MIDEAST: Netanyahu-Negotiations Opened w/Lebanon
Barak Ravid at Axios: "Prime Minister Benjamin Netanyahu: In light of Lebanon’s repeated requests to open direct negotiations with Israel, I instructed yesterday to begin direct negotiations with Lebanon as soon as possible. The negotiations will focus on disarming Hezbollah and establishing peaceful relations between Israel and Lebanon. Israel appreciates the Lebanese prime minister’s call today to demilitarize Beirut."
- The issue of Israel's war against Hezbollah in Lebanon, which has continued beyond the US-Iran ceasefire implemented on Tuesday, has threatened the fragile truce. Senior Iranian figures had claimed a ceasefire in Lebanon formed part of the deal with the US, and that if Israel's assault did not halt the US-Iran deal would be deemed moot and talks in Islamabad on Friday will not take place.
- As noted earlier, US President Donald Trump is reported to have pressured Netanyahu to scale back its assault (see
IRAN: Trump Asked Netanyahu Yesterday to Scale Back Lebanon Strikes: NBC) - Domestically, this may end up less of a blow to Netanyahu, who could seek to argue to hardline rightwingers in the coalition, and voters supportive of the war that he wanted to continue but was effectively forced to stop by Trump.
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BOC: BofA No Longer Sees 2026 BOC Cuts Given Oil Price Shock
In light of geopolitical and energy market developments and ahead of next week's BOC decision, BofA analysts have changed their BOC call to see a hold in the overnight rate at 2.25% through year-end, versus their previous call for two 25bp cuts. They had been the last (as far as we are aware) analyst holdout for BOC rate cuts this year, with virtually unanimous opinion now that the overnight rate will end 2026 either at the same level or higher.
- They write: "Higher oil prices from the Iran conflict boost both Canadian growth and inflation, leaving the BoC little room to ease despite a soft domestic economy. While we do not expect rate hikes given anchored expectations and weak growth, the bar for cuts has risen meaningfully."
- They estimate that a sustained 10% increase in oil prices adds 30bp to GDP growth over the course of the year, and about 40bp to headline CPI (with smaller core passthrough).
- A final note is that the Middle East war could "end up facilitating the USMCA negotiations. With rising geopolitical tensions, the US is unlikely to want multiple fronts open simultaneously, while secure energy supply from Canada becomes even more strategically valuable."
GILT AUCTION PREVIEW: On offer next week
The DMO has announced it will be looking to sell GBP4bln of the 4.125% Mar-31 Gilt (ISIN: GB00BVP99673) at its auction next Tuesday, March 17.
MNI EXCLUSIVE: MNI Interviews Ex Boston Fed Research Director on Policy Outlook
- MNI interviews former Boston Fed research director on monetary policy outlook -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
