Markets
Details of the announced interim agreement between the United States and Iran are still missing, and it is not expected to happen until later this week. Based on previously put forward versions, both sides will likely aim to restore Hormuz flows within 30 days of the extended ceasefire. 60 day extension Changes the narrative from “hope an agreement is reached” to “hope the agreement is not derailed” While the two sides are trying to address Iran’s nuclear ambitions. Perhaps it is the constant threat and expectation of a slow return of traffic through the main shipping artery Help explain the tepid market response This morning, albeit after some progress on Friday. Brent crude opened at $83 per barrel from a close of $87 per barrel last Friday and is still hovering around that level. Underlying bond curves rose, with German yields down 5 basis points at the front end of the curve and US yields down 4 basis points. UK bonds outperform (2-year: -6.5 basis points). Once again, the main move occurred after the European bell, highlighting investors’ extremely cautious optimism. The EUR/USD pair rose from 1.1570 to 1.1620 and remained there throughout European trading. The EuroStoxx 50 rose 1.2%, surpassing the previous year-to-date level and an all-time high of 6,200 in the process.
In the absence of major economic data, we look forward to European Central Bank comments Since the interest rate hike by 25 basis points last week. Overall, they still point to further action, perhaps in July. European Central Bank President Lagarde singled out core inflation as the key milestone. June inflation figures, due on July 1, could be crucial in determining the outcome of the policy meeting scheduled for July 23. she Pledges to kill inflation If she wakes up again and considers completing her mission a personal duty. It is fully aware that letting the inflation harvest out of the bottle for a second time would be the biggest possible policy mistake of the moment. On a side note, she also supported more eurozone crowdfunding as key to the Savings and Investment Union project. A mutual debt instrument that provides depth and liquidity to the market is seen as critical to success. Slovak ECB member Casimir said the “direction of travel is clear” and preferred to load up on the work to be done initially. The damage to the Middle East cannot be repaired overnight, even with a framework for peace. Reopening Hormuz cannot be compared to simply turning a light switch back on. Bundesbank President Nagel is keeping all options open for the July meeting, where he expects the normalization of oil supplies to take months. Other ECB members, including Rehn, Mullen, Pereira and Coker, were less forthright. They suggest further rises in the coming months but want to see more data, especially regarding the effects of the second round of inflation. Tracking wages at the European Central Bank Scheduled for Wednesday, it’s worth watching.
News and opinions
US President Trump has threatened to impose a 100% tax on French wine and champagne exports. In an interview with the New York Post, He criticized the 3% sales tax imposed by France on technology companies, Which usually affects companies based in the United States more than others. French lawmakers had voted in October to double the tax to 6%, but the measure was ultimately vetoed by ministers who feared disproportionate US retaliation. The US market accounts for about a fifth of the French wine industry’s sales. The annual trade value is more than $2 billion.
UK real estate platform Rightmove said house prices fell 0.6% month-on-month in June and fell 0.5% year-on-year. This was the largest June drop in 14 years. Rightmove noted that house prices typically rise slightly in June and concluded that the decline this year has reversed Many new sellers are adjusting prices in response to the record number of homes available for this time of year. Rightmove reported that sales activity remained broadly flat, with buyer demand in May (the latest data available) down 10% year-on-year but largely in line with trends seen so far this year. “Higher mortgage rates continue to impact activity, while the wider selection of homes for sale is encouraging buyers to take a less pushy approach unless the property really stands out in its price or presentation.” The platform said. Despite this, The number of agreed sales remains broadly in line with recent years, even exceeding 2023 levels by 5%.
