• Meanwhile in markets, markets are rallying on the back of the Iran war deal. And we have a little bit of time for a victory lap. We’ve been in ‘camp deal’ in the Iran war for months. And now, after all the twists and turns and tense moments, President Trump has finally delivered – on his 80th birthday (which was yesterday);

• With both the US and Iran now saying that there is a deal, does that mean that the coast is clear? Absolutely not. To be sure, there’s plenty to like: reopening the Strait of Hormuz, and for Iran sanctions relief and unfreezing of assets. On the other hand, there’s no official document of the deal out in public (yet). And I am not sure that there will be unified document of the accord, or that there will be no major differences in interpretation between the US and Iran on the agreement. Furthermore, the ceasefire is only extended for sixty days during which both sides must reach an agreement on the nuclear issue. Given the contentious nature of the nuclear stuff, chances are that the deadline will be extended. We could even see breakdowns in negotiations or perhaps a rerun of the ‘choreographed’ strikes that we witnessed last week. In any case, for now, enjoy the ride;

• In the wake of the deal news, predictably, bonds and equities are up while the dollar and Brent crude oil futures prices are down. Starting with Brent, prices are down 3.5% to $83.8 a barrel. For the record: that’s the lowest level since early March. US Treasury yields are down, and tenors across the curve have fallen to their lowest level since mid-May. Fed rate hike pricing is sagging, with fed funds futures and OIS forwards only pricing in one more hike (odds of a second hike are now faint);

• Ahead of the Bank of Japan meeting tomorrow, where consensus expects a 25bps hike, the yen is underperforming against the dollar compared with the other majors this morning. As a matter of fact, USDJPY is still slightly above the 160 line in the sand level for Japan’s FX officials;

• In equity space S&P 500 futures are up 1.5% while Nasdaq futures are up a chunky 3.5% on the back of the SpaceX ipo. Asian equities are in the green, with the Nikkei up no less than five percent;

• In other news, Trump is still not the peacemaker he professed to be in the Ukraine war. Trump spoke with Russian President Putin yesterday (apparently on the occasion of Trump’s birthday), with the latter returning the favor by launching drone and missile strikes on Kiev this morning. With both sides inflicting severe pain on each other – the Russian with strikes often on civilian targets and the Ukrainians targeting Russia’s energy infrastructure – we fail to see signs of the peace accord that Trump promised us in his first days in office;

• Post-Governing Council meeting ECB-speak has been generally hawkish. A case in point are remarks made by President Lagarde this morning. Lagarde, our ever so consistent ECB President, told French media this morning that the central bank has, in fact, started to see second round effects. Which is quite a change of heart. Because on Thursday she confidently proclaimed that there have been no second round effects yet. In any case, what a difference a weekend makes;

• Looking ahead, we have a bit of ECB-speak today and that’s it. The rest of the week is chockful of central bank interest rate decisions. Tomorrow there is the aforementioned BOJ meeting (consensus expects a 25bps hike) as well as the Reserve Bank of Australia interest rate decision, which is expected to be a hold;

• The highlight this week is Wednesday’s FOMC meeting and the first press conference with new Fed Chairman Warsh. With inflation above target every year since 2021 (and often greatly above target), what I am looking for is crystal clear: commitment to the two percent target. No ifs and buts with esoteric measures of underlying inflation that supposedly show that it isn’t that bad (it is);

• The lesser gods in central bank space this week include the Riksbank on Wednesday; the Swiss National Bank, Norges Bank, Bank of England, and Czech National Bank on Thursday. All decisions should be a hold. Except for the Czechs, where some rate setters have proposed a hike.

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