Archives of “February 17, 2022” day

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European major indices close lower

  
Analysis, Global Indices

The major European indices are ending the session with declines across the board. The losses were led by the Italian FTSE MIB which fell -1.19%. The France’s CAC fell by a provisional -0.4%.

A snapshot of the provisional closes shows:

  • German DAX, -0.8%
  • France’s CAC, -0.4%
  • UK’s FTSE 100 -1.0%
  • Spain’s Ibex, -0.9%
  • Italy’s FTSE MIB -1.2%
European stocks
European stocks end lower

The European debt market, the benchmark 10 year yields are mostly lower but off their lowest levels. The German, France, Italy yields are near unchanged. The UK 10 year yield fell -6.4 basis points.

Europe
Benchmark Europe the 10 year yields

BREAKING : Iran nuclear deal draft mostly agreed, text highlights sequencing – report

  
Analysis, Crude, Politics

leaders of the US and Iran

Reuters is out with a report saying “much of the text” of a 20-page Iran nuclear deal has been agreed but some thorny issues remain.

  • Sequencing starts with Iran suspending nuclear enrichment above 5%
  • That will come with unfreezing $7B in Iranian funds held in South Korean banks along with the release of western prisoners
  • Once in place the main phase of sanctions-lifting will begin
  • Timeline of between 1 and 3 months from agreement to full implementation
  • New agreement will be like the old one where the US grants sanctions waivers renewing every few months
  • Iran continues to demand the US guarantee it will not withdraw again
  • Compromise may include agreement that Iran can enrich up to 60% again if US violates pact
  • Final round of negotiations may require face to face meetings between Iran and US

That last headline is an important one. If that meeting is scheduled or takes place, it will be a sign that an agreement is close at hand.

Details on the reported Russian attack as suggested by the Ukraine military

  
  Analysis

It is reported that Ukraine’s military is now accusing Russian-backed forces in Eastern Ukraine of firing shells at a village in the Luhansk region, hitting a kindergarten. No injuries were caused by the attack though.

As a reminder, Russian forces had earlier in the day accused Ukraine of firing mortar attacks at four LPR localities. So, this could be a bit of a tit-for-tat move in response. Ukraine did come out to deny the earlier accusation though.

Federal Reserve speakers coming up on Thursday 17 February 2022

  
  Analysis

St Louis Fed President James Bullard at 11 am ET (1600 GMT)

  • speaks on the U.S. economy and monetary policy before the Columbia University & SGH Macro Advisors Fireside Chat

Federal Reserve Bank of Cleveland President Loretta Mester at 5 pm ET (2200 GMT)

  • peaks on the economic outlook and monetary before virtual event of the Volatility and Risk Institute and the Center for the Global Economy and Business, NYU Stern School of Business
federal-reserve-mester

Oil falls into negative territory on scope for Iran deal

  
Analysis, Crude

Oil bulls could be facing a double-whammy within days.

1) It appears as though Russia-Ukraine fears were overblown. Citi suggested a $10 geopolitical bid in oil and given the sharp fall on the climb-down yesterday, that’s not out of the question.

2) An Iran nuclear deal is inching towards conclusion. Iran’s top negotiator had his most-optimistic comments yet today. I would have thought this was priced in more because the signs of have been growing for some time but given the $2 drop on the Iran headlines, this appears to have caught the market off guard.

WTI crude is now trading at $91.56, down from $95.00 earlier. That’s a swift drop.

oil drop

Add in concerns about inflation, rate hikes and the overall market mood and the risks for oil continue to mount.

Technically, the bulls shouldn’t be too worried so long as $88.40 holds but it might be a case of easy-come, easy-go. Yesterday I highlighted the $78-81 area as a spot to eye on the downside.

Iran nuclear negotiator says ‘closer than ever’ to agreement

  
Analysis, Crude

1) The US wants oil prices to be lower

2) Iran can add 500k bpd right away and another 500k bpd by year end

That’s the recipe for a deal. There’s been a small further dip in oil prices on these headlines.

After weeks of intensive talks, we are closer than ever to an agreement; nothing is agreed until everything is agreed, though. Our negotiating partners need to be realistic, avoid intransigence and heed lessons of past 4yrs. Time for their serious decisions.

WTI

I think a high probability of a deal should be priced in but you never know with the oil market. Between this and the growing likelihood of peace in Ukraine, there’s plenty of reason to suspect we will have lower oil prices by month end.

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