnitude earthquake near the Fordow nuclear facility in Iran", according to Sky News Arabia
• US President Trump said he hopes there will be a deal between Iran and Israel, but "sometimes you have to fight it out"; he does not want to say if he has asked Israel to pause strikes on Iran; said the US will continue to support Israel in its defence.
• "Iranian security reveals secret Mossad headquarters south of Tehran that includes drones and explosives", according to Sky News Arabia.
• Israel's military instructed the public it is safe to leave protected shelters, signalling threat from the current Iranian missile attack is over, according to Reuters.
• Ambrey said Iranian forces launched a ballistic missile attack on port infrastructure in Israel's Haifa, according to Reuters.
• Several residential buildings in Tel Aviv were struck an Iranian missile attack, according to a Reuters witness.
• Israeli military says it attacked Iran’s IRGC Qods Force headquarters in Tehran, according to Reuters.
• "Israeli security source: Iran has started using hypersonic precision missiles", according to Al Arabiya.
• "IRGC: Our operations will continue until Israel's complete demise", according to Cairo News.

WEEKEND UPDATES

Strikes

• Israel and Iran launched fresh attacks on each other's major cities, with exchanges of fire continuing into a third day on Sunday, according to multiple media outlets.
• Iran fired more ballistic missiles toward Israel, while Israel struck several areas in Tehran, including Niavaran, Valiasr Square, and Hafte Tir Square, according to Al Jazeera.
• Iranian strikes targeted a power station in Hadera and the Netanyahu family's residence in Caesarea, according to Israeli media cited by Middle East Eye.
• Israel launched a barrage of strikes across Iran on Sunday, stretching from the west to Tehran and Mashhad in the east, after Israeli PM Netanyahu had vowed to make the country pay "a very heavy price" for killing civilians, according to AFP. The Israeli army launched an attack on several military targets in western Tehran, according to journalist Elster on X. The Israeli Army said it had attacked more than 170 targets and over 720 Iranian military facilities in less than three days.
• The Israeli Ambassador to the US told Fox News that they still had a few surprises up their sleeve for Iran.
• IDF Spokesperson citing the Chief of Staff: "The IDF, through the Air Force, has completed paving the way to Tehran, and is precisely and extensively attacking the regime's infrastructure and nuclear program in a way the enemy never imagined."
• Israeli government approved extending the state of emergency until June.
• The IRGC confirmed the deaths of several high-ranking officers. Iran officially confirms that IRGC intelligence chief Brig. Gen. Mohammad Kazemi and his deputy Hassan Mohaqiq were killed in Israeli strikes on Sunday.

Oil, Gas, Nuclear Facilities

• Israeli drones on Saturday targeted the South Pars Gas Refinery and the Fajr Jam Gas Refinery, according to Tasnim News Agency. Iran has partially suspended gas production at the world's biggest gas field - the South Pars gas field - after an Israeli strike caused a fire there on Saturday, according to Reuters.
• The Israeli Bezan Petroleum Company said Saturday's Iranian bombing had caused damage to the oil refinery and its extensions in Haifa Bay.
• Israel Army said it had struck hard Iran's Isfahan nuclear facility, according to reports.
• Isfahan refinery units were in stable condition, IRNA said on Sunday.
• A senior Israeli official said the operation would have been useless without destroying the Fordow nuclear reactor in Iran, according to Al Arabiya citing the official.
• Kpler's Bakr posted "So far there are no signs of disruptions in oil loadings from Iran, we’ll continue to monitor the situation...Without a supply outage, there will be no need from anyone to add more barrels onto the market", via X.
• The UK said it was worried about Iran potentially closing the Strait of Hormuz.

Diplomacy

• US President Trump posted on Truth Social on Sunday: "Iran and Israel should make a deal, and will make a deal...we will have PEACE, soon, between Israel and Iran! Many calls and meetings now taking place."
• Mediation efforts to stop the war with Iran had begun, according to Yedioth Ahronoth citing an Israeli official. Yedioth Ahronoth quoted an Israeli official as saying there was no good proposal yet to stop the war with Iran.
• One Israeli official told Axios that Israel was not interested in a ceasefire at that time because it had not yet achieved all of its goals, particularly in destroying Iran's nuclear programme. Israeli officials said there was currently no serious diplomatic initiative to stop the war with Iran.
• Israeli PM Netanyahu said regime change in Iran was likely through Israeli military operations, according to Reuters.
• Turkish President Erdogan Erdogan told US President Trump that Turkey was ready to make every effort, including playing a facilitator role, according to Reuters.
• Russian official said Moscow is capable of playing a major role in mediating between Iran and Israel.
• "There’s a big mediation push by Gulf Arab states to end the conflict between Israel and Iran, but so far no signs of things calming down", according to Kpler's Bakr.
• Iran's Foreign Minister said they will halt attacks on Israel if Israeli strikes stop.

Assassination Headlines

• A US official confirmed to Axios's Ravid that over the weekend, Israel had an operational window to assassinate Iran's Supreme Leader Ali Khamenei, but President Trump made it clear he was against such a move, according to Axios.
• Israeli PM Netanyahu said Iran had fired a missile at his bedroom window but missed.
• Israeli PM Netanyahu said intelligence showed Iranian attempts to assassinate US President Trump, calling him "enemy number one," and spoke about when he had informed President Trump of the plans for launching the strikes, according to Reuters.

