Morning from Europe.

What a weekend in the Middle East.

By the time of writing, it is still unclear whether Israel accepts the “tit for tat” logic after an unprecedented wave of missiles and drones attempting to strike Israeli territory. It seems like the US have made their wishes heard, with clear hints to Israel not to retaliate again

It’s absolutely possible that Israel decides to carry out further attacks in coming days as it could benefit Netanyahu domestically. But very clearly, the US interprets the Iranian operation over the weekend as “eye for an eye” and does not support further action. Comparable to the aftermath to the killing of Qassem Solemani in 2020.

The price action is fairly muted this morning after a bloodbath ahead of the closing bell on Friday, and commodities are broadly gaining ground, which makes sense given 1) increasing tensions in the Red Sea / Strait of Hormuz, 2) sanctions on Russia in base metals space and 3) an increasing supply chain pressure.

Chart 1: BCOM versus Supply Chains