• Meanwhile in markets, peace, love, happiness, and a big phat rally as the US and Iran appear to be really, really close to a deal. Yes, this time President Trump, who has said 39 times (39!) according to CNN that a deal is close, is probably speaking the truth;

• This time around, it’s not just the western media (read: Axios) that is running the peace deal stories. According to Al Jazeera, Iran’s Foreign Ministry’s spokesman confirmed in a statement to local media that the leadership in Tehran is studying the memorandum of understanding. And that a deal “closer to being approved than ever before”;

• Axios reported overnight that the third party-mediated deal includes a 60-day extension of the ceasefire, which now would also cover Lebanon (fully). Markets will love it that Iran and the US will both immediately lift the blockade of the Strait of Hormuz and that shipping should return to normal in 30 days. Iran would get sanctions relief on meeting certain milestones and a temporary sanctions waiver for oil sales right out of the gate. Talks on the nuclear issue will begin in all earnest when the deal is signed, which according to the latest reports could happen in Geneva on Sunday. Vice President Vance would sign the deal for the US side – Trump’s eightieth birthday is on Sunday and he will stay in Washington;

• Admittedly, we’re feeling quite smug. We’ve been peace optimists for the past several months. Operating under the simple axiom that Trump wants out. He quite simply isn’t the man to get into a quagmire that will dominate the rest of his term. He’s not like Russian President Putin, who keeps his arm in the meatgrinder that is Ukraine for more than four years straight – with no end in sight. Trump’s behavior vis-à-vis Israel’s Prime Minister Netanyahu tells you all you need to know. High on success of the quiet coup in Venezuala, he was oversold the campaign against Iran. And probably got second thoughts early in, realizing that decapitating Tehran’s leadership brought him no good;

• Turning to some market commentary, bonds and equities are rallying strongly while oil and the dollar are both down. Bund and UST yields are trading close to the lows of the day and have notched up weekly declines across the curve of 4-9bps for the former and 6-11bps for the latter. In equity space, the Stoxx 50 is up two percent, which is about enough to return the index to its pre-war high. Nasdaq futures are up more than three percent from pre-peace deal levels yesterday afternoon. Be aware that SpaceX will Ipo today;

• ECB sources and speakers have been all over the place in the wake of yesterday's ECB Governing Council meeting. My reading of the tealeaves is that our central bank overlords in Frankfurt will quite simply hold rates next month. And my conviction is only strengthened by the Iran deal. Fittingly, ESTR swap pricing for the July ECB has sagged to 2.24 from 2.29 around the time of the interest rate decision yesterday;

• Brent crude futures have plunged to the mid $86s a barrel on deal optimism, nearly matching the mid-April low (when there was also quite a lot of optimism on a deal). The broad dollar has added to losses and is down more than half a percent for the week;

• Looking ahead, we have an empty calendar today. Focus will be on next week’s string of central bank meetings. First and foremost the Fed on Wednesday (a hold) and the Bank of Japan on Tuesday (a 25bps hike). We also have the Swiss National Bank, Bank of England, Risksbank, Norges Bank, and Czech National Bank meetings. The highlight on the data docket next week are US retail sales out on Wednesday.

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