Allies' Involvement

• US President Trump said the US might get involved in the Israel-Iran war., according to ABC.
• The US is not currently considering joining the war against Iran to eliminate its nuclear program, according to an ABC News report.
• Israel’s minister called on the United States and Europe to join Iran's offensive, according to Reuters.
• Yemeni Houthis said on Sunday that they targeted Israel in coordination with Iran, the first time in this war that an Iran-backed group has publicly announced an attack in coordination with Iran.
• IDF Spokesperson said alerts had been activated in the area surrounding Gaza and that details were being reviewed, according to Reuters.
• A Pakistani security source said rumours of Pakistan providing military support to Iran were false, according to Al‑Manar.
• A high-ranking Russian official has contacted several top Iranian officials offering a safe route out of the country. Several officials are reportedly finalizing their exit routes, according to Iran International.

Nuclear Deal

• Israeli PM Netanyahu told Fox News that they had known the negotiations between the US and Iran would not progress.
• US President Trump is still trying to resume talks with Iran, according to Axios.

CRYPTO

• Bitcoin edges higher and trades just shy of USD 107k; Ethereum also benefits from the risk tone and climbs past USD 2.6k.

APAC TRADE

• APAC stocks saw mixed trade with sentiment stabilising overnight despite the losses on Wall Street on Friday and the geopolitical escalations over the weekend. This came amid efforts to broker a ceasefire between Israel and Iran, with US President Trump posting on Truth suggesting many calls and meetings are taking place for a peace deal between Tehran and Tel Aviv.
• ASX 200 moved between modest gains and losses, whilst reports suggested Australian regulator ASIC and RBA have ongoing concerns over ASX’s ability to maintain stable, secure and resilient critical market infrastructure. Santos shares meanwhile jumped 15% at the open after ADNOC made a USD 18.7bln takeover offer for the Co.
• Nikkei 225 was bolstered by the weaker JPY despite the escalation on the Israel-Iran front. In trade-related headlines, Japan's top trade negotiator Akazawa and the US engaged in in-depth discussions and explored the possibility of a trade agreement. Traders now look ahead to the BoJ announcement on Tuesday.
• Hang Seng and Shanghai Comp were choppy whilst weekend reports suggested the US-China trade agreement in London did not resolve export restrictions linked to national security, according to Reuters. Chinese markets saw no notable reaction to Chinese activity data which saw Retail Sales surpass the most optimistic of analysts' forecasts, whilst Industrial Output slightly missed expectations.

NOTABLE ASIA-PAC HEADLINES

• BoJ reportedly considers halving quarterly purchases of Japanese government bonds to JPY 200bln from April 2026; the proposal is to be discussed at the Monday‑Tuesday policy meeting and expected to gain majority board support, according to Nikkei.
• Taiwan added China's Huawei and SMIC to its export control blacklist to combat arms proliferation and prevent tech transfers, according to Reuters.
• Amid rising global trade frictions and unilateral actions, China and Central Asian countries explored building a more resilient regional supply chain, with the China-Central Asia mechanism providing certainty amid external shifts, according to Global Times.
• South Korea to reportedly unveil an extra budget of at least KRW 20tln soon, according to South Korean press Joongang.
• South Korean Finance Ministry said that closely monitoring financial markets; South Korea to provide financial and shipping support to exporters, according to Bloomberg.
• NZIER lowered New Zealand's 2025/26 GDP growth forecast to 1.9% from 2.1%.
• PBoC injected CNY 242bln via 7-day reverse repos with the rate maintained at 1.40%.
• China's NBS said China's economy remains steady; economy still encounters numerous unstable, uncertain factors; China must coordinate domestic economic work and trade struggle, according to Reuters and Bloomberg. Stats Bureau spokesperson said China’s policy toolkit is well-stocked and has the flexibility to adjust macro policies according to changing circumstances, and overall level of prices still at a low level which affects enterprises, employment and incomes. Spokesperson added that there is difficulty in recruiting workers in some sectors and a high level of pressure on employment for some groups. and there is still some pressure on maintaining stable employment primarily due to the complex and changing external environment. Furthermore, due to factors such as increased uncertainty in trade policies it has been particularly challenging for China’s economy to maintain stable growth since the second quarter. Spokesperson said that for the first half of this year China’s economy is expected to have remained generally stable, and based on the first half of 2025 China’s economic performance is expected to maintain a generally stable development trend. The official added that peoples’ consumption ability and confidence need to be boosted, and factors supporting consumption growth in May include goods trade-in policy, 618 shopping event and expansion of list of visa-free entry countries.
• China's Stats Bureau spokesperson said in order to help the real estate market stop its decline and return to stability more efforts are still needed, according to Reuters.
• China is to hold its NPC Standing Committee meeting June 24–27th, according to Reuters.

DATA RECAP

• Chinese House Prices YY (May) -3.5% (Prev. -4.0%).
• Chinese Industrial Output YY (May) 5.8% vs. Exp. 5.9% (Prev. 6.1%)
• Chinese Retail Sales YY (May) 6.4% vs. Exp. 5.0% (Prev. 5.1%)
• Chinese Urban Investment (YTD)YY (May) 3.7% vs. Exp. 3.9% (Prev. 4.0%)