IRAN: First Statement From Iranian Supreme Leader Threatens Escalation

Mar-12 13:57

Iranian Supreme Leader Mojtaba Khamenei indicated in his first official statement, read out on State TV, that the regime will continue its hardline response to US-Israeli strikes, potentially widening the conflict to include new regional targets.

  • Mojtaba said, per Iran Nuances, “Lever of closing Strait of Hormuz must continue to be used. We've had studies on opening other fronts where enemy has little experience and would be extremely vulnerable. These will be activated if the war situation persists..." He added, if "reparations" aren't paid, "we will take from their assets to the extent we deem appropriate. And if that is not possible, we will destroy their property to the equivalent value..."
  • He warned that while Iran seeks "constructive relations" with neighbours, it will continue to strike targets in the Gulf if "foreign military bases" are used against Iran. He added that Arab countries should "shut down US bases as soon as possible."
  • The statement is broadly in line with a prevailing view that Mojtaba is aligned with hardline elements of the Iranian Revolutionary Guards (IRGC). 
  • Iran expert Hamidreza Azizi wrote earlier this week that Majles speaker Mohammad Bagher Ghalibaf “said Iran is certainly not pursuing a ceasefire and instead believes it must deliver a decisive blow that becomes a lasting lesson to the aggressor.”
  • Azizi wrote. “In this view, Iran is trying to break what it sees as Israel’s preferred cycle of war, negotiation, ceasefire and then renewed war. Tehran appears increasingly determined to reject a quick ceasefire, widen the costs of the conflict, and force a new strategic equation.”
  • The NYT noted earlier that the hardline response from the Iranian regime makes its pursuit of a nuclear bomb more likely, and therefore an exit strategy for the US more complicated.

Historical bullets

MNI: US REDBOOK: FEB STORE SALES +6.5% V YR AGO MO

Feb-10 13:55
  • MNI: US REDBOOK: FEB STORE SALES +6.5% V YR AGO MO
  • US REDBOOK: STORE SALES +6.5% WK ENDED FEB 07 V YR AGO WK

BUNDS: Block trade

Feb-10 13:54

Bund Block trade, suggest buyer:

  • RXH6 5k at 128.50.

STIR: Navarro's NFP Comments Help Blunt Dovish Data Reaction

Feb-10 13:53

Dovish repricing initially seen in the USD short end as retail sales come in on the soft side of expectations (with negative revisions). The downside surprise in the ECI was modest, particularly when rounding is accounted for, while the import price readings were mixed.

  • Prior weekly ADP data had little impact but reinforced the idea of a slowing labour market.
  • Meanwhile, Peter Navarro, Counselor to President Trump, noted that the deportation of workers is impacting jobs data, which should factor into a revision of expectations for the labour market data, albeit stressing that he does not expect a weak outcome in tomorrow’s NFP release.
  • The latter point helps counter some of the data-driven move after Monday comments from NEC Chair Hassett seemingly alluded to the potential for a downside NFP surprise.
  • SOFR futures now flat to +3.5 on the day vs. 0.25-2.0 firmer into ADP. Implied terminal rate pricing on the strip at 3.10% vs. 3.11% pre-ADP
  • FOMC-dated OIS showing 5bp of cuts for March, 11bp through April, 25bp through June, 35bp through July, 47bp through September, 52.5bp through October and 58bp through year end, little changed to 1bp more dovish vs. pre-ADP levels.