Societe Generale in its early Tuesday economic news summary pointed out:
Mild risk off, yields retreat on flight-to-quality, Brent rebounds 2.2% from one-month low of US$95.95/barrel as the United States launches "self defense" military strikes on Iranian missile sites, boats around the Strait of Hormuz. The two-year U.S. Treasury down 7bps at 4.05%, 10-year UST slips 5bps at 4.50%. EUR/USD steadies around 1.1630, contained by option expiries at 1.1600-45 (3.5 billion euros).
European Central Bank's Schnabel in an interview with Reuters: "From today's perspective, I think a rate hike in June will be needed. Given the size and the persistence of the current shock, looking through is no longer an option in my view."
The U.S. and Iran said to be working toward a Memorandum of Understanding (Secretary of State Rubio), disputes over language concerning nuclear program and the lifting of sanctions holding up finalization of deal. Optimism that the differences will be resolved "relatively soon." Iran: "degree of understanding" has been reached on many issues, but agreement isn't imminent.
Week ahead: U.S. PCE inflation on Thursday, durable goods orders, consumer confidence, gross domestic product second read. The consumer price index for Germany, France, Italy, Spain on Friday. Reserve Bank of New Zealand forecast to stay on hold. South African Reserve Bank forecast to hike by 25bps, Bank of Korea and Malaysia's MNB forecast to stay on hold.
Nikkei -0.4%, EUR 10-year IRS +1bp at 3.0%, Brent crude +2.2% to US$98.2/barrel, Gold -0.9% at US$4,531/oz.