GLOBAL POLITICAL RISK: Trump Looking For Speedy End To Iran War - WSJ
The WSJ has reported that US President Trump is telling aides he wants a speedy end to the Iran war (see this link for the full piece). The article notes that Trump is urging his advisors to stick to the 4-6 week timeline originally envisaged for the war. The planned mid-May summit with China President Xi is also planned around the fact the war is likely to be concluded by then, per the article.
- Still the article notes: "The problem is Trump has no easy options for ending the war, and peace negotiations are at a nascent stage."
- It also highlights competing agendas for Trump, with some advisors pressing for a renewed focus on mid-term elections, while other advisors are reportedly urging the President to go harder in terms of the conflict.
- The WSJ notes: "People close to the president cautioned that it is often difficult to predict what decisions Trump might make about the war, noting that as the conflict has unfolded, he has vacillated behind the scenes between embracing diplomacy and ramping up strikes. Some people close to Trump are urging him to go harder, saying regime change in Iran could be legacy- defining."
- The broader tone to the piece appears to fit with public rhetoric from Trump around looking to end the conflict soon, although as the WSJ notes, peace negotiations are at nascent stage. At face value the two-sides appear some distance from each other in terms of stated positions.
- Oil prices haven't reacted much to the story/headlines, with Brent holding modestly higher for today's session so far, last above $103/bbl.
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CHINA: Central Bank Withdraws CNY926.4bn via OMO
The first day back from Lunar New Years sees a significant withdrawal of liquidity. It may be too early to read anything into this as the daily operation adjusts to the various maturities it issued prior to the break.
- The PBOC issued CNY526bn of 7-day reverse repo at 1.4% during this morning's operations.
- Today's maturities CNY852.4bn of 7-day reverse repo and CNY600bn of 14-day reverse repo.
- Net liquidity withdrawal CNY926.4bn.
- The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
- The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.32%, from prior close of 1.42%.
- The China overnight interbank repo rate is at 1.36%, from the prior close of 1.30%.
- The China 7-day interbank repo rate is at 1.50%, from the prior close of 1.40%.
MNI: CHINA PBOC CONDUCTS CNY526 BLN VIA 7-DAY REVERSE REPO TUES
- CHINA PBOC CONDUCTS CNY526 BLN VIA 7-DAY REVERSE REPO TUES
CNH: USD/CNY Fixing Edges Up Versus Pre LNY Levels, USD/CNH Higher
The USD/CNY fix printed at 6.9414, versus a BBG market consensus of 6.9200. Note the last fixing on Feb 13, prior to the LNY break, was 6.9398, so we are a touch above that. The fixing error is tighter though at +214pips, form +329pips on Feb 13. USD/CNH is a little higher post the fixing, last around 6.8950 (close to 6.8900 pre the fixing outcome). The market may have been looking for a lower fixing outcome relative to the pre-LNY break but this would have gone against the firmer USD index backdrop over the break period. Focus will now be on the onshore spot open. As expected, from a little earlier we had the loan prime rates, for the 1yr and 5yr,which were left unchanged.
