Iran ceasefire ends today, whats comes next?

Good morning

All in all it was a reasonably quiet day in the markets yesterday with equities closing a little lower as we waited to see if Iran would retaliate for the seizure of one of its ships by the US for trying to breach the ports blockade.  With what seems like little in the way of action from the Iranians, futures prices suggest we could see a firmer opening for European stocks although as I type oil prices have just spiked which always puts me on alert, but the quick 1% move seems to have reversed. 

In currencies, GBPUSD was broadly unmoved yesterday, spending much of the day 20 pips or so either side of 1.3520, the level we find ourselves at now.  It’s a similar story for EURUSD which did creep back towards 1.1800 yesterday but now sits around 1.1775.  Even USDJPY did little, seeing a 30 pips range since the London close, unable to break above 159.00 for now.   CAD pushed a little higher after inflation numbers showed a jump from 1.8% to 2.4%.

We had NZ inflation numbers overnight which came in at the upper end of expectations and sent NZD higher, GBPNZD dropped from 2.2980 to a low around 2.2850, AUDNZD dropped from 1.2190 to current levels around 1.2115.  Thoughts seem to be that RBNZ will do their best to ignore any uptick in inflation, preferring to adopt a ‘wait and see’ approach that could take them through 2026 with no rate rises, in an attempt to keep the fragile NZ economy recovery intact.  Even so, the market seems to be looking for earlier rate rises, perhaps as soon as July.  The NZIER business confidence number was pretty shocking, coming in at -4% from a reading last time of 48%.  Looks like a mistake to me.

UK unemployment numbers released this morning looked pretty impressive on the face of it, with the unemployment rate ticking down from 5.2% to 4.9% and average earnings beating expectations.  GBP not really bothered, we did see a brief and tiny tick higher but that’s all.  Also in the UK, Starmer did his best to save himself yesterday as he addressed Parliament over the Mandleson appointment. 

He said he was ‘staggered’ the Foreign Office didn’t tell him information regarding Mandelson’s failure to pass the vetting process.  Impossible to believe he wouldn’t know and impossible to believe he hadn’t sought that information after the well-publicised debacle.  Indeed it was disclosed he did inadvertently mislead Parliament and much of the House including members of Starmer’s own party aired their feelings that Starmer’s defence was far-fetched. 

Kevin Warsh is due to begin his confirmation hearings today, his personal wealth and investment holdings are likely to be raised.  I wonder if he made any recent timely oil purchases or sales?  He is likely to make it clear he would not bow to political pressure were he to replace Powell as Fed Chair.

In sport, West Ham drew with Crystal Palace which wasn’t quite what Spurs were hoping for but it could have been worse, West Ham now just two points above Spurs in the league with just five matches remaining.  The relegation battle will go down to the wire but I have to say despite a better performance from Spurs at the weekend I still struggle to see where they will win enough points to stay up.  The bookies seem to agree, Spurs are just about evens to be relegated.

US retail sales is the main event today although eyes will remain firmly fixed on Iran and any peace talks given the ceasefire deadline ends today and rump has said he has little inclination in extending it.  Iran has said it will not negotiate under the shadow of threats and has new military cards to play should hostilities restart.  We hope for some success in peace talks but I am afraid I am not particularly optimistic at this stage.

UK inflation number will be released early tomorrow morning.   Headline CPI is expected to come in around 3.3% against 3% last time, I would not be surprised to see that headline slightly higher. 

Have a great day…

-  10.00 German ZEW

-  13.15 US ADP employment

-  13.30 US retail sales

-  15.00 US pending home sales

-  00.50 Japan trade balance

-  07.00 UK CPI, PPI, RPI