What are the main events for today?
EUROPEAN SESSION
In the European session, the main highlight was the UK CPI report. Headline inflation beat expectations slightly but the core measure matched expectations coming in at 2.8% y/y. The more concerning part for the BoE might be the jump in services inflation to 3.7% from 3.4% in the prior month.
The reaction in the markets has been relatively muted as a rate hike in November was already fully priced in. Further out the curve, traders expect the BoE to tighten by 118 bps by the end of 2027.
AMERICAN SESSION
In the American session, we don’t have anything on the agenda other than Meta and Tesla earnings announcements after the stock market close. Tesla (TSLA) is expected to post adjusted EPS of around $0.45 and revenue of approximately $27.9 billion, with earnings down y/y and revenue broadly flat. Meta (META) is expected to deliver EPS of around $6.58 and revenue of approximately $63.3 billion, representing revenue growth of roughly 24% y/y.
The focus will remain mostly on US-Iran negotiations after yesterday’s reports. As a reminder, Al-Arabiya reported that Qatar And Pakistan presented a “Compromise Proposal” that met the demands of both the American and Iranian sides and that the Pakistan Army Chief carried a proposal with US and Iran approval. The new proposal also included partial response to Iran’s frozen funds demand.
The markets cheered initially as expectations of an imminent deal grew stronger, but then reversed after a diplomat involved in US-Iran talks said that negotiations continue and that reports of a deal being close are wrong.
Nevertheless, the markets retain some hope given the sudden increase of such positive reports and the proximity to the midterm elections. Trump might want to secure at least a short-term deal to bring energy prices and Treasury yields lower, while boosting the stock market.
CENTRAL BANK SPEAKERS
- 08:00 GMT/04:00 ET – ECB’s Cipollone (neutral- voter)
- 13:00 GMT/09:00 ET – BoE Governor Bailey (neutral – voter)
- 16:00 GMT/12:00 ET – ECB President Lagarde (neutral – voter)
