Iran talks fail to bring agreement

Good morning

Welcome back, I hope you had a wonderful weekend

US headline CPI inflation was indeed much firmer than previous readings on Friday as the impact of the Iran war although the Core reading (excluding food and energy) was a touch below expectations.  US rate expectations have shifted, with some now not seeing a rate cut until very late in 2026.  Market impact was limited as the market concentrated more on the Iran war talks that would be taking place over the weekend.  We know now that no deal was agreed at those talks and when the trading began on Sunday night we saw the US dollar push higher, with GBPUSD opening around 1.3385, some 80 pips below Friday’s close, and EURUSD some 60 pips lower to 1.1665 or so.  USJDPY pushed higher but as we have seen several times, moves were capped around the high-159’s. 

I actually thought we’d see the US dollar push a fair bit higher than we’ve seen so far, but as I type GBPUSD has recovered a little to 1.3425 and EURUSD to 1.1700.  Oil prices jumped, losses in Asian equities were not as large as I’d imagined we’d wake up to, although European markets are soft on the open, down around 1%.  Again, I’d have expected larger moves given the lack of any peace deal and the news that US will blockade Iranian ports, the proof now I suppose will be whether ships can safely pass through the Strait of Hormuz or whether Iran will attach vessels in the area, a move that would almost certainly lead to further US military action.  There remains some hope that talks will restart but I worry that the two week ceasefire will be at risk what may happen in the meantime.

In Hungary, Orban did lose the election which saw a landslide victory for Peter Magyar.  It was a bit of a surprise that there seemed to be little in the way of dirty tricks or interference in the voting.  EURHUF has traded lower from around 375 in Friday to current levels around 365 partly on hopes Hungary will receive payments from the EU that have previously been held back although I would imagine this will take quite some time. Although Magyar is more pro-EU he may not want or be able to make sweeping reforms tool quickly. 

Congratulations to Rory McIlroy for winning his second Masters in a row, managing to hold onto a lead he had almost from the start despite some late drama that looked like he could possibly throw it away at the end. 

On the subject of throwing away chances to win, Arsenal lost to Bournemouth at the weekend, putting their hopes of winning the league title at risk.  Next Sundays match between Man City and Arsenal is lined up to be a thriller and a potential title-decider.   Of course, at the other end of the table Spurs run of bad form continues and with West Ham winning at Wolves, Spurs are now in the bottom three.  Spurs were a little unlucky and I have to say some refereeing decisions didn’t go our way but those excuses won’t save Spurs from relegation. 

Next weekend is against Brighton who have won five out of their last six premier league matches and are pushing for a European spot.  Not looking forward to that.  For now we’ll just have to hope Man Utd can beat Leeds this evening as we really don’t need the teams closest to Spurs getting any points at all.  Sorry Mark!

Not much on the calendar today, in fact there isn’t much in the way of important data at all this week.  We will hear from several central bank officials at the IMF meeting that takes place this week, no doubt inflation and interest rates will be high on the agenda.  Meanwhile I’ll be watching Iran for any signs of a break to the fragile ceasefire.

Have a great day…

-  13.15 ECBs de Guindos speaks

-  14.00 BoEs Taylor speaks

-  15.00 US existing home sales

-  23.20 Feds Miran speaks

-  00.01 UK BRC retail sales

-  01.30 AUS Westpac consumer confidence