IRAN: 'Conflicting Positions' Of US Reason For Talks Postponement-Iranian Media
Following Axios' report that the fourth round of US/Iran talks scheduled to take place in Rome on 3 May have been pushed back a week (see 'OIL: U.S/Iran Nuclear Talks Postponed Until Next Week: Axios', 1431BST) Iranian-based outlet Iran Nuances reports that the postponement is "seemingly due to conflicting positions by US side & changing the established frameworks in previous rounds".
- An earlier article from Iran Nuances claimed, "Iran is growing increasingly skeptical about the United States’ seriousness and integrity in ongoing nuclear negotiations aimed at sanctions termination. [...] spokesperson for Iran’s Ministry of Foreign Affairs, Esmail Baqaei, described the recent US sanctions as another clear testament to the contradictory approach of American decision-makers and their lack of goodwill and seriousness in advancing the path of diplomacy."
- On 29 April, the US Treasury Dep't announced new sanctions on six Iran and China-based firms that the US alleges are involved in Iran's efforts to secure parts for ballistic missiles that could carry nuclear material.
- US Defence Secretary Pete Hegseth's aggressive X post on 1 May towards the Iranian-backed Houthis in Yemen has been strongly criticised by Tehran. However, the delay in talks would seemingly indicate that lack of progress in negotiations (the third round on 26 Apr delivered less positive rhetoric than the previous two rounds) is the main reason for the postponement rather than any specific US trigger.
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BONDS: Gilt/Bund Spread Seeking Direction After Recent Swings
The 10-Year gilt/Bund spread has rebounded from the lows seen in March, last ~195bp.
- The early March narrowing was mostly driven by the tabling of the expedited German fiscal loosening plan, which has since been delivered.
- The lack of an immediate increase in German issuance has factored into the move away from the March lows.
- More recently, gilts initially benefitted from the DMO’s remit for 25/26 being skewed slightly shorter-than-expected in maturity terms.
- The fact that the size of the remit was within the lower end of expectations, presented further cross-market support.
- 2 factors have played into the spread widening seen since that event, in our view:
- 1) Perceptions surrounding European economic growth being more susceptible to downside shocks from U.S. tariffs than the UK’s growth (as well as the UK seemingly being in a better position to cut a trade understanding with the U.S. when compared to the EU).
- 2) Continued questions surrounding the fiscal health of the UK and the potential for an upsizing of issuance over the medium term, given continued headwinds for growth and still limited fiscal headroom.
- The interplay between the factors outlined above will be key for the direction of the spread in the medium-term, with last week’s move back above 200bp faded in the first instance.
Fig. 1: 10-Year Gilt/Bund Spread (bp)
Source: MNI - Market News/Bloomberg
USDCAD TECHS: Bullish Outlook
- RES 4: 1.4700 Round number resistance
- RES 3: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 2: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 1: 1.4415 Intraday high
- PRICE: 1.4403 @ 14:49 BST Apr 1
- SUP 1: 1.4320/1.4235 50-day EMA / Low Mar 26 and a key support
- SUP 2: 1.4151 Low Feb 14
- SUP 3: 1.4107 50.0% retracement of Sep 25 ‘24 - Feb 3 bull run
- SUP 4: 1.4011 Low Dec 5 ‘24
USDCAD is trading higher today. A bullish theme remains intact - moving average studies continue to highlight a dominant uptrend - and a stronger rally would refocus attention on the bull trigger at 1.4543, the Mar 4 high. A return lower and clearance of 1.4235, the Mar 26 low, would instead undermine the bull theme and highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger.
MNI: US MAR FINAL MANUF PMI 50.2 (FLASH: 49.8); FEB 52.7
- MNI: US MAR FINAL MANUF PMI 50.2 (FLASH: 49.8); FEB 52.7
