IRAN: Trump Expects Iran Deal Within “Day or Two”: Axios
Apr-17 16:57
Trump told Axios that U.S. and Iranian negotiators will probably meet this weekend, and he expects them to finalise a deal within “a day or two”
- Trump’s optimism comes after holding at least one direct call with an Iranian official in recent days, Axios added.
- Earlier reporting said that The U.S. and Iran are negotiating over a three-page plan to end the war, with one element under discussion being that the U.S. would release $20 billion in frozen Iranian funds in return for Iran giving up its stockpile of enriched uranium, according to two U.S. officials and two additional sources briefed on the talks.
- Iran's foreign minister Araghchi on X.com: @araghchi "In line with the ceasefire in Lebanon, the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire, on the coordinated route as already announced by Ports and Maritime Organisation of the Islamic Rep. of Iran.
- While Trump stressed that the Strait of Hormuz is "COMPLETELY OPEN," a social media account linked with the IRGC suggests that Iran is in control traffic and collecting tolls - an unpalatable long-term solution for Gulf states.
- Renewed optimism for a swift end to the war has sparked a selloff in energy markets, with Brent and WTI down 11% and 12% respectively on the day, while TTF has fallen 7%.
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FED: Statement: 1, 2, or 3 Dissenters? (2/2)
Mar-18 16:54
- A change to the forward rate guidance would of course be impactful, but given prevailing uncertainty and Committee discord over the path forward, we doubt there is sufficient decisiveness to make an amendment here.
- The Statement added “extent and timing” in December to signal that after 3 consecutive cuts, the easing bias remains but the pace has slowed and the next move will be data-dependent. That’s still enough to convey the Committee’s optionality and non-commitment on future rates.
- There’s no doubt that the undercurrent for guidance is in a hawkish direction, with the January meeting minutes noting “Several participants indicated that they would have supported a two-sided description of the Committee's future interest rate decisions, reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels.”
- MNI’s Instant Answers questions for the meeting include a tally of dissenters. Gov Miran looks likely to dissent (again) in favor of a 25bp reduction, and he may again be joined by Gov Waller who said in February that his decision on the meeting would be a “coin flip” that would be decided by the incoming February payrolls and CPI data. A third dissent – by Gov Bowman – is unlikely (she didn’t dissent in January) but not unthinkable.
- Indeed many analysts expect 3 dissents.
- The Implementation Note could at some point include a tweak of administered rates, including a nudge lower in the interest rate paid on reserve balances from the current 3.65%, or the standing repo facility rate of 3.75%. We continue to include these in our Instant Answers, just in case – once again we don’t expect any move at this meeting.
- Additionally the Fed is due to update soon on its reserve management purchase tempo. It has said it will dial back purchases from the existing $40B/month once the mid-April tax season (which drains reserves / liquidity) is at an end. The current NY Fed bill buying schedule runs through April 7, with the new one due to be published April 13, so we wonder if there will be a signal provided ahead of time as to the exact size of future monthly RMPs.
OPTIONS: Mixed Trade On Eve Of BOE/ECB Decisions
Mar-18 16:52
Wednesday's Europe rates/bond options flow included:
- RXJ6 126.50/126.00ps 1x2, bought for -1 (receive) in ~4k
- ERM6 97.75/97.8125/97.9375c ladder, bought for 2 in 6k
- SFIZ6 96.50/96.80/97.10c fly, bought for 5 in 5k
- 0NM6 96.30/96.60cs, bought for 9.5 in 10k
US 10YR FUTURE TECHS: (M6) Monitoring Resistance
Mar-18 16:51
- RES 4: 113-07+ High Mar 3
- RES 3: 113-03 High Mar 4
- RES 2: 112-10/112-24+ 20-day EMA / High Mar 10
- RES 1: 112-07 High Mar 18
- PRICE: 111-25 @ 16:49 GMT Mar 18
- SUP 1: 111-11 Low Mar 13 and the bear trigger
- SUP 2: 111-08+ Low Feb 3
- SUP 3: 111-06+ Low Jan 20 and a key support
- SUP 4: 111-00 Round number support
A bear cycle in Treasuries remains intact and this week’s recovery appears corrective - for now. Initial firm resistance to watch is 112-10, the 20-day EMA. A clear breach of it would signal scope for a stronger bounce. For bears, a resumption of the downtrend would open the next key support at 111-06+, the Jan 20 low. Clearance of this level would highlight an important medium-term bearish development.
