Futures bounce from red Friday after Trump pivots quickly on hard EU trade stance

EU mid-market update: Futures bounce from red Friday after Trump pivots quickly on hard EU trade stance, delayed tariffs by a month; French CPI drops to over 4-years low; Nvidia results tomorrow.

Notes/observations

- Risk appetite spurred on from London open, as European indices printed green across board, yen weakened overnight and US futures pushed to highs. Returning from extended weekend, sentiment has been lifted by Trumps delay of EU tariffs from Jun 1st to July 9th after phone call with Von Der Leyen.

- US long-end treasury yields follow Japanese yields lower, after MOF said to be considering trimming issuance of ‘super-long’ JGBS. German 10-year bund hovers around 2.5%, with analysts noting downside risk towards ~2.2% if there is re-escalation of trade tensions.

- US looks to busy slate of data; Durable goods at 08:30 ET, FHFA and Corelogic House Price Indexes (HPI) at 09:00 ET and Consumer Confidence at 10:00 ET.

- Weekend recap of geopolitical tension: Russia launched its largest aerial attack on Ukraine, killing 12, including three children, with 900 drones and missiles. Zelensky urged stronger Western sanctions, criticizing US inaction. Trump called Putin “crazy” on Truth Social, proposed sanctions after a rejected ceasefire call, and criticized Zelensky’s rhetoric. EU and UK imposed new sanctions; No ceasefire progress.

- Tomorrow, investors will be watching Nvidia’s Q2 guidance closely amid pulled-forward AI GPU shipments before U.S. export curbs; Beyond Q2 results, attention will turn to the rollout of China-compliant modified Hopper and Blackwell chips, networking attach-rate rebounds, and any cloud providers’ 2026 capex plans comments.

- Asia closed mixed with Nifty50 underperforming -0.9%. EU indices +0.3-1.2%. US futures +1.3-1.6%. Gold -1.1%, DXY +0.3%; Commodity: Brent +0.4%, WTI +0.4%; Crypto: BTC +0.0%, ETH +2.9%.

Asia

- Japan MOF to hold meeting with JGB primary dealers on June 20th; MOF could consider 'trimming' issuance of super-long JGBs - Nikkei.

- China MOFCOM: To summon auto industry associations to meet today, incl automakers BYD and Dongfeng auto to "discuss emergence of used cars that have never been driven on the market" - financial press, citing sources.

- China may accelerate bond sales for idle land purchases.

- China Public Security Bureau: Recent Guangzhou cyber attack was by a foreign hacker organization 'supported by Taiwan DPP'.

- Yuan strength seen supporting the appeal of China assets, CNY is expected to be traded with 'moderate strength' in the short-term; cites analysts - China Securities Journal.

- Japan is considering revising the treatment of goodwill in order to increase activity among startup cos. - Nikkei.

- S&P affirms Hong Kong sovereign rating at AA+; Outlook Stable.

Ukraine conflict

- Reportedly US Pres Trump mulls sanctions against Russia this week as he grows frustrated by Russian President Putin’s continued attacks on Ukraine and the slow pace of peace talks, according to people familiar with Trump’s thinking - WSJ.

Trade

- Japan Economic Revitalization Min and Top Trade Negotiator Akazawa: Will Not sacrifice agriculture in trade talks.

- EU Trade Commissioner Sefcovic said had a 'good call' with US Commerce Sec Lutnick.

-Malaysia Trade Ministry: To begin FTA negotiations with GCC countries (Gulf countries) - financial press.

Europe

-UK govt said to be shifting to shorter-term borrowing - FT, citing UK DMO Official Jessica Pulay.

-Bank of England faces interest rate dilemma after 9% wage rise; UK average advertised wage +9% y/y (the biggest rise since June 2022), according to job search website Adzuna - press.

-ECB Chief Lagarde said strong euro will help EU counter Trump tariffs.

-ECB's Villeroy (France): Reiterates normalization of interest rates is 'probably' not over; French inflation is encouraging.

-Reportedly EU Commission asks European companies to detail US investment plans - press.

-Sweden Central Bank (Riksbank) Jansson: Strength of Swedish crown (SEK) is a result of worries about Trump's tariffs and other policies and is unlikely to be reversed in the short term.

-Turkey said to start investigation into Istanbul interim mayor - press.

Americas

- Fed's Kashkari (non-voter): May take months or years to conclude trade talks; Favors maintaining rates until tariff clarity.

- Reportedly more US businesses with manufacturing operations on the mainland are warning they will be forced to raise prices in the coming weeks as inventories dwindle and shipping costs surge - Nikkei.

- Softbank said to propose joint US-Japan $300B tech fund.

- DJT plans to raise $3B to spend on cryptocurrencies [time frame uncertain, currencies unnamed] - FT.

Energy

- Norway Statistics Office (SSB) May Investment Forecast Survey: Firms see 2025 spending at NOK 269B v NOK 254B prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.48% at 553.12, FTSE +0.97% at 8,802.68, DAX +0.65% at 24,153.68, CAC-40 +0.15% at 7,840.24, IBEX-35 +0.23% at 14,258.26, FTSE MIB +0.52% at 40,195.00, SMI +0.17% at 12,350.30, S&P 500 Futures +1.47%].

Market focal points/key themes: European indices opened mixed but moved to trend upwards through the early part of the session; risk sentiment seen improving after French CPI was lower than anticipated; among sectors leading the way higher include real estate and financials; lagging sectors include consumer discretionary and utilities; Harmony gold to acquire MAC Copper; Alphawave and Qualcomm extend deadline for merger talks; focus on US durable goods to be released later in the day; earnings expected in the upcoming Americas session include AutoZone.

Equities

- Consumer discretionary: Bodycote [BOY.UK] +3.5% (trading update), Grieg Seafood [GSF.NO] +1.5% (Q1 results).

- Financials: Vienna Insurance [VIG.AT] +1.5% (Q1 results).

- Materials: Clariant [CLN.CH] -1.5% (rejects and notes OMV €1.0B damages claim), Hochschild Mining [HOC.UK] -6.0% (COO to step down).

- Healthcare: Nicox [COX.FR] +22.5% (milestone payments).

- Industrials: Elementis [ELM.UK] +13.0% (Divests Talc business for $121M, to launch $50M share buyback; Affirms outlook), Paragon [PGN.DE] +1.5% (Q1 results).

- Technology: SAP [SAP.DE] +1.0% (mull applying for EU AI Gigafactory; exploring integrating Alibaba’s large language model, Qwen, to its generative AI hub in China).

- Real Estate: Adler Group [ADJ.DE] +3.0% (trading update, affirms guidance).

Speakers

-Fed's Kashkari (non-voter): May take months or years to conclude trade talks; Favors maintaining rates until tariff clarity.

-Sweden Central Bank (Riksbank) Jansson: Strength of Swedish crown (SEK) is a result of worries about Trump's tariffs and other policies and is unlikely to be reversed in the short term.

-ECB's Villeroy (France): Reiterates normalization of interest rates is 'probably' not over; French inflation is encouraging.

-Thailand Fin Min Pichai: 'High' foreign reserves attract inflows; affirms will not interfere with FX rate.

-Japan Fin Min Kato: Rising yields are Not impeding stable sale of JGBs; Approves ¥300B reserve funds for economic support; ¥288B to be used for gas, electricity subsidies.

-Bank of Japan BOJ Gov Ueda: Japan still grappling with achieving 2% inflation target, but closer than at any time in over 3 decades - opening remarks at BOJ-hosted conference "New Challenges for Monetary Policy".

Economic data

-(EU) Euro Zone May Economic Confidence: 94.8 v 94.1e; Industrial Confidence: -10.3 v -10.5e; Services Confidence: 1.5 v 1.0e; Consumer Confidence (final): -15.2 v -15.2 advance.

-(PT) Portugal May Consumer Confidence: -18.2 v -17.9 prior; Economic Climate Indicator: 2.3 v 2.2 prior.

-(AT) Austria May Manufacturing PMI: 48.4 v 46.6 prior (34th month of contraction).

-(TW) Taiwan Apr Monitoring Indicator: 33 v 35 prior.

-(PH) Philippines Apr Budget Balance (PHP): 67.3B v -375.7B prior.

-(ZA) South Africa Mar Leading Indicator: 115.4 v 114.2 prior.

-(SE) Sweden May Consumer Confidence: 83.1 v 81.8 prior; Manufacturing Confidence: 100.1 v 100.2 prior;Economic Tendency Survey: 94.6 v 95.0 prior.

-(ES) Spain Mar Total Mortgage Lending Y/Y: 51.7% v 9.3% prior; Mortgage Approvals Y/Y: 44.5% v 4.3% prior.

-(FR) France May Preliminary CPI CPI M/M: -0.1% v +0.1%e; Y/Y: 0.7% v 0.9%e (lowest since Feb 2021); CPI EU Harmonized M/M: -0.2% v +0.1%e; Y/Y: 0.6% v 0.9%e (lowest since Dec 2020, below all estimates).

-(DK) Denmark Apr Retail Sales M/M: +0.4% v -0.1% prior; Y/Y: 4.9% v 1.6% prior.

-(CH) Swiss Apr Trade Balance (CHF): 6.3B v 6.4B prior.

-(DE) Germany June GfK Consumer Confidence: -19.9 v -20.0e (highest since Nov 2024).

-(FI) Finland May Consumer Confidence: -8.4 v -7.4 prior; Business Confidence: -11 v -10 prior.

-(NL) Netherlands May Producer Confidence: -3.9 v -3.3 prior.

-(EU) Euro Zone Apr EU27 New Car Registrations: +1.3% v -0.2% prior.

-(JP) Japan Apr PPI Services Y/Y: 3.1% v 3.0%e.

-(IL) Israel Mar Manufacturing Production M/M: 0.5% v 1.9% prior.

-(BR) Brazil May FGV Consumer Confidence: 86.7 v 84.8 prior.

-(UK) May BRC Shop Price Index Y/Y: -0.1% v -0.1% prior; Food prices Y/Y: 2.8% v 2.6% prior (one year high).

Fixed income issuance

- Italy Debt Agency (Tesoro) sells €2.75B vs. €2.50-2.75B indicated range in 2.55% Feb 2027 BTP bonds; Avg Yield: 2.01% v 2.00% prior; Bid-to-cover: 1.61x v 1.65x prior.

- Italy Debt Agency (Tesoro) sells total €2.0B vs. €1.5-2.0B indicated range in 2032 and 2036 inflation-linked bonds (BTPei).

-Sweden sells SEK12.5B vs. SEK12.5B indicated in 3-month bills; Avg Yield: 2.225% v 2.235% prior; Bid-to-cover: 2.81x v 2.42x prior.

-Indonesia sells total IDR8.0T vs. IDR10.0T target in Islamic bills and bonds (sukuk).

-Denmark sells total DKK100M in 3-month and 6-month Bills.

-Netherlands Debt Agency (DSTA) sells €2.275B vs. €2.0–2.5B indicated range in 0.0% July 2030 DSL bonds; Avg Yield: 2.231% v 2.493% prior.

-Philippines sells PHP19.76B vs. PHP30.0B indicated in 15-year bonds; Avg Yield: 6.473% v 6.781% prior; bid-to-cover: 1.74x v 1.93x prior.

-Thailand Central Bank sells THB60B vs. THB60B iindicated in 3-month bills; Avg Yield: 1.48738% v 1.54422% prior; bid-to-cover 1.74x v 1.44x prior.

-Australia sells A$400M vs. A$400M indicated in 4.25% Jun 2034 bonds; Avg Yield: 4.2162% v 4.1725% prior; bid-to-cover: 5.16x v 4.89x prior.

Looking ahead

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (ZA) South Africa to sell combined ZAR3.75B in 2030, 2040 and 2053 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €10.563B with 47 bids recd).

- 06:00 (EU) ECB allotment in 3-month LTRO tender (prior €4.4B with 18 bids recd).

- 06:00 (IL) Israel to sell combined ILS1.9B in 2027, 2029, 2031 and 2035 bonds.

- 06:00 (UK) May CBI Retailing Reported Sales: No est v -8 prior; Total Distribution Reported Sales: No est v -26 prior.

- 07:00 (BR) Brazil May FGV Construction Costs M/M: No est v 0.6% prior.

- 08:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision: Expected to leave Base Rate unchanged at 6.50%.

- 08:00 (BR) Brazil May IBGE Inflation IPCA-15 M/M: No est v 0.4% prior; Y/Y: No est v 5.5% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Apr Preliminary Durable Goods Orders: No est v 9.2% prior; Durables (Ex Transportation): No est v 0.0% prior; Capital Goods Orders (non-defense/ex-aircraft): No est v 0.1% prior; Capital Goods Shipments (non-defense/ex-aircraft): No est v 0.2% prior.

- 09:00 (US) Mar FHFA House Price Index M/M: No est v 0.1% prior.

- 09:00 (US) Q1 House Price Purchase Index Q/Q: No est v 1.4% prior.

- 09:00 (US) Mar S&P CoreLogic CS 20-City M/M: No est v 0.4% prior; Y/Y: No est v 4.5% prior; S&P CoreLogic CS US HPI Y/Y: No est v 3.9% prior.

- 09:30 (US) Fed's Barkin.

- 10:00 (US) May Consumer Confidence: No est v 86.0 prior.

- 10:30 (US) May Dallas Fed Manufacturing Activity: No est v -35.8 prior.

- 11:30 (US) Treasury to sell 6-week, 13-Week and 26-week Bills.

- 12:00 (EU) ECB's Nagel.

- 12:20 (CH) SNB President Schlegel.

- 13:00 (US) Treasury to sell 2-Year Notes.

- 16:00 (US) Weekly Crop Progress Report.

- 17:00 (KR) South Korea May Manufacturing Business Survey: No est v 93.1 prior; Non-Manufacturing Business Survey: No est v 84.5 prior.

- 18:45 (NZ) New Zealand Apr Filled Jobs M/M: No est v 0.2% prior.

- 21:30 (AU) Australia Apr CPI Y/Y: No est v 2.4% prior; CPI Trimmed Mean Y/Y: No est v 2.7% prior.

- 21:30 (AU) Australia Q1 Construction Work Done: No est v 0.5% prior.

- 22:00 (NZ) New Zealand Central Bank (RBNZ) Interest Rate Decision.

- 22:00 (SL) Sri Lanka Central Bank (CBSEL) Interest Rate Decision.

- 23:00 (TH) Thailand to sell combined THB27.0B in 2035 and 2055 bonds.

- 23:35 (JP7) Japan to sell 40-year JGB Bonds.