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• Albusaidi, "Today’s indirect negotiations between [Iran and US] concluded with good progress towards identifying common goals and relevant technical issues. The spirit of our meetings was constructive. Together we made serious efforts to define a number of guiding principles for a final deal... Much work is yet to be done, and the parties left with clear next steps before the next meeting."
• The statement suggests the two sides may be getting closer to defining the shape of a new nuclear deal, if not the substantive details. As we noted previously, Iran has appeared primarily focused on the parameters of talks. SECURITY: Second Round Of Indirect US-Iran Nuclear Talks Underway In Geneva
• Indeed, Ali Vaez, Director of the Iran Project at the International Crisis Group, notes: "We seem to have moved from Washington and Tehran talking about talks to talking about what talks should address. If that's the case, it would constitute a step forward because of how divergent their positions have been on what an agreement should cover."
• Laurence Norman at WSJ puts a more pessimistic spin on the same post-talks statements: "I think we should be very careful in over-interpreting this. It sounds very much to me as if they have agreed the scope of what needs addressing in a deal. Not what the content of that scope will be." 

The ECB remains in its well-signalled “good place” on policy rates, and market-implied inflation expectations have been anchored around the 2% inflation target for some time now. That has seen the sensitivity of front-end EUR rates (e.g. ESTR 1y1y) to changes in EUR 5y5y inflation swaps decline considerably relative to the Sep-23 to Jun-25 cutting cycle. Looking ahead, it may require the onset of a fresh policy rate cycle (e.g. in response to a new shock or change in the existing balance of risks) for this sensitivity to increase again.

• The 5y5y EUR inflation swap is currently at 2.0962%, down from a year-to-date closing high of 2.1440 on February 2. Based on daily data since the last ECB cut, this 5y5y level has been associated with a 1.92% ESTR 1y1y rate. ESTR 1y1y is currently at 1.935%.
• ECB officials will have to weigh several "known unknowns" facing the inflation outlook over the coming years. Continued import penetration from China (and related EUR effective exchange rate dynamics) remains a downside risk to goods inflation in the near-term, but the impact of higher tariffs/deglobalisation forces on supply chains may provide some offset further out.
• Domestically, there remains uncertainty around the inflationary impulse from higher German fiscal spending, alongside the broader compensation/productivity outlook.
• A reminder that this week's Eurozone data calendar is headlined by the February flash PMIs and Q4 negotiated wages - both on Friday.

January's CPI report showed a continuation in the divergence of inflation breadth between goods and services categories, even as core/underlying aggregate metrics continued to decelerate. The upside pressure isn't exactly narrow, but the reduction in outlying upside readings should provide some comfort that a broader surge in inflation isn't underway.

• Overall CPI breadth showed close to 60% of all items rising at a higher-than-2% Y/Y clip, after 57% in December and marking a 24-month high. However just 46% was rising faster than 3% (down from 47%) while the share rising at 4+% was steady at 38%. The latter is still elevated but is related to base effects from the prior year's sales tax holidays that are causing outsized gains across multiple categories.
• But there was a notable pickup the proportion of goods categories rising at 2+%, reaching 42% after 40% for a 24-month high, even with 3+% steady at 47%. This is above average and clashes with the overall subdued goods CPI aggregate readings showing fairly tame pressures, but again the jump the last 2 months is potentially base effect related (the share rising 4+% ricked up nearly 1pp to 28%, a 25-month high). This included a dropping out of the tax break for alcohol, toys, games, hobby supplies, and children's clothing. That said, several grocery food categories remained elevated Y/Y.
• For services though the improvement in breadth metrics continued. The proportion of items rising 2+% was 17%, down from 18% prior for a 6-month low, while 3+% was 43% (12-month low, 46% prior) and 4+% 10% (4-month low, 11% prior). A lot of this is shelter and energy-related, both of which are providing a pretty sizeable disinflationary impulse (the latter on carbon tax-related negative base effects), though a few food service related categories saw offsetting base effects here.