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Optimistic Signals and Substantial Deadlock Coexist in US-Iran Talks; USD/JPY Rebounds After Opening Lower

⑴ The yield on the UK 10-year government bond fell below 4.9%, reaching its lowest level since April 21, after recording the largest weekly decline in 2024. Investors were encouraged by the progress in US-Iran negotiations and reduced their expectations for Bank of England rate hikes amid weak economic data. ⑵ The US President stated that the memorandum of understanding between the two countries is "basically concluded," and that the Strait of Hormuz will be reopened, after which Brent crude fell below $100 per barrel. ⑶ Data released last week showed that retail sales in April plummeted by 1.3%, nearly double the expected decline, while inflation and labor market data also came in weaker than expected. The May purchasing managers’ index indicated the first contraction in the private sector in a year, further reinforcing the shift in interest rate expectations. ⑷ Investors are now awaiting speeches from Bank of England policymakers later this week for monetary policy signals, as well as watching political developments surrounding the Prime Minister after the Labour Party’s defeat in local elections this month.

⑴ Industry shipping tracking data shows that Reliance Industries, the operator of the world’s largest refining complex, imported an average of 217,800 barrels of Russian crude oil per day in April, a month-on-month decrease of 37.9%. ⑵ After the United States temporarily eased restrictions to help stabilize international oil prices, Reliance Industries imported Iranian crude oil again in April for the first time in seven years. ⑶ Data shows that Russian oil accounted for 16.7% of the company's total crude imports in April, down from 26.3% in the previous month.