IRAN: Iranian Ambassador Touts Toll System With Iran In Latest Interview
Latest from Bloomberg: * "Iran is discussing with Oman how to set up some form of a permanent toll ...
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GILTS: Curve Holds Flatter, CPI Eyed
Cues from Tsys have dominated over the past couple of hours, with little in the way of clarity re: the potential U.S.-Iran negotiations provided in the latest round of headlines.
- U.S. data-driven downticks in futures have been limited, with bears unable to retest support (87.82), although they remain in technical control.
- Yields 6bp higher to 1bp lower, curve flattens.
- Front end of the gilt curve continues to underperform on the day, with some of the outcomes within this morning’s labour market data (lower unemployment, driven by participation rate swings and firmer-than-expected economy-wide wage figures) factoring into the initial selling on the open, albeit with our macro team noting that the report was soft overall.
- BoE-dated OIS 0.5-7.0bp more hawkish across ’26 meetings, with 39bp of hikes now showing through year-end vs. less than 25bp at one stage on Friday (when risk-on price action linked to hope surrounding the U.S.-Iran situation peaked).
- SONIA futures 0.5-8.0 lower.
- The front end move is even more notable when viewed against the backdrop of Energy Secretary Miliband releasing his plan to delink gas and electricity prices.
- Comments from former senior Civil Servant Robbins failed to provide a definitive uptick in risks re: the future of PM Starmer.
- The BoE remains more sensitive to upside surprises in inflation at this juncture, as the MPC is on the lookout for further signs of inflationary passthrough linked to the Iran conflict.
- Our full preview of tomorrow’s CPI release is available here.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA (bp) |
Apr-26 | 3.756 | +2.6 |
Jun-26 | 3.856 | +12.6 |
Jul-26 | 3.962 | +23.2 |
Sep-26 | 4.065 | +33.5 |
Nov-26 | 4.109 | +37.9 |
Dec-26 | 4.119 | +38.9 |
Feb-27 | 4.120 | +39.0 |
Mar-27 | 4.116 | +38.6 |
Apr-27 | 4.107 | +37.7 |
US TSY OPTIONS: BLOCK: Large Aug'26 10Y Put Buyer Add
- +60,000 TYQ6 108.5 puts, 20 vs. 111-14/0.18% at 0946:28ET - adds to over 21k on screen reported a few minutes ago
US DATA: Philly Service Providers See Small Passthrough From Higher Input Costs
The Philly Fed non-manufacturing index followed the NY Fed’s services survey with a better than expected April outturn, although there was a softer detail with new orders looking particularly weak. Price details were mixed as well, with prices paid coming close to the recent peak from Apr 2025 and before that early 2023 but prices received falling to the lowest since Jun 2025.
- The overall non-manufacturing index at -16.5 more than reversed the March decline from -17.3 to -23.9 having previously dropped to its lowest since May 2025 in initial reaction to the Middle East conflict.
- For context, the -16.5 compares with an average -21.6 in 2025 and -8 in 2024.
- As always, this headline index is the representative firm’s view on regional business activity. Alternatively, the firm-level index also improved on the month from -8.3 to -4.5 although that’s still a weak patch after an average 8.7 through Jul 2025 to Feb 2026 after recovering from large negative readings following tariff announcements.
- New orders were a notable weak point, falling from -4.7 to -16.9 for the lowest since Apr 2023, with a employment metrics at least providing some offset as they recovered after slipping in March.
- Prices paid saw a solid increase (+4.8pts to 43.9, highest since Apr 2025) but it didn’t translate into higher prices received, which actually fell further to 6.7 (-2.6pts) for the lowest since Jun 2025 having recently peaked at 22.0 in February (highest since May 2023).
