IRAN: Axios-Foreign Min Proposed Interim Deal To US Envoy
Axios reports that Iranian Foreign Minister Abbas Araghchi proposed a potential 'interim deal' in last weekend's indirect-direct nuclear talks with US Middle East envoy Steven Witkoff. The article claims that the Iranian minister informed Witkoff that the agreement on a final nuclear deal may not be possible under US President Donald Trump's accelerated timeline demands (quoted as two months in a letter to Supreme Leader Ayatollah Ali Khamenei).
- The Iranian mission to the UN denied the interim deal proposal, saying to Axios it was "neither true not accurate".
- Axios: "Witkoff told Araghchi he doesn't want to discuss an interim deal for the time being. Instead, he wants to focus on reaching a comprehensive deal within 60 days. If that both parties think significantly more time is needed as that deadline approaches, they can revisit the idea of an interim deal, Witkoff said according to the sources."
- A third round of talks between working-level negotiators will take place this Saturday 26 April in Oman. The White House has confirmed that State Department policy planning chief Michael Anton will lead a team of around a dozen career officials in the talks.
- Speaking in a podcast interview released on 23 April, Secretary of State Marco Rubio said that Iran must give up all nuclear enrichment if it wants a deal. He also reiterated the threat of military action if a deal is not reached, saying "he would prefer that there not be need to resort to military force", but not ruling any measures out.
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STIR: Market Pricing Just Over 40bp Of BoE Cuts Through December Ahead Of CPI
GBP STIRs hold onto the bulk of their modest hawkish adjustment, with gilts reluctant to rally too far from session lows.
- BoE-dated OIS shows ~41bp of cuts through year-end, with 14.5bp priced for May, 17bp through June and 26.5bp through August. ’25 MPC meeting contracts are little changed to 2bp more hawkish on the day.
- December pricing is currently the most hawkish seen since Jan 22.
- We, along with the sell-side consensus, look for the next BoE cut to come in May.
- SONIA futures little changed to -3.0.
- CPI data is due ahead of tomorrow’s Spring Statement (the former is scheduled for 07:00 GMT on Wednesday).
- This is a bit later in the month than usual (possibly due to the 2025B weights update).
- BBG surveys point to core and services CPI ticking down by a tenth (to +3.6% & +4.9%, respectively), while the headline CPI reading is seen steady (+3.0%).
- Last week’s MPC meeting minutes picked up on the move higher in both core goods and food prices in January.
- If upside pressures to goods prices are maintained, services inflation needs to be lower than pre-pandemic levels to meet the 2% headline target. That could require more restrictive policy than was seen in pre-pandemic times.
- Ultimately, this means that non-energy goods inflation will be much more important during 2025, almost on a par with services inflation.
- A reminder that the PPI release has been postponed indefinitely due to issues with the data.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
May-25 | 4.310 | -14.6 |
Jun-25 | 4.284 | -17.2 |
Aug-25 | 4.189 | -26.7 |
Sep-25 | 4.144 | -31.2 |
Nov-25 | 4.069 | -38.7 |
Dec-25 | 4.046 | -41.1 |
EQUITIES: Estoxx put spread
SX5E (20th Jun) 3300/2700ps, bought for 1.4 and 1.5 in 20k.
US DATA: Richmond Fed Manufacturers Expect Inflation To Soar
The Richmond Fed's manufacturing survey for March fully reversed February's improvement, with forward-looking survey components pulling back sharply, but inflation expectations soaring.
- March's composite index registered -4 (positive 1 was expected), down from positive 6 in February and as such back to the same -4 level seen in January. These figures remain well above the double-digit negative levels seen in 2H 2024, though the latter may have been influenced by various idiosyncratic factors including hurricanes and a work stoppage/order cancellations at Virginia-headquartered Boeing.
- As with the headline figure, New Orders reverted back in March, to -4 (0 prior, -4 in January), while 6-month expectations dropped to a 29-month low -22.0 (positive 2.0 prior). Employment fell to -1 from 9, while shipments dropped to -7 from 12.
- Regional manufacturers saw a huge increase in the level of inflation over the next 12 months - expected price changes jumped to 7.2% from 4.6% prior, with expected prices received up to 4.0% from 3.2% (actual prices paid/received also jumped, respectively by 1.5pp to 3.75% / 0.7pp to 2.3%).
- Expected price pressures are as high as they've been in the 20+ year survey, equalling the pandemic jump.
- That's unsurprising given tariff concerns but offers a further suggestion that manufacturers are bracing for both softer demand and higher input prices (which may not be fully passed on to consumers, as suggested by the gap between expected prices paid/received).
