IRAN: US' Bessent-Looking To Cut Exports To 100k/bbd As Part Of Maximum Pressure
Feb-14 12:14
Speaking to Fox Business News, Treasury Secretary Scott Bessent says "We can apply maximum economic pressure on Iran", adding that the US wants to see a cut in Iranian oil exports, saying "We're committed to cutting exports to 100k/bbd". Says "Iran will be in severe economic distress if we get their oil sales back to Trump's levels from his first term in the White House."
- Bessent's comments come a day after Iranian President Masoud Pezeshkian said with regards to the US' 'maximum pressure' strategy that “Iran will not submit to any threat and will not back down in the face of pressure,”
- On negotiations, Pezeshkian said “We are not saying that we will not negotiate, but Trump cannot dictate orders to us and impose sanctions on us and then talk about negotiations”
- The combative comments come after reports in WSJ and WaPo on 12 Feb claiming that according to US intelligence, Israel views the coming months as a key opening for possible strikes on Iranian nuclear sites. The reports claim the Netanyahu gov't believes the Trump administration more likely to back Israel in such action than the Biden administration.
- As The Cradle reports "US President Donald Trump has recently stated several times that he would prefer a nuclear deal with Iran rather than an attack on the country. “They don’t want to die. Nobody wants to die. If we made the deal, Israel wouldn’t bomb them,” the US president said this week." The apparent strategy would be a 'carrot or stick', for Iran - enter into talks on the US' terms or risk Israeli attack.
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FRANCE: Bayrou Government Looks Set To Survive Censure Vote On Thursday
Jan-15 12:00
PM Bayrou’s government looks set to survive a censure vote on Thursday, alleviating some short-term widening risks in OATs against EGB peers. However, medium-term fiscal and political risks remain prevalent in France, limiting the case for OAT outperformance at this stage. OATs continue to underperform PGBs and SPGBs year-to-date, with the 10-Year SPGB/OAT/PGB butterfly currently at 53bps (vs 52bps yesterday and a cycle closing low of ~56.5bps).
- Bayrou’s address attempted to placate parties across the political spectrum. As a partial concession to the left, Bayrou announced a renegotiation of the 2023 pension reform. Local media has reported that the first debates on this topic will begin on Friday.
- Bayrou also advocated for a move towards proportional representation at the next legislative elections – a notion supported by the right-wing Rassemblement National party.
- The Bayrou government will target a 2025 fiscal deficit of 5.4%. This was at the upper end (though still within) the 5.0-5.5% range touted by Finance Minister Lombard last week. Budget Minister Montchalin has said this will entail E53bln of savings. Montchalin noted this morning that a budget will aim to be presented by the end of January.
- A reminder that ex-PM Barnier’s budget proposal entailed a 5% deficit and E60bln of savings.
- The far-left LFI party proposed a no-confidence motion against the government following the speech (as expected), which will be debated tomorrow at 1500CET and voted on at around 1730CET. It is not expected to succeed in ousting Bayou.
EQUITIES: EU Bank Index Highest since August 2015.
Jan-15 11:54
- Equities on both sides of the Pond are extending gains, following Earnings from Blackrock, BoNY, Wells and JPM.
- In Europe, although not the leading sector, the Bank Index {SX7E Index} is testing a fresh intraday high, and is extending to its highest level since mid August 2015.
(Chart source: MNI/Bloomberg):
OUTLOOK: Price Signal Summary - Corrective Cycle In Gold Still In Play
Jan-15 11:43
- On the commodity front, recent gains in Gold appear corrective. However, the yellow metal continues to hold on to the bulk of last week’s gains and scope is seen for a continuation higher near-term. A stronger recovery would open $2726.2, the Dec 12 high and an important resistance. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2644.3, the 50-day EMA.
- In the oil space, the trend structure in WTI futures remains bullish and the contract is trading just ahead of its recent highs. The stronger reversal to the upside has resulted in a breach of key short-term resistance at $76.41, the Oct 8 high. Clearance of this hurdle strengthens a bull theme and opens $79.59, the Jul 5 ‘24 high. On the downside, a reversal lower would expose the 20-day EMA, at $73.15. This average is seen as a key short-term support.
