The NYSE, Nasdaq, and bond market are closed in observance of Juneteenth, a federal holiday. This results in lighter trading conditions and a quieter session in North American trading.

Attention is on potential US military action against Iran, which may occur this weekend. Meanwhile, Europe is concluding a week of central bank activities.

Swiss National Bank Rate Decision

The Swiss National Bank (SNB) is expected to reduce its rate by 25 basis points to combat deflationary pressures. The Bank of England (BOE) is anticipated to maintain its bank rate, although the accompanying vote decision could be of interest.

With markets largely subdued due to the Juneteenth holiday closure, reduced volume has offered little in the way of short-term conviction. This lull, however, doesn’t translate into a lack of underlying momentum elsewhere. The quieter US session merely shifts our gaze across the Atlantic, where key policy decisions are being digested beyond the headlines.

Jordan’s camp at the SNB has long telegraphed its intent to ease further, and a 25-basis-point cut seems more a formality than a surprise at this stage. The data backdrop—particularly core inflation drifting below target—supports continued accommodation. The Swiss franc’s strength, too, hasn’t escaped notice. That said, the implications stretch beyond Zurich, as looser financial conditions may ripple through euro-aligned volatility measures and yield curves more broadly.

The situation at Threadneedle Street is more nuanced. While Bailey is unlikely to shift the benchmark rate just yet, the composition of the vote will carry meaning. If dissent softens towards a cut, we anticipate front-end rates to begin adjusting slightly ahead of schedule, especially if macro figures underperform in the coming fortnight. One eye, naturally, must remain on next month’s CPI data, but we’re seeing growing divergence in expectations, which may open brief windows of directional bias.

Geopolitical Risks and Market Implications

As for geopolitical risk, with rising tension between the US and Iran, it’s the repricing of risk premiums we’re already seeing that warrants a closer look. Energy futures have started to reflect the prospects of regional disruption, with Brent spreads steepening. Should there be military action, certain commodity-linked plays could become more reactive, particularly where carry is already positive due to structure. That presents an opportunity to deploy short-dated gamma where convexity will be more cheaply priced going into the weekend.

What matters now, in the absence of fresh macro events in the US, is interpreting the pace of response. That includes volatility surfaces across FX and rates, and adjusting positioning in relation to the data vacuum. Use this temporary calm to re-calibrate delta exposures and roll out risk on wings that may become active should headlines break.

The next window of liquidity will arrive as Asia reopens, but without uniform direction. We expect options books to remain light, with bid-offer spreads holding wider than average. For now, we’re watching for consistencies—or gaps—between implied and realised volatility, especially in sterling and oil-linked pairs. Such divergences tend not to last long.

Steer by what’s observable: guidance, inflation trajectories, and strain on rates differentials. From there, re-enter selectively.

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