US sanctions on Iran and CPI amongst market movers today – Rabobank

Analysts at Rabobank suggest that the near-term focus is firmly on inflation as firstly, we have US CPI, which is seen just 0.1% m-o-m and unchanged 1.7% y-o-y on a core basis, though the headline is seen 2.1%. 

Key Quotes

“Apart from that, we have the issue of the looming US decision on sanctions on Iran. With oil prices already pushing past USD70pb, should President Trump opt to impose more economic penalties on Tehran for ballistic missile, human rights, and cyber violations that reduce its oil exports further, we might see further upwards price momentum. That may hit bond yields today.”

“Of course, the broader geopolitical ramifications of a potential collapse in the US-Iran deal are also huge. Europe has already made its position here clear – it is opposed to any US opposition to the current US-Iranian nuclear deal. In short, the EU prefers to see the rosy prospects for potential Europe-Iranian trade, while the US is focusing on the potential hole that would be left by a nuclear missile. As a potential sign of what we might expect from Washington today, we have just seen the US Justice Department establish a financing and narcoterrorism team specifically targeting Iran’s Lebanon-based ally Hezbollah.”