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As expected, President D. Trump withdrew from the 2015 accord aimed at curbing Iran’s nuclear program and reinstated financial sanctions on Iran, seeking to quickly curb Iran’s oil output. Sanctions will be reinstated after “wind-down periods” of 90 or 180 days, still leaving some room for limited negotiations.  Macron, Merkel and U.K. Prime Minister Theresa May issued a joint statement emphasizing “our continuing commitment” to the accord and urging Iran “to show restraint in response to the decision by the U.S.” Ali Shamkhani, Secretary General of Iran’s Supreme National Security Council reportedly said that “if the U.S. initiates confrontation with Iran, we won’t stay passive.” If the nuclear agreement “gets destroyed due to the U.S. assault, for sure it won’t be to their benefit,” he said, adding that the “biggest loss will be for the Europeans.” EU trade with Iran has nearly tripled since 2015. At the same time, a revival of US oil sanctions on OPEC’s third-largest producer may set the stage for record-high US crude exports by the end of this year, Bloomberg reported. US Stocks closed mostly unchanged.  EM markets weakness remained with the return of EM local currency bond index suffering a three sigma move. Argentina was said to be in talks with the IMF for a $30bn flexible credit line to help defend the currency after it dropped to a record. The dollar which gained mostly vs. EM also gained further vs. EUR as $ shorts continued to be squeezed in a move that was also encouraged yesterday by Italian shares tumbling on expectations for fresh elections. Turkey’s lira dropped to a fresh low as well. The euro traded mostly weaker, falling -0.5% vs. USD, CHF and JPY. Bonds closed lower nonetheless (with 10 y US yields rising 3bps to 2.99%), as scrapping the Iranian deal was seen as potentially inflationary while JPMorgan CEO J. Dimon also hinted at market participants having to prepare for 10-year yields at 4%. 

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