• Meanwhile in markets, we are caught between two competing forces: the hawkish opening chapter of Fed Chair Warsh and the signing of the memorandum of understanding between the US and Iran. US Treasuries and equities have clawed back part of their post-FOMC losses, but both remain below pre-FOMC decision levels;

• The 2-year US Treasury yield hit 4.21 percent this morning – higher than any level it hit during the Iran war. While it has since eased back from those highs, it remains in line with yesterday’s close. The 30-year UST yield has come down by 5bps this session – trading at 4.89 percent. In our neck of the woods, we’re seeing a mixed picture in Bund yields as well: 2-year yields are up 4bps this morning, while the 30-year yield has fallen 2bps;

• Moving to equities, the Stoxx 50 is up a quarter of a percent this morning – hitting a new all-time high. S&P 500 futures are up a little under a percent, but that still leaves them short of fully reversing yesterday’s decline;

• Shifting to FX, the broad dollar is up a little under half a percent this morning – with EURUSD trading below the 1.15 handle for the first time since the end of March. The Swiss franc has weakened slightly since the Swiss National Bank’s interest rate decision this morning – where it held rates steady at zero percent. USDCHF is now back above the 0.80 level, but at 0.921 EURCHF continues to trade below its 200-day moving average;

• Beyond the decision to hold rates steady, the SNB’s messaging in both the policy statement and press conference largely echoed that of the March meeting. Our expectation remains that the SNB will maintain its zero-interest rate policy over the coming twelve months, until the end of our forecast horizon;

• In more central bank news, the Bank of England is set to hold interest rates steady this afternoon, but if there is any action it will be found in the dissenting vote count. The MPC saw just a single hawk break ranks across the March and April meetings – but there is a risk we will return to a situation where multiple members split the vote this time around. Nevertheless, the recent tumble in crude oil prices – with Brent now trading at $77 a barrel – has given the MPC some breathing room to remain in wait-and-see mode. Nevertheless, talk of 2026 rate hikes is still very much alive. Overnight index swaps are still leaning toward the BoE pulling the trigger on one 25bps rate hike in either September or November this year – with year-end pricing at 33bps of hikes;

• Looking ahead, the afternoon also brings the interest rate decision of the Czech National Bank – which is expected to hike. We will have to make do with today's central bank fireworks to round off this week as tomorrow's session is going to be dead quiet. Besides the release of Japanese May CPI data and some ECB-speak the day offers little excitement – especially with US markets closed for Juneteenth.

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