Trump still insists Iran deal is close

Good morning

What a difference a day makes.  We’ve gone from warm weather and beautiful sunshine to heavy rain and cooler temperatures.  Fortunately the weather held out long enough for my golf weekend, so I guess I can’t complain too much.  There are reasons to welcome the rain.  The farmers and our gardens will be happy, but above all it means the London Underground workers who are on strike yet again today will not be able to enjoy barbeques or rounds of golf that I’m sure they all had lined up instead of being at work. 

Another day, another raft of comments from Trump about a possible Iran ceasefire extension.  He has said that a deal with Iran to reopen the Strait of Hormuz could come over the next week.  Still, there were also reports that Iran had cut off all dialogue with the US due to Israeli action in Lebanon but Trump has said he’s spoken to Israel who have agreed to hold off any attacks on Beirut, and has also spoken with Hezbollah to ask them not to attack Israel.  As always, until we have a proper deal, it is impossible to guess what the outcome will actually be.

In terms of markets, US equities ended positively but European and Asian markets were mostly lower.  Oil prices are higher than yesterdays open but off the highs that came with the Iranian cutting off dialogue news.  GBPUSD is 1.3475, EURUSD 1.1650 which leaves GBPEUR a touch higher at 1.1570.  UK’s Lord Livermore, financial secretary to the treasury, has said it is inevitable that UK will rejoin the EU at some point as it is in the economic interest of the country to do so.  I am sure he won’t the last minister to publicly make such a statement. 

GBP is holding up pretty well despite BoEs Bailey last week saying UK is running with high inflation and low growth, which makes rate decisions a real balancing act, one that BoE are more likely to be patient on.  BoE are different from other central bank in this regard, with RBNZ, RBA and ECB all talking about potential rate rises, with Fed not so certain under Warsh’s new Chairmanship.

USDJPY remains in the high 159’s despite renewed verbal intervention from Japan FinMin Katayama who used the old ‘we are ready to act as appropriate’ phrase to remind the market they are watching FX levels closely. 

Most other news seems to be about AI firms seeking to raise money with Google talking about raising $80bn for AI infrastructure and Anthropic, valued at almost US$1trn, filing for an IPO.  I’d imagine any share offerings such as these will be snapped up.  It is difficult to know whether AI firms are over or undervalued at the moment, some of the numbers are incredible but we’re certainly at the very start of what could be a revolutionary industry and who knows where that could lead.  Of course there will be AI firms that fail to live up to their valuations but others must

The calendar today includes EU inflation numbers and US JOLTS job openings, the first of the US jobs data this week.  We will hear from several central bankers including BoEs Bailey this afternoon.  Overnight we’ll have the latest Aussie GDP and services PMI numbers. 

Have a great day…

-  10.00 EU HICP

-  14.35 ECBs Vujcic speaks

-  15.00 US JOLTS

-  15.00 BoEs Bailey speaks

-  16.10 ECBs Sleijpen speaks

-  18.00 BoEs Greene speaks

-  23.45 NZ building permits

-  00.00 AUS S&P services PMI

-  02.30 AUS GDP