IRAN: Foriegn Min Warns E3 Against Non-Compliance Resolution At IAEA
Foreign Minister Abbas Araghchi has warned the E3 nations (France, Germany, UK) against launching a non-compliance procedure against Iran at the upcoming International Atomic Energy Agency (IAEA) Board of Governors' meeting on 9 June. In a post on X, Araghchi implies that the last non-compliance procedure, launched 20 years ago, was a spur to Iran's move towards a nuclear weapon, saying "When the E3 engaged in the same foul conduct back in 2005, the outcome in many ways was the true birth of uranium enrichment in Iran."
- Araghchi: "Mark my words as Europe ponders another major strategic mistake: Iran will react strongly against any violation of its rights. Blame lies solely and fully with irresponsible actors who stop at nothing to gain relevance."
- A draft resolution says that the IAEA's “inability ... to provide assurance that Iran’s nuclear programme is exclusively peaceful gives rise to questions that are within the competence of the United Nations Security Council,” meaning the UNSC could be tasked with ruling on potential sanctions.
- This would come after a second IAEA Board meeting (later in the summer) that would assess Iran's reaction to the first resolution, and if deemed insufficient, to officially refer the matter to the UNSC.
- With the US set to back the resolution, it could move the status of US-Iran talks from their current 'shaky ground' to outright 'hostile'. As Axios reported on 5 June, the risks of Israeli strikes on Iranian nuclear facilities escalate significantly if the US-Iran talks "have been exhausted".
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EQUITIES: Estoxx futures is closing the small Opening gap
- The Estoxx futures is slowly closing the Opening gap, not a Tech level, and the is fairly gradual.
- In Cash, Stoxx600 is down 0.42%, with Retail (-1.71%), Healthcare (-1.07%), Realestate (-0.84) the worst performing Sectors.
- Basic resources, Media are the leading sectors, up 0.48% and 0.44% respectively.
- Initial support in VGM5 will be at 5178.00, Yesterday's low.
ITALY AUCTION RESULTS: Buyback Results
The MEF has bought:
- E1,545mln of the 0.50% Feb-26 BTP at 98.953..
- E942mln of the 4.50% Mar-26 BTP at 102.010.
- E604mln of the 0% Apr-26 BTP at 98.295.
- E872mln of the 1.60% Jun-26 BTP at 99.408.
- E1,037mln of the 0% Aug-26 BTP at 97.762.
EGBS: Futures Rally To Fresh Session Highs; Brush Aside German Spending Sources
Major EGB futures have rallied to fresh session highs over the last 60 minutes, led by semi-core/peripherals. The space largely brushed aside a Reuters sources article detailing German defence spending plans, with the piece lacking clarity on whether the touted E60bln of additional spending is for 2025 alone or split across the current parliamentary term.
- The limited reaction in German swap spreads suggests the story is consistent with pre-existing sell-side estimates of defence spending increases.
- Bund futures are +16 ticks at 131.07, with initial resistance seen at 131.24 (Apr 5 high). That shields key resistance and the bull trigger at 132.03 (Apr 7 high).
- OAT and BTP futures are up ~25 ticks each, with no obvious driver of outperformance versus Bunds. Today’s LT OAT auction was solid, but doesn’t seem to be enough to account for the outperformance.
- The German curve has bull flattened, with 30-year yields 3bps lower on the session. 10-year EGB spreads to Bunds are now up to 2bps tighter.
- Italy has held a buyback transaction this morning.
- Eurozone March retail sales were in line with consensus at -0.1% M/M, vs a one tenth downwardly revised 0.2% prior.
- Global macro focus turns to this evening's FOMC decision.
