Electricity Is The New Eggs In A Power-Hungry US

Top U.K., France and Germany diplomats are pushing for eleventh-hour diplomacy with Iran in Geneva on Friday, as Washington weighs the possibility of joining Israel's military campaign against Tehran over the next two weeks.

Iran and Israel have been trading fire for the past week, in the latest climax of tensions that have been simmering since the Tehran-backed Hamas' terrorist attack against the Jewish state in October 2023. Israel has since been fighting a war on multiple battles against the Palestinian militant group and other Iranian proxies, such as Lebanon's Hezbollah and Yemen's Houthi — which Tehran says are acting independently.

The conflict has risked further escalation since the start of the week, amid signals that the U.S. — historically a close ally and weapons supplier of Israel — could intervene militarily against Tehran.

"Based on the fact that there's a substantial chance of negotiations that may or may not take place with Iran in the future, I will make my decision whether or not to go within the next two weeks," U.S. President Donald Trump said, according to a statement read out on Thursday by White House Spokesperson Karoline Leavitt.

Following a Thursday meeting with U.S. Secretary of State Marco Rubio and special envoy for the Middle East Steve Witkoff, U.K. Foreign Minister David Lammy said the three "discussed how a deal could avoid a deepening conflict" and that "a window now exists within the next two weeks to achieve a diplomatic solution."

"There is no room for negotiations with the U.S. until Israeli aggression stops," Iranian Foreign Minister Abbas Araghchi, who is expected to attend talks in Geneva, was quoted as saying on Iranian state TV on Friday, according to Reuters.

Trump's aversion to Iran's nuclear program has been a central point of his statesmanship across both mandates. The White House leader pulled the U.S. out of the Joint Comprehensive Plan of Action (JCPOA) during his first presidency, tightening the noose on Iran's coffers through a string of stringent financial and oil-linked sanctions.

Self-proclaimed 'peacemaker' Trump has so far fruitlessly pursued a second nuclear program deal since the start of his second term, initially expressing a preference for a diplomatic breakthrough — the likes of which European officials are now hoping to strike.

"In the United States, [there are] many political officials who are convinced that we must not once more make the errors of the past. What we saw in Libya, what we saw in Afghanistan, what we saw in Iraq, we do not want to see reproduced," French Foreign Minister Jean-Noël Barrot said in a TV interview with French media, according to a CNBC translation.

Notably, the U.K., France and Germany — alongside Iran's allies Russia and China — were previously involved in the JCPOA with Washington and Tehran.

Markets have been rattled by the possibility of the conflict destabilizing the wider oil-rich Middle East and potentially drawing in the world's largest economy, spurring investors on a flight to safe-haven assets and broader focus on defense companies and initiatives.

Source: CNBC

UK banks are offering unusually high interest rates to clients in order to attract cash, the latest sign of how the Bank of England’s balance-sheet reduction is shrinking liquidity in the system.

The rate offered by banks most keen to attract overnight deposits has aligned with the BOE’s key rate for the first time since May 2020, excluding a brief up-tick over year-end, according to Sterling Overnight Index Average (SONIA) data published Friday. The reading represents the amount banks pay to borrow sterling from other financial institutions.

It shows that banks are willing to offer more to attract clients’ cash as the BOE shrinks liquidity by trimming its bond holdings and ending loan programs. The data adds to other signs of increased demand for excess cash, including a record £70 billion ($94 billion) usage of a BOE repo facility on Thursday.

The developments underscore the delicate balancing act for officials as they look to wean markets off years of abundant liquidity. The central bank’s Executive Director of Markets Vicky Saporta has urged lenders to step up use of its routine facilities to avoid possible market stresses as the BOE runs down its balance sheet.

“It’s another indicator that liquidity conditions are tighter than the BOE thinks,” said Moyeen Islam, a strategist at Barclays.

The rates alignment is unusual because, with cash abundant after years of central bank bond purchases, banks would typically compensate deposits to clients at levels below Bank Rate. That reflected a lesser need to attract liquidity, and allowed them to profit from the spread between the rate they paid out to clients and the rate they secured by depositing cash at the BOE.

The central bank faces a crunch point as it reduces its balance sheet of gilts at a pace of £100 billion ($135 billion) a year through a mix of not reinvesting the proceeds of maturing bonds and active sales. Analysts have speculated officials may slow this so-called quantitative tightening from October as the BOE approaches the preferred minimum range of reserves, or PMRR.

“There is growing evidence that the market is closer to equilibrium reserve position, calling into question the need for a further renewal of active quantitative tightening,” said Islam.

The central bank’s aim is to wean markets off abundant liquidity fueled by years of gilt purchases, and instead provide cash via repo operations. That transition raises the risk of volatility, though, and officials are monitoring sterling money markets for signs of tension.

One metric the BOE has said it is watching is the spread between the main SONIA benchmark — which represents a trimmed mean of overnight deposit rates offered by banks — and the BOE’s key rate. SONIA has been converging with the Bank Rate since the beginning of this year though remains around three basis points below it.

