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SocGen's Overnight Economic News Summary

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Societe Generale in its early Monday economic news summary pointed out:

Brent -4.7% to US$83.2/barrel after the United States/Iran agree on a Memorandum of Understanding, permanent cessation of military operations, re-opening of the Strait of Hormuz after signing of the agreement this Friday, lifting of the naval blockade. The interim deal would launch 60 days of negotiation on Iran's nuclear program. The US dollar (USD) offered, 10-year German Bund dips to 2.95%, 2s/10s bull steepens to 38.5bps. 10-year U.S. Treasury falls to 4.43%.

SocGen Brent forecast US$80/barrel by end-2026 based on the end of June re-opening, oil flows normalize by January 2027. Technical support US$82/81, US$78 and US$75. SocGen economics: central banks remain on guard rather than returning to easing. U.S. growth forecast at 2.3% and inflation 4.0% in 2026, eurozone at 0.9% and 3.0%, China at 4.6% and 1.2%.

CFTC positioning: Euro (EUR) net longs trimmed to 1.6% of OI, yen (JPY) shorts jumped to 28.9%, sterling (GBP) shorts raised to 22.0%, Australian dollar (AUD) longs cut to 5.8%, Canadian dollar (CAD or loonie) shorts up to 31.3%, Mexican peso (MXN) longs climbed to 29.8%, Nymex longs trimmed to 6.5%.

Week ahead: Federal Reserve forecast on hold and drop neutral bias. Bank of Japan forecast +25bps. Bank of England, Reserve Bank of Australia, Norway's Norges Bank, Switzerland's SNB, Sweden's Riksbank forecast on hold. U.S. retail sales. Eurozone final consumer price index, Germany ZEW survey. United Kingdom CPI, retail sales, employment, Makerfield by-election. Brazil's central bank forecast -25bps, Czech and Chile on hold. Japan and South Africa CPI.

Nikkei +5.0%, EUR 10-year IRS -3.5bps at 3.00%, Gold +2.1% at US$4,306/oz.

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