TENSIONS ARE ESCALATING ACROSS THE MIDDLE EAST.

- The U.S. is preparing for a large-scale military operation against Houthi forces in Yemen following their attacks on Saudi Arabia and amid growing concerns over Houthi control of the strategically critical Bab el-Mandeb Strait, according to CNN.

- U.S. security alerts issued Saturday warned of potential flight cancellations, airspace closures and major travel disruptions, while Americans outside the region were urged to seriously reconsider travel to or through the Middle East.

- President Trump has cut short his stay at Camp David and is returning to the White House tonight as tensions across the region continue to escalate.

- Iran has reportedly placed its armed forces on “Code 100” alert, putting the IRGC, regular military, and security forces on a heightened state of readiness.

If we do see further escalation, oil and bond yields are likely to spike higher. Markets have been very resilient so they will encounter another test if we see a breakout above $108 on crude and 5% on the 10-year if this gets worse.

Source: amit