Commerzbank in its "European Sunrise" note of Monday highlighted:
Markets: United States Treasury and Bund futures gapped lower, then stabilized. UST curve bear-flattens with 10-year yields up 2bps. E-minis open lower, Asian stocks gain modestly. DXY reverses more than Friday's drop, with the euro (EUR) falling to $1.176. Brent jumps to US$96/barrel.
Fed: Federal Reserve Governor Christopher Waller says he is cautious on lowering rates amid the risk of a prolonged impact on inflation. San Francisco Federal Reserve President Mary Daly says leaving rates unchanged would still restrain inflation.
Strait of Hormuz: Iran reimposed restrictions on vessel traffic for as long as the U.S. blockade of Iranian ports continues. The U.S. boarded an Iranian-flagged cargo ship.
Iran war: President Donald Trump says U.S. representatives are returning to Pakistan for negotiations, he renewed threats of broad attacks on Iran's infrastructure and stands by his comment that war is "close to over." Iran has no plans to participate in new U.S. talks, doesn't see clear prospects (state TV), but it's unclear whether the decision not to attend was final.
UAE: The United Arab Emirates asks the U.S. for a wartime financial backstop, like a foreign exchange swapline (WSJ).
==EUROPE:
ECB: Euroepan Central Bank Governing Council (GC) member Martins Kazaks says it's not a given that the next rate move will be a hike, as inflation pressures would be much weaker if shortages tilt the economy closer to recession. GC member Alexander Demarco says it's a "bigger risk to rush raising rates" than to wait a bit longer. Both members wouldn't object to market bets for two rate hikes this year. GC member Martin Kocher warns against preemptive rate action.
EU diplomats fear a rushed framework agreement with Iran will lock in weak commitments and spark new disputes, leaving the region more unstable than before (Reuters).
Bulgaria: Former President Rumen Radev, who opposes sanctions on Russia and military aid for Ukraine, wins an absolute majority in parliament, says Europe needs to think about how to secure resources, as it isn't competitive without cheap energy.
Ratings: Moody's downgrades Belgium to A1 from Aa3, changes outlook to stable from negative, and affirms Lithuania at A2/stable. DBRS confirms Italy and Slovakia at A (low)/stable, EU at AAA/stable.