WS #13048

The Bank of England held rates at 3.75% in a 6-3 vote, with three members voting for a hike. The MPC flagged upside risks to inflation from the Iran war, AI demand, and El Niño, and noted that policy could need to react before inflation persistence risks materialize. The central forecast implies one quarter-point hike in Q4 2026 and another in 2027. This is a hawkish hold, reinforcing the global central bank tightening bias. Meanwhile, the US-Iran conflict continues to escalate: US launched heavy retaliatory strikes against Iran, Iran vowed retaliation, and oil surged 8% overnight. The FT reports US and France gave Ukraine intelligence to map Russian air defenses, enabling drone strikes that have eliminated over 30% of Russian refinery capacity. Ukraine's central bank raised its main rate to 15.5% and sees inflation at 10% by end-2026. On earnings, several major beats stand out: Bristol-Myers Squibb (BMY) beat by $0.44 and raised guidance sharply; Quanta Services (PWR) beat by $0.99 and raised FY26 guidance significantly; Huntington Ingalls (HII) beat by $1.44 and raised sales guidance; Ferrari (RACE) beat by $0.22 and raised FY outlook; Crocs (CROX) beat and raised guidance; TriNet (TNET) beat by $0.62 and raised guidance. However, LKQ missed and lowered guidance, and Builders FirstSource (BLDR) missed and lowered sales guidance. The macro narrative is risk-off due to geopolitical tensions and hawkish central banks, but energy, defense, and select earnings winners are bullish. The dominant theme is ESCALATING US-Iran conflict with second-order effects on oil, inflation, and central bank policy.