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US / Iran talks to revive 2015 Iran nuclear deal – Iran says still work to be done

  
Analysis, Politics

Reuters with an update on talks, will be of interest to the oil traders.

  • essential issues remain to be negotiated, the top Iranian negotiator said on Thursday
  • “We achieved good, tangible progress on the different issues …. we are closer than ever to an agreement but there are still essential issues under negotiations,” Iranian Deputy Foreign Minister Abbas Araqchi was quoted as telling Al Jazeera television.
Once the agreement is renegotiated Iranian oil should return to markets within months. Still a ways off though.
—
Background to this is
  • The US withdrew from the agreement in 2018
  • Iran and six world powers have now been negotiating in Vienna since April

Major indices close mixed with the Dow down, the S&P flat, and the NASDAQ higher

  
Analysis, US Market

Russell 2000 fell

The major US indices are closing the day mixed. The Dow industrial average was the worst performer. The NASDAQ index was the best performer
  • Technology +1.17%
  • Healthcare +0.8%
  • communication services +1.49%
  • financials -2.93%
  • energy -3.49%
  • materials -2.2%
Highlights:
  • Dow closes down for the fourth straight day
  • Longest losing streak since January for the Dow
  • The Dow is on track for its worst week since late January
  • NASDAQ closes within striking distance of a record close but still below
  • The S&P snapped 82 days losing streak
There was a rotation out of cyclicals, financials and and more into technology. Funds moved out of interest rates as well after the run up yesterday.  Crude oil, commodities, were also out of favor today after being more favored in 2021.

A look at the closing levels shows:

  • Dow industrial average felt -209.96 points or -0.62% at 33823.71
  • S&P index fell -1.76 points or -0.04% at 4221.94
  • NASDAQ index rose 121.67 points or 0.87% at 14161.35
  • Russell 2000 fell -27.23 points or -1.18% at 2287.46

The Fed blinks, what’s next?

  
  Analysis

Fed loses faith in its own projections

Fed loses faith in its own projections
For months the Fed was strident that inflation would be transitory and that holding down rates would aid a ‘broad and inclusive’ recovery.
In one afternoon, they threw it all away.
Powell blinked after a pair of high CPI readings and now the market is pricing in a hike in 2022. All fighting for credibility was wasted, there is no new regime.
In Powell’s telling, this is an adjustment due to a faster rollout and more confidence in employment growth but even that undercuts his old assertion that they were waiting for realized gains in employment rather than forecasts.
So the dollar is off and running. That’s the right move. The market will continue to price in rate hikes now and there’s little the Fed can do to jawbone. Equities are holding up ok but I fear they’re vulnerable as well. There is some hope though in the fixed income market where yields are flat across most of the curve and down 3 bps in 30s.
There’s no need to fight the dollar strength now. There are crowded shorts in dollars and this is a genuine fundamental shift.

Eurozone April construction output -2.2% vs +2.7% m/m prior

  
  Analysis

Latest data released by Eurostat – 17 June 2021

  • Prior +2.7%; revised to +4.1%
  • Construction output +42.3% y/y
  • Prior +18.3%; revised to +20.0%
There is still some slack evident in construction activity in the region, with civil engineering work falling 6.1% and building construction down 1.0% in April relative to March. That said, this is capturing a lagging period (two months ago) so I wouldn’t look much into it.
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