FED: CBS Report Points To Trump Asking If He Should Fire Powell

Reuters reports that Iran has requested that Qatar, Saudi Arabia, and Oman ask US President Donald Trump to apply pressure on Israel to agree to an 'immediate ceasefire', per two Iranian and three regional sources. According to Reuters, "in return, Iran to offer flexibility in nuclear negotiations with US."

• The report comes amid a series of unverified dovish comments from Iranian officials suggesting that Tehran. The comments may be encouraged by Trump's recent statements, which have appeared to distance the White House from the conflict. Reuters reported this morning that Trump "vetoed" an Israeli plan to kill Supreme Leader, Ayatollah Ali Khamenei. Semafor reported earlier that top Pentagon officials, “are divided over the extent of US military support for Israel.”
• However, Hooman Majd at NBC reports on X that Tehran has "denied" a recent WSJ report suggesting Iran is seeking de-escalation. See: WSJ-Iran Open To Return To Talks If US Doesn't Join Attacks
• Recent military deployments from Centcom, including the diversion of the USS Nimitz aircraft carrier back to the Red Sea, suggest the Pentagon is also enhancing its posture in the region to contain prolonged conflict or escalation, and better assist Israel in repelling future Iranian strikes.
• Trump is shortly due to meet Canadian Prime Minister Mark Carney, ahead of formal engagements at the G7 leaders' summit. The bilat will offer the first press access to Trump of the day and will kick off an intense period of diplomatic activity that is likely to lead to a stream of comments from world leaders. LIVESTREAM

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EXECUTIVE SUMMARY: 

• The Riksbank is expected to cut rates by 25bps to 2.00% on Wednesday, following through on the slight dovish tilt incorporated into the May policy statement. Data since May has veered in a dovish direction, with soft activity signals coming alongside an easing of inflationary pressures. As such, a cut towards the lower end of the Riksbank’s 1.50-3.00% neutral range appears prudent to offer further support to Sweden’s rate-sensitive economy.
• The June decision includes an updated Monetary Policy Report and rate path projection. Developments since March support a downward revision to the rate path from its current flat 2.25% level, but we don’t expect the path to move much below 2.00%. It’s still too early for the Executive Board to signal a material chance of a cut to 1.75% in the baseline projection – the June MPR alternative scenarios are best placed to incorporate a dovish pivot of that nature. We expect the path to gradually return to the 2.25% level by the end of the projection horizon.
• In the policy statement, we expect guidance to note that rates are “well positioned” to navigate the uncertain outlook, and don’t expect an explicit bias towards further easing.
• Of the 13 analyst previews we have seen, the majority (11) expect a 25bp cut in June to 2.00%. Of those who expressed a view on the June rate path, expectations are for a trough in Q3/Q4 around 1.90-2.00%. Terminal rate expectations range between 1.75-2.00% heading into the decision.

• Iran have reportedly approached Qatar, Saudi Arabia and Oman to ask President Trump to press Israel to agree an imminent ceasefire, according to Reuters sources. In return, Iran are reportedly offering flexibility in nuclear negotiations with the US.
• Markets holding, and building, on their risk-on moves as these Iran headlines cross - equities remain favoured with the e-mini S&P still higher by ~75 points to show above the Thursday high.
• The USD remains pressured in G10 to keep the broader downtrend intact while oil prices slip sharply: WTI crude is now off over 4% on the day.

• ILS the primary beneficiary: USD/ILS is lower by over 3.5% on the day and well through the Wednesday lows: as such, the pair has reversed the entirety (and then some) of the move triggered by the first reports of imminent action against Tehran.