Muted Asia open, loud energy tape: OPEC steals the Monday mic

Asia’s session kicks off under a holiday hush: Japan’s Golden Week is wrapping with Children’s Day, Korea marks Buddha’s Birthday, and half a dozen regional exchanges are dark or running skeleton crews. Order books are thinner than hotel coffee, so every headline travels further and trades punch above its weight.

Against that backdrop, tariff‑détente chatter still commands centre‑stage. April’s risk‑asset boogeyman is getting gingerly tucked back in the closet—for now—as Washington and Beijing perfect their olive‑branch ballet. Yet everyone in the pits knows the curtain doesn’t truly rise until the two superpowers face each other across the negotiating table. India and Japan’s trial balloons will likely float as scripted, offering a taste of how the framework might work, but they’re little more than teaser trailers. ASEAN side‑deals? Pure amuse‑bouche. Real price discovery only begins when the heavyweights haggle over the big‑picture terms and start slapping numbers on the scoreboard.

Back in the U.S., futures are trading soft as we head into the Fed’s marquee meeting later this week. Friday’s jobs beat all but rules out an immediate cut, yet June’s fate still hangs in the balance—and traders aren’t sniffing any dovish steam this Monday. Meanwhile, the tariff bogeyman isn’t fully vanquished—weekend headlines trumpet “progress,” but some traders can’t shake the feeling it’s all choreography. Call them cynical, but these front-page deal teasers feel hollow until we see the fine print.

It’s a surprisingly mellow Monday start—no headline fireworks, light volumes, and the usual risk-on jitters on ice after last week’s tariff chatter extended a nine-day green streak, not to mention payroll fireworks. Futures are treading water, top-of-book depth is kiddie pool in nature, and FX crosswinds are whisper-quiet, although oil importer beneficiary countries and currencies like JPY and EUR should catch a reasonable tailwind. After a week of headline-driven trade talk nirvana, this calm is the market catching its breath before the next directional catalyst drops

Expect a blitz of “China deal progress” dispatches in the days ahead—and hope for a real outline. Just remember: optimism is great fuel, but it burns hot and fast. Until we see concrete terms and heavyweights locking arms, treat every olive-branch whisper as a trial balloon, not a done deal.

Positioning is now lopsided toward a “peace-deal upside,” with traders sniffing out that holy trinity of lower tariffs, taxes, and rates—and that threesome could certainly juice the tape further. But don’t overlook the looming 2026 Budget fight: unlike the spend-happy theatrics of Trump 1.0 (and pretty much every other presidency), this one’s heavy on austerity—no soft-pedaling on deficits this time. If Congress sticks to the cuts, it’ll be a boon for bond yields, but it also shines a harsh light on an economy that’s grown overly dependent on government cheques. The existing Trump-era tax cuts are merely status-quo, so the real kicker will be whether lawmakers ink any fresh breaks. Extend the old cuts and you get zero new stimulus; fail to extend them and you get a hefty growth haircut. Early skirmishes over those measures will start moving markets long before the ink dries, so strap in—next week’s budget negotiations could be the next headline-to-headline catalyst.

On the energy front, OPEC+ just ripped up its own playbook, green‑lighting a second straight 411‑kbpd output hike for June—triple what some Wall Street desks had pencilled in. Layer that on top of May’s identical bump and more than 800‑kbpd of fresh barrels are crashing a market already nursing its worst monthly drawdown since 2021.

Brent and WTI promptly slipped 4 % , underscoring that the cartel now takes cues from Washington’s cheap‑gas agenda as much as from Riyadh’s fiscal math. With President Trump jetting to the Gulf mid‑May, he’s effectively the swing vote inside OPEC+: lower pump prices tame headline inflation and box the Fed into a softer stance—two birds with one barrel.

Finally, Japan’s “nuclear option” on Treasuries fizzled fast. After floating a trial balloon about weaponizing its trillion‑dollar stash, Tokyo walked it back in record time. The bond market never flinched—yields actually dipped—because liquidating reserves would kneecap Japan’s FX‑intervention arsenal and invite a dollop of U.S. financial retaliation. Another Tokyo headline mangled on the way through customs.

Headline razzle-dazzle can ignite the next risk rally, but real price discovery lives in the fine print. India and Japan will lay the blueprint, China’s talks will be the proof of concept—and until we see actual trade-deal text, this market is dancing to a tune that may not have a full orchestra behind it.