IRAN: Trump States Maximalist Stance; Kazakhstan Offers To Take Enriched Uranium

• +21,000 0QM6 96.00 puts from 5.5 to 7.0 vs. various lvls on 0.37% delta, adds to +46.7k yesterday at 5.0 (open interest +25k to 57.8k)

The Acting Pentagon Comptroller Jay Hurst has told the House Armed Services Committee that the cost of the Iran war to date totals approximately USD$25 billion, significantly below a USD$1 billion per day figure speculated in the media. Hurst noted that the Department of Defense would send Congress a supplemental funding request in the future.    

• The figure is likely to draw some scepticism, especially in light of reports early in the conflict that the Pentagon had requested the White House pursue a USD$200 billion supplemental. Ali Vaez, an Iran expert at the International Crisis Group, called the number "Certainly an undercount," in message on X.
• Haider Ali Hussein Mullick, a former official at the DOD's Inspector General's office, wrote in the NYT this week that the true cost of the war is unlikely to be known, noting that, "The Iran war has neither a special inspector general nor a public website explaining how much is being spent and on what."
• "The Pentagon told Congress that the first six days of the war cost more than $11.3 billion. The Center for Strategic and International Studies calculated that munitions consumed 84 cents of every dollar spent on the Iran conflict in the opening 100 hours, as the U.S. military burned through Tomahawk, Patriot and THAAD inventories. With over 50,000 U.S. troops deployed in the region and about 13,000 strikes against Iran, the American Enterprise Institute estimated the cost at between $25 billion and $35 billion," Mullick wrote.

The rally in oil prices and political noise in the UK has combined to push markets to price in a little over 75bp of BoE tightening through February, with liquid OIS contracts now as much as 9bp more hawkish on the day.

• Markets still pricing ~2.5bp of hikes for tomorrow’s decision.
• SONIA futures flat to -13.0. SFIZ6 tests support at the March 30 low (95.505).
• A reminder that we lean towards a 7-2 vote to leave Bank Rate unchanged tomorrow.
• We don’t think there is enough agreement within the MPC as to whether the risks of second round effects are higher than downside risks to inflation from a potentially slowing economy and therefore expect the guidance to remain very non-committal.
• Our full preview is available here.