Frontier & EM Daily, 29/06: US-Iran truce tested; Venezuela underperforms

• US and Iran agreed to halt attacks and meet in Qatar tomorrow, after weekend strikes threatened to derail fragile MoU

• Bolivia moved to flexible exchange-rate regime; the central bank has devalued the currency by 30% to BOB9.73 per USD

• Serbia’s President Vucic said that he will resign within weeks and call early presidential and parliamentary elections

  
  

EM eurobonds saw mixed performance on Friday as the Strait of Hormuz situation remained fragile. Brent crude slipped near US$73/bbl, hovering close to pre-war levels, as Saudi Arabia restarted crude loadings at its Ras Tanura terminal for the first time since the Iran war began. US 10-year yields fell 3bps to 4.37%, while US equities wavered amid a sharp tech selloff, with semiconductor shares down 4.2% on the day. Fed's Kashkari said he had pencilled in one rate hike for this year, citing broader inflationary pressures beyond the Middle East conflict.

Meanwhile, the US and Iran have reportedly agreed to halt attacks and meet in Qatar tomorrow to resolve renewed tensions over the Strait of Hormuz, after weekend strikes threatened to derail their fragile MoU. The escalation followed attacks on commercial vessels, US strikes on Iranian military sites, and Iranian retaliation against US facilities in Kuwait and Bahrain.

Europe, Middle East

• Bahrain's 2036 eurobonds were the sharpest underperformer in the Gulf, falling 0.6% (spreads +11bps), as lower oil prices weighed on the fiscal outlook even as Hormuz traffic continued to flow. We retained our Sell on the BHRAIN 2032s earlier this month, seeing risks even if traffic quickly resumed with spreads at pre-crisis levels despite the shock.