IRAN: US, Iran Considering Extending Ceasefire by 2 Weeks: BBG

The latest CFTC CoT report (through the week ending March 10) showed asset managers adding to their overall net long, while leveraged funds added to their overall net short:

• Asset managers added to their overall net long positioning as net long setting across TU, FV, UXY & WN futures outweighed net long cover in TY & US futures. The cohort remains net long across the curve after adding a net ~$7.1mln DV01 of exposure across the curve.
• Leveraged funds added to their overall net short as meaningful rounds of net short setting across UXY & WN futures comfortably outweighed short cover across the remainder of the curve ($9.1mln DV01 net short added in the latest week). The cohort remains net short across the curve.
• Broader non-commercial net positioning saw net shorts trimmed in TU, FV & TY, while a small net long was added to in US futures and net shorts increased in UXY & WN futures. See the table below for more detail on this cohort’s positioning adjustments.

Source: MNI - Market News/CFTC/Bloomberg Finance L.P.

Uncertain Rate Path, No Knee-jerk Reactions

For the full publication, please click here 

EXECUTIVE SUMMARY

• The Riksbank is expected to hold the policy rate at 1.75% in March. We expect the policy statement to stress considerable uncertainty around the updated March MPR forecasts and rate path projection. Although the central forecast may still indicate that a 1.75% rate is appropriate through the course of this year, we are unsure if the Board will have enough confidence to repeat its guidance of steady rates for “some time to come” given the geopolitical uncertainty
• This should not necessarily be interpreted as an overtly hawkish tweak, but rather a reflection of the wider range of potential outcomes relative to December. Prior to the Iran war starting, developments since the December decision had been dovish.
• Overall, we think the first three quarters of the March MPR rate path should see minimal revisions relative to December (this is the part of the path “owned” by the Executive Board, and therefore constitutes a policy signal). That said, the Riksbank’s mandate prioritises inflation as a first order objective. The policy statement is thus likely to stress heightened vigilance on inflation and inflation expectations developments, and a willingness to act if required.  Increased focus should be paid on the March MPR’s alternative scenarios
• One scenario we can envisage is a relatively hawkish policy statement (i.e. vigilance and willingness to act on inflation), which is then dampened by a more balanced press conference from Governor Thedeen. 

• -5,000 FVM6 108-22.25, post time bid at 1047:02ET, DV01 $222,000.
• The 5Y contract trades 108-23 last (+7.75)