No news from peace talks, not sure that's good news!

Good morning

European and US equity markets were down yesterday and most Asian markets followed suit although risk sentiment is not suffering as much as I’d have though given we have had no great news from Iran peace talks other than Trump saying he will extend the ceasefire indefinitely until talks are finished, good news in itself but it is not clear whether this is a unilateral move or whether Iran have agreed to it as well.  US are maintaining the port blockade although some ships are said to have bypassed the blockade, while Iran are reported to have opened fire on a ship passing through the Strait of Hormuz, neither side happy to give ground in order to get peace talks started.  We really need some sort of agreement made between US and Iran or we risk slipping back into war. 

GBPUSD is currently 1.3515, EURUSD 1.1750 so relatively unchanged from yesterday but the situation seems pretty clear to me for now.  Good news from Iran will send USD lower across the board, while a resumption of hostilities would see USD push higher again, a brief spike in both GBPUSD and EURUSD this morning, coinciding with a quick slide in oil prices on some sort of peace rumour is yet more proof of this.  Those moves have since reversed but it is another sign that the markets will react to any news, good or bad.  Gut feel now is that a peace deal seems further away with neither side showing any sign of retreating but I hope to be pleasantly surprised.  

UK inflation this morning came in pretty much as expected, headline CPI was up to 3.3% from 3%, higher yes but I still think it could have been worse.  Core CPI headline was actually lower at 3.1%.  These numbers should be enough to steer the BoE from a rate rise next week but the voting pattern will be very interesting.  I have seen some suggestion BoE will cut rates, not at this meeting mind you and I’m sure such a move would be dependent on the Middle East crisis coming to an end, but longer term it is possible UK rates could come lower. 

US retail sales were above expectations yesterday, adding a bit of cheer to the markets although it is fair to say that much of the spending was on furl given the recent price jumps.  Warsh’s confirmation hearing perhaps garnered more attention.  He mentioned a couple of points that may be of interest, first he isn’t a fan of current communications regarding rate forecasts, namely the Summary of Economic Projections, or dot plots as they are perhaps better known.  These are released four times each year and show where the various Fed officials see rates this year and some years in the future.  We could see the end of these were he to become Fed chair. 

Also of interest was his preference for a ‘trimmed’ mean measure of inflation over the likes of Core PCE.  These currently run a bit lower and therefore could be seen as a dovish stance.  He did reject any talk of him simply being Trump’s puppet, confirming his desire to keep the Fed independent.

In other news, Chelsea’s awful run of form continued last night as they lost to Brighton 3-0.  Perhaps Spurs draw with Brighton at the weekend wasn’t so bad after all.  Chelsea have enough points to not face Spurs fears of relegation but they are worryingly close to missing out on the European places.  Meanwhile, Leicester, once Premier League champions, have been demoted from the Championship to League One.  Their fans really have seen the highs and lows in recent years.  Should serve as a warning to Spurs.

I’d thought about heading into London this week only to find there is a strike affecting the underground.  The strike is officially on Tuesday and Thursday but the knock on effect for Wednesday and Friday is looking pretty awful, so we could really consider this a four-day strike.  These strikes are a disgraceful display and just should not be allowed to take place.  However much is given to the likes of RMT, we all know it will only be enough until next time.  More strikes are scheduled in May.  

In other news, head outside around 10pm this evening, find a dark spot, look at the darkest area of sky, wrap up warm and settle down.  The clear skies should provide the perfect conditions to see the Lyrid meteor shower which should bring 15 or so meteors each hour but has the potential to reach up to 100 each hour if you’re lucky. 

Before then, other than keeping an eye on the Middle East, todays calendar brings several ECB speakers who are likely to stick with the ‘ ECB don’t need to rush into any rate decision’ theme.  I’ve highlighted the Turkish rate announcement only because rates are incredibly high at 37%, these are expected to remain unchanged today.  Aussie PMI’s overnight could give us a taste of what to expect for the EU UK and US equivalents that are released tomorrow.

Have a great day…

-  09.05 BoEs Breeden speaks

-  12.00 CBRT rate announcement

-  13.15 ECBs Lane speaks

-  13.45 ECBs Cipollone speaks

-  15.00 EU consumer confidence

-  16.10 ECBs Sleijpen speaks

-  18.00 ECBs Nagel speaks

-  18.30 ECBs Lagarde speaks

-  00.00 AUS S&P manufacturing, services PMIs