Market Pulse

Research evidence excerpt

Market Pulse

Indeed, judging by Trump's tone yesterday, new bombing runs would have started already if not for a delay imposed ahead of

the summit meeting between Trump and China President Xi Jinping, and the prospect that it may result in a breakthrough for

the US-Iran impasse. While there has been the view among some analysts that the US-Iran issue features prominently at the

summit, it is also possible that the focus remains on US-China economic issues only (such as extending the trade truce beyond

November) and not on Iran. If China is unwilling to weigh in on the matter of the US and Iran, then it seems as if the window

of risk for a renewal of kinetic actions against Iran begins early next week, when Trump has returned to the US from China.

(So far, analysts are generally in agreement that China has avoided applying pressure on Iran to make concessions to the US.)

Third, traders today may be getting increasingly dismayed by the prospect of a leadership change in the UK. After the

UK's local elections last week, it seemed as if PM Keir Starmer might survive (at least in the short term) rising opposition to

his premiership from within the Labour Party. If there is a shake-up, traders who are long Gilts and the GBP would prefer that

Wes Streeting is chosen as leader, as he is seen as ideologically closer to the party’s pragmatic or “Blairite” positioning, with a

fiscally responsible positioning that still emphasizes growth. Andy Burnham, on the other hand, is seen (at least historically) as

being less constrained by financial markets, and less willing to restrain public investment to reduce the deficit under the UK's

fiscal rules. Gilt markets have been volatile in a bad way this morning, and the GBP has weakened vs. the USD and EUR on the