Drilling down into the SONIA data, the 90th percentile of transactions — or those most willing to accept deposits — hit 4.25% Friday. That’s the same as the BOE’s key rate, or the amount lenders can obtain by depositing cash at the central bank.

Source: Bloomberg Europe

Oil prices fell more than 3% on Friday as President Donald Trump holds off for now on helping Israel to destroy OPEC member Iran's nuclear program.

Global benchmark Brent fell $2.78, or 3.53%, to $76.07 per barrel. U.S. crude oil gained 84 cents, or 1.12%, to $74.30 per barrel.

Trump said Thursday that he would make his decision on striking Iran within the next two weeks, but wanted to provide space for potential negotiations to take place over the Islamic Republic's nuclear program.

"Based on the fact that there's a substantial chance of negotiations that may or may not take place with Iran in the near future, I will make my decision whether or not to go within the next two weeks," Trump said in a statement read aloud by White House Press Secretary Karoline Leavitt on Thursday.

Though Trump is holding back, Israel is escalating its attacks on Iran after eight days of conflict. Prime Minister Benjamin Netanyahu has ordered Israel's military to intensify its strikes on strategic and government targets in Iran, after an Iranian missile hit a major hospital in southern Israel, Defense Minister Israel Katz said on Thursday.

Source: CNBC

Hotter weather in Europe this summer risks driving up demand while causing output from hydropower and nuclear plants to fall, according to research firm Energy Aspects.

Higher-than-usual temperatures across western Europe next month could add about 3 gigawatts of extra demand, it said, while generation from hydro and nuclear power is expected to take a hit of a similar dimension.

The region relies on those and other fuel sources during summer to balance output from renewables, and is likely to draw on natural gas to make up for any shortfalls. Traders are closely watching how heat waves develop across Europe as they could impact how much gas is put into storage ahead of next winter.

Longer-term forecasts show temperatures remaining above normal levels throughout July. That risks pushing gas generation up by more than 4 gigawatts and also bolstering coal and lignite activity in Germany, according to Energy Aspects.

European power contracts for delivery in July have edged up as a result, with the research firm seeing further upside for prices. French contracts are the most sensitive to heat, due to the potential for reduced generation from nuclear as rivers get too hot to cool reactors, and as air conditioning needs rise.

Electricite de France SA has already said that a heat wave that’s spreading across the country may force it to curb nuclear output later this month due to the rising temperature of the Rhone river.

Healthy hydro stocks in Spain are likely to limit the impact of heat on local prices, while in Germany demand does not typically respond as much to higher temperatures.

French power contracts for delivery in July have risen about 16% this week. The equivalent contract in Spain is up about 8%.

Source: Bloomberg Europe

As America’s national debt climbs past $37 trillion, concerns are growing about the country’s financial future. Just ten years ago, the debt stood at $18 trillion. Now, it has more than doubled, raising serious worries about inflation, currency devaluation, and the long-term stability of the economy.

Meanwhile, some experts believe Bitcoin and even stablecoins might offer some real solutions.

Let’s see how!

U.S. Double Down On Debt

The U.S debt is growing by about $4.27 billion every day, and it has reached $37 trillion so far. If nothing changes, experts warn that interest payments alone could swallow up the entire budget, leaving little for things like Social Security, defense, or public services.

Recently, Elon Musk on X said the U.S. is on the edge of “de facto bankruptcy,” with interest payments alone eating up 25% of government revenue.

Meanwhile, economist Peter Schiff went a step further, claiming the U.S. is already bankrupt—it’s just not obvious yet.

Why Bitcoin Is the Only Solution?

Analysts are now calling Bitcoin a protective asset, especially as each U.S. citizen indirectly holds over $106,000 in national debt. That number shoots up to $323,000 per taxpayer. With a federal deficit of $2 trillion and spending of $7.1 trillion.

However, over the past decade, when U.S debt doubled down, Bitcoin price has jumped from under $500 to more than $111,000. For many, this isn’t just a price chart; it’s proof that Bitcoin is becoming a financial lifeline.

Raoul Pal, founder of Real Vision, compared Bitcoin to a “life raft” in these uncertain times. As central banks print more money, Bitcoin’s fixed supply becomes even more attractive. Pal believes Bitcoin not only protects against inflation but also grows in value as more people adopt it.

Stablecoins: A Surprising New Ally?

While Bitcoin acts as a hedge, stablecoins may play a different role — one that could help reduce the debt itself.

U.S. Treasury Secretary Scott Bessent recently suggested that Stablecoins are backed by U.S. Treasury bonds. As the stablecoin market grows, so will the demand for these bonds, possibly lowering government borrowing costs.

The GENIUS Act, which aims to regulate stablecoins and mandate Treasury bond holdings, has passed the Senate and awaits a House vote.

However, America’s growing debt is forcing everyone governments, investors, and everyday people to look for new solutions.

Source: CryptoSlate

Source: Bloomberg