Market News

The New York Times reports that despite publicly refusing to negotiate with President Trump over the ongoing U.S. and Israeli military campaign, Iran appears to have quietly explored the possibility of ending the conflict. According to officials familiar with the matter, operatives from Iran’s intelligence services reached out indirectly to the C.I.A. shortly after the attacks began, proposing discussions about potential terms for ending the war. The communication was reportedly passed through a third country’s intelligence agency.

American officials, however, are doubtful that either side is genuinely prepared to pursue negotiations in the near term. In Washington, the outreach is not being treated as a serious breakthrough, particularly…

• Prior -0.3%

That's a notable bump to start the year and even if you exclude energy prices (+1.3%) from the equation, euro area producer prices were still up 0.6% in January. The breakdown shows increases across the board in the likes of intermediate goods (+1.0%), capital goods (+0.6%), and durable consumer goods (+0.8%). That is all only marginally offset by a decline in prices for non-durable consumer goods (-0.2%) on the month.

But when compared to the same month last year, euro area producer prices are down 2.1%. That being said, it owes much to base effects as energy prices are the biggest drag. The year-on-year reading for energy prices show a 8.9% decline. So if you strip that out, producer prices are actually seen up 1.2% in…

For some context: Saudi Aramco's Ras Tanura refinery forced to shut down after reported drone attack

Even if Iran's offensive threats appear to be diminishing, they are trying to make the most out of it by hitting back at where it hurts most. As a reminder, Aramco's Ras Tanura refinery is the largest oil refinery in the Middle East. As such, this will just continue with the ongoing disruption to the oil market - not least with the de facto closure of the Strait of Hormuz.

The strike above is also confirmed by the Saudi defense ministry, saying that there was "an attempted attack" on Aramco's Ras Tanura refinery. Adding that "the initial evaluation shows it was carried out by a drone". The good news though is that "no damage" is being…

For some context: Saudi Aramco's Ras Tanura refinery forced to shut down after reported drone attack

Even if Iran's offensive threats appear to be diminishing, they are trying to make the most out of it by hitting back at where it hurts most. As a reminder, Aramco's Ras Tanura refinery is the largest oil refinery in the Middle East. As such, this will just continue with the ongoing disruption to the oil market - not least with the de facto closure of the Strait of Hormuz.

The strike above is also confirmed by the Saudi defense ministry, saying that there was "an attempted attack" on Aramco's Ras Tanura refinery. Adding that "the initial evaluation shows it was carried out by a drone". The good news though is that "no damage" is being…

• Prior 54.0
• Final Composite PMI 53.7 vs 53.9 prelim
• Prior 53.7

Key findings:

• Business activity rises for tenth month running in February
• New order growth loses momentum
• Job cuts persist amid pressure on margins from rising costs

Comment:

Tim Moore, Economics Director at S&P Global Market Intelligence, said:

"Business activity continued to pick up across the UK service economy in February, with growth holding close to the five-month high seen at the start of 2026. Survey respondents commented on rising new business intakes and improving sales pipelines. This was linked to greater business and consumer spending, especially in domestic markets. Export orders were relatively subdued, however, and the rate of expansion slipped to a three month…

• Prior 51.6
• Composite PMI 51.9 vs 51.9 prelim
• Prior 51.3

The euro area economy is seen holding up well to start the year amid improved demand conditions. In particular, Germany looks to be one to help shoulder the economic burden after having been the main drag for a long time. The only troubling spot is perhaps that there is a notable rise in cost pressures. Besides that, output charges also remain elevated even if it has eased marginally from January with the rate being the second-steepest in a year.

HCOB notes that:

“The service sector did not perform particularly well in February, but momentum did increase slightly when compared with the previous month. Other encouraging signs include the slightly stronger increase in new business and the…

• Prior 52.4
• Final Composite PMI 53.2 vs 53.1 prelim
• Prior 52.1

Key findings:

• Employment falls again despite positive business expectations

Comment:

Commenting on the PMI data, Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“This is pretty robust growth from the service sector in February. The prospects for continued expansion are good, as new business grew more strongly than in the previous month, supported by large orders and a noticeable increase in new work from abroad. The order backlog, which had been declining in the previous three months, also rose in February. However, companies are trying to cope with the improved business situation with fewer employees. Perhaps companies need a little more certainty before they…

• Prior 52.9
• Composite PMI 52.1 vs 51.4 prior

Key findings:

• Weaker rise in new business volumes, despite fresh increase in exports
• Job creation hits seven-month high as outlook brightens
• Inflationary pressures increase

Comment:

Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said:

“Overall, the latest PMI figures paint an encouraging picture. The manufacturing sector recorded a solid improvement, while the service sector continues to expand at a comfortable pace. This could give Italy's private sector a welcome boost overall and enable it to get off to a solid start in the first quarter of the new year.

“The services sector remains in clear expansion mode. Some firms benefited in February from the Winter…

• Prior 48.4
• Composite PMI vs 49.9 prelim
• Prior 49.1

More to come..

The main purpose of the meeting is to assess the implications of the US-Iran conflict, with Lescure revealing that he had already spoken to US Treasury secretary Bessent and other counterparts. After which, all parties agreed on the necessity of convening next week to "fully understand" the situation in the Middle East.

I wouldn't expect much updates or significant headlines to come from the meeting. However, it is best to be aware that there will be some discourse on the impact of the US-Iran conflict on major economies.

One can safely assume that higher oil prices and energy security will be among the discussions. That as it will start to stir up conversations about inflation pressures once again. From yesterday: Inflation fears reemerge…

• Prior 53.5

The headline estimate misses on expectations but still reaffirms an expansion in Spain's services sector to start the year. That being said, the rate of growth is the weakest since June last year. That amid reports of softer demand and cooler market conditions. Adding to that, employment also rose to a lesser degree, with some evidence of firms not replacing leavers as expectations about the future softened to their lowest for six months.

On the prices front, cost pressures are seen intensifying as input price inflation accelerated to its highest level in a year. So, that's something to be wary about.

HCOB notes that:

“The Spanish private sector economy is continuing to lose growth momentum, with the HCOB Composite PMI posting at…

• Prior +0.1%
• Core CPI +0.4% y/y
• Prior +0.5%

Headline annual inflation remains unchanged and continues to border on deflation territory. The bad news for the SNB is that core annual inflation is seen trickling lower to 0.4%. For some context, core annual inflation was still hovering at 0.9% in February 2025. It's a slow descend but one that continues to threaten a return to deflation for the Swiss economy.

The bright side is that the US-Iran conflict might help to push up price pressures a little, even if temporary. However, it's a double-edged sword as the SNB has to deal with a much stronger Swiss franc amid heightened geopolitical tensions. And they're already having to step into the market this week it would seem here.

Despite that, EUR/CHF…