IRAN: “*IRAN'S STATE TV: EXPLOSION HEARD IN QESHM ISLAND” BBG

Bank of Canada Gov Macklem commented after a speech in Paris that the recent pullback in energy prices is welcome news for the inflation outlook, and that the June CPI report wasn't worrying from the Bank's perspective given steady core pressures and limited breadth. Macklem did caution that they were still looking at whether pipeline pressures materialize, but overall the drop in oil prices removes upside risks to inflation. BOC rate pricing was steady throughout, still implying about 16bp of hikes through end-year (though down slightly from 18bp Monday).

• This was Macklem's first appearance since the June 10 BOC press conference, since which time front crude oil futures have declined more than 15% to post-February lows on US-Iran ceasefire deal progress. Macklem said "the Iran-US peace agreement is very welcome news....it's clear that there's still a lot to be worked out in the peace agreement...[but] the drop in the price of oil, it certainly takes some upside risks away on inflation, which does reduce the dilemma... there's still a long way to go, so we'll have to see, and we're still looking at the pressures that are in the pipeline, and how those are going to play out, but yes, no question, it's good news, and it does take some of the upside on inflation away."
• On Monday's CPI report, Macklem reminded that at the latest meeting the BOC said inflation was expected to rise around 3% and "that's what happened, came in 3.2". And "when you look at the number, it is very concentrated" in oil prices. "There is some spillover to other some services" including airfares/travel services, "but overall we are not seeing so far ... much spreading of higher oil prices to other prices of other goods and services." "If you look at our measures of core inflation, both trim and median, they didn't move."
• And as MNI pointed out following the report re breadth narrowing at the high end of the CPI basket, Macklem said "if you look at the whole distribution of price changes... one thing we track is the proportion of CPI components rising faster than 3% - that's actually pretty close to its historical average, so what that's saying is that so far there's no evidence of generalized inflation. So far the rise in inflation is very much reflecting the rise in global energy prices related to the war in Iran."
• He reiterated that as opposed to providing precise forward guidance, "we're going to take the decisions one at a time based on the best available information".
• As reported earlier by our Policy team, Macklem also noted that “supply shocks cause a dilemma for us", and that consumer spending remains resilient but growth is expected to be "modest" amid trade tensions.

The EU plans to issue E80bln of NGEU and Macro Financial Assistance+ bonds in H2-26 (conventional and green) – in line with the provisional target outlined at the end of April. This is down from E100bln planned for H1. We estimate it has raised E99.5bln nominal and E96.9blnbln in cash terms this year (following today’s non-competitive round result)

• There are 4 confirmed syndication weeks in H2-26 (MNI expected 4-5; vs 6 in H1-26, 4 in H2-25) and 6 planned auction dates (MNI expected 6; vs 6 in H1-26 and 6 in H2-25).
• “Subject to market conditions, the Commission intends to launch new conventional EU-Bond lines in the 3-year, 5-year, 15-year and 30- year maturity segments.”
• “NextGenerationEU Green Bond issuances in H2 2026 are expected to take place via tapping of existing bonds.”
• “EU-Bond auctions will continue to be 3-leg auctions complemented by non-competitive offers to EU Primary Dealers the day following the bond auction, allowing for the allocation of additional amounts of auctioned bonds (maximum 20%).”
• EU-bills will continue to be issued as triple-tranche auctions, with new 12-month lines issued during the first auction of the month. Only one auction is planned in August, and the second auction in December is optional.

From EU press office email (link likely available shortly): "The EUROPEAN UNION, rated AAA (Fitch) / Aaa (Moody's) / AA+ (S&P) / AAA (Scope), announces its intention to issue up to € 80 billion of EU-Bonds in the second half of 2026, to be complemented by short-term funding (EU-Bills)."

So that's in line with the provisional target outlined at the end of April (after incorporating additional borrowing to cover the loan to Ukraine).