ON DECK FOR FRIDAY, MARCH 27th
KEY POINTS:
- Markets are rightly sceptical toward Trump’s deadline extension
- Trump’s Iranian deadline extension is repeating last year’s trick…
- ...which should have markets on edge in the nearer term
- Spanish inflation accelerates in a first glimpse of the war’s effects
- UK retailers were tracking a great quarter before war broke out
“We’ve won this war.” [Pssst…ummm, Pete…send 10,000 more troops.]
This kind of conflicting guidance from the Trump administration combined with ongoing bilateral strikes and learned scepticism toward fake deadlines have markets in disbelief toward Trump’s 10-day extension of the deadline for negotiations with Iran that was supposed to have expired tonight.
And rightfully so. This piece reminds us that two-week extensions are a favourite tactic of Trump’s across many issues but that he usually violates his own deadlines and in both directions.
For instance, when the US extended the deadline last summer before Operation Midnight Hammer, it bombed Iran almost immediately after issuing the extension. Trump said this on Thursday June 19th 2025:
“Based on the fact that there’s a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks.”
And then Operation Midnight Hammer bombed Iran two days later over June 21st –22nd.
Is the exact same tactic being employed once more? If so, then be on guard for nearer term actions and possibly into this weekend or early next week. It seems that Mr. Trump is totally fabricating claims that Iran is interested in negotiating. If Iran’s regime learns from Trump’s deadlines, then they won’t be letting their guard down on this one. It’s called game theory and in multi-period games you learn from your opponent’s favourite tricks especially if they unimaginatively fail to mix up their tactics. Perhaps set aside the social media account and play a little chess every now and then...
And so markets are on edge this morning and should position accordingly into the weekend. Oil is up by 2½% with Brent back above US$110/oz. Tell that to Ontario that used mid-January macro forecasts including oil price assumptions of US$59 this year and $62 next year; fresher numbers would have no doubt meant bigger deficits. Even the ECB and Fed made an effort to use fresher forecasts!
Sovereign bond yields are up across maturities and countries by single digit basis points except for a little more at the long-ends in the UK and Japan.
Stocks are pushing lower again with N.A. futures down ½% and European cash markets down by over 1%.
Across currencies, the Mexican peso is underperforming the most after a surprisingly dovish Banxico yesterday afternoon that merely positioned the energy shock as a risk.
STUFF OTHER THAN IRAN
There was a light line-up of calendar-based risks overnight. There is nothing material on tap in either the US or Canada.
Spain’s CPI inflation surged in March by 1.5% m/m on an EU-harmonized basis. Core CPI was up by just under ½% m/m which was among the weaker readings comparing like months of March which is the comparator because it’s not seasonally adjusted (chart 1).
UK retail sales volumes gave back a little of the prior month’s surge. February sales volumes slipped by -0.4% m/m after an upwardly revised 2% m/m surge in January. Sales ex-gas also fell by -0.4% and after an upwardly revised prior gain of 2.2%. Markets faded the backward-looking data. Nevertheless, the overall quarter is on fire with sales volumes ex-fuel tracing a surge of 7½% q/q SAAR (chart 2).
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