Iran – Protests and barrels
Following widespread protests across the country, the Iranian regime has effectively shut down most communications with the outside world. Independent humanitarian organisations estimate that more than 12,000 people have been killed, as authorities have responded to demonstrations with severe force. Protests are unlikely to fade in the near term. President Trump has sent mixed signals: while rhetoric has intensified, concrete military action has so far been delayed. At the same time, the United States is reportedly building up additional military capabilities in the region, keeping escalation risks elevated. Markets appear to be pricing a high probability of a strike, with oil prices reacting nervously to each new headline.
US – Softer CPI, no alarm bells
Last week’s US CPI print came in line with expectations. Headline inflation rose by 2.7% YoY, while core CPI printed at 2.6% YoY, slightly below consensus. The softer outcome was primarily driven by core goods, while core services inflation was broadly in line. Shelter inflation remained firm at 0.4% MoM, but non-shelter services printed softer than expected. Markets reacted by pricing slightly lower short-term rates, with the 2-year Treasury yield falling by around 2 basis points on the day. Overall, the inflation outlook continues to appear benign. With this print close to expectations, the January Fed meeting is fully priced for a hold.
Greenland – Cold island, hot geopolitics
President Trump’s recent stream of comments has remained focused on Greenland and its strategic importance within the global geopolitical balance. Headlines last week suggested that Germany and France could send troops, largely as a symbolic move. With NATO commitments and international law in play, even symbolic actions risk escalating into a broader diplomatic dispute between the US and its European allies. While no immediate military confrontation is expected, the situation could add geopolitical uncertainty and volatility to markets should tensions intensify.
Algebris Investments’ Global Credit Team
For more information about Algebris and its products, or to be added to our distribution lists, please contact Investor Relations at algebrisIR@algebris.com. Visit Algebris Insights for past commentaries.
Any opinion expressed is that of Algebris, is not a statement of fact, is subject to change and does not constitute investment advice.
No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this document by any of Algebris Investments, its members, employees or affiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.
© Algebris Investments. Algebris Investments is the trading name for the Algebris Group.
