Oil slipped toward $87 a barrel, while gold dropped below $1,970 an ounce as Israel held off on its ground offensive into Gaza amid efforts to secure the release of more hostages. US futures contracts advanced in Asia after the S&P 500 slid more than 1% on Friday. Treasuries fell, paring Friday’s rally.

Markets are starting to wind back some of last week’s haven bid after Hamas released two US hostages and aid started to trickle through Egypt’s border with Gaza at the weekend. Still, Israel has stepped up air raids on Gaza in preparation for the “next phase” of its conflict with Hamas, while also warning that Hezbollah risks dragging Lebanon into a wider regional war. 

It’s “a carbon copy of last Monday’s session as we see a partial unwind of the safe-haven flows put on ahead of the weekend”, said Tony Sycamore, an analyst at IG Australia in Sydney. 

The yen briefly weakened beyond 150 per dollar early on Monday, a closely watched level for possible intervention by Japanese authorities to support the currency. Bank of Japan officials are pondering whether to tweak their yield-curve control setting at a policy meeting next week, the Nikkei newspaper reported on Sunday, without saying where it obtained the information.

“Markets are again on high alert for a possible BOJ intervention,” Commonwealth Bank of Australia strategists including Joseph Capurso wrote in a note to clients. The yen is likely to remain under pressure this week “as the rise in the 10-year Japanese government bond yield, amid growing speculation of BOJ policy tightening, will do little to reduce Japan’s wide bond yield gap with the US”, they said.

Read more: Israel’s Support for Hostage Talks May Delay Invasion of Gaza

Global markets have been whipped around in recent weeks by climbing Treasury yields and growing concern about interest rates staying elevated for longer. Federal Reserve Bank of Cleveland president Loretta Mester said the US central bank is close to wrapping up its tightening campaign if the economy evolves as expected.

The S&P 500 on Friday slid below its 200-day moving average — seen by some as a bearish signal — and the Cboe Volatility Index, known as the VIX or Wall Street’s “fear gauge”, jumped to its highest since March. 

The nearest futures contracts tied to the VIX closed on Thursday in a pattern known as backwardation. That’s a sign of mounting distress, as traders anticipate more volatility in the near-term than further out in the future.

Read more: VIX Is in Backwardation. Here’s Why and What It Means: QuickTake 

This week, traders will be parsing for clues on the outlook for global interest rates with inflation readings in Australia and Japan as well as economic activity data in the US and Europe. Fed chairman Jerome Powell is due to give remarks and the European Central Bank will deliver a policy decision later in the week.