Calm waters ahead of Nvidia earnings after US close

EU Mid-Market Update: Calm waters ahead of Nvidia earnings after US close, but Trump tape bombs could suddenly shift sentiment; Lagarde mulls to end ECB term early?

Notes/observations

- No real direction this morning due to lack of substantial catalysts overnight and ahead of results from behemoth Nvidia, expected after US close. Investors focusing on Q2 guidance, data center growth breakdown and any impact from export controls/tariffs.

- Ultralong Japanese bond yields rose after weak demand at a 40-year auction, lowest appetite since Nov. 40-year yield is off highs overnight but holds approx 4-5bps higher. The move has spilled over to US treasuries with long-end climbing as well.

- Trade narrative unchanged since Trump’s last Truth Social post yesterday mid-session, saying “Extremely satisfied with the 50% Tariff allotment on the European Union; EU has called to quickly establish meeting dates”.

- Klaus Schwab, founder of the World Economic Forum (WEF), revealed that Christine Lagarde, head of the European Central Bank (ECB), discussed taking over as WEF chair by early 2027, potentially leaving her ECB role 10 months early, contingent on achieving the ECB’s 2% inflation target.

- Asia closed mixed with KOSPI outperforming +1.3%. EU indices -0.4% to +0.5%. US futures -0.2%. Gold +0.6%, DXY 0.0%; Commodity: Brent +0.3%, WTI +0.4%; Crypto: BTC -0.9%, ETH 0.0%.

Asia

- New Zealand Central Bank (RBNZ) cuts Official Cash Rate (OCR) by 25bps to 3.25%; As expected; 1 dissenter voted to keep rates unchanged.

- Japan Fin Min Kato: Will closely monitor bond market 'situations' - parliamentary testimony.

- Japan said to propose buying up to ¥1.0T (~$7.0B) of US-made chips as part of US trade talks [timeframe uncertain] - Japanese press.

- Latest rate cuts in China speed up deposit outflows into products including wealth mgmt - China Securities Times.

- Australia Apr CPI Y/Y: 2.4% v 2.3%e; CPI Trimmed Mean Y/Y: 2.8% v 2.7% prior.

- Malaysia PM Anwar: Will introduce new legislation that enables AI to 'operate independently' from the laws of the country - comments at ASEAN-GCC Economic Forum 2025.

- Malaysia Economy Min Rafizi announces resignation (to focus on general election); Effective Jun 17th (inline).

Europe

- Czech Foreign Min Lipavsky: China is installing itself into our society. Through manipulation, propaganda, cyberattacks - X post.

- Indonesia, France to sign defense deal during France Pres Macron's visit (May 27-29th); France and Indonesia sign letters on agriculture and critical minerals - press.

- EC said to urge EU nations to cut water use by 10% by 2030 - FT.

- Romania Pres and US Pres Trump reportedly spoke on phone - Romanian press.

- UK Kantar announces 12 week grocery market share and sales: 4-weeks to May 18th UK grocery inflation at 4.1% v 3.8% prior.

- Sweden Central Bank (Riksbank) Financial Stability Report; US trade, security policy shifts increase market uncertainty, financial instability risks.

- WEF founder Klaus Schwab: ECB's head Lagarde discussed leaving ECB early to head WEF - FT.

- ECB's Stournaras (Greece): UniCredit’s Alpha stake raise is very positive; Deal shows way forward for EU in banking sector.

- Finland issues proposal to withdraw from Ottawa Treaty - press.

Americas

- Pres Trump: Confirms to be working on taking Fannie Mae and Freddie Mac public - Truth post.

- Pres Trump to sign executive orders on Wed at 2 pm ET.

- Canada PM Carney: The US and Canada engaged in 'Fairly intensive' talks on new economic and security deal.

- Brazil Govt: Decides to renew trade defense measures in the steel sector.

- Elon Musk: 'Disappointed' in cost of Trump tax bill; I was disappointed to see the massive spending bill frankly, which increases the budget deficit, not just decrease it and undermines the work that the DOGE team is doing.

Mid-East

- Head of Iran's Nuclear Organization: Iran may allow US nuclear inspectors via IAEA if there is a deal.

Trade

- Japan Economic Revitalization Min and Top Trade Negotiator Akazawa: Will not disclose concrete thinking about trade talks (presumably with the US) - parliamentary testimony.

- China Vice Commerce Min: To jointly maintain free trade with Germany; China and Europe chip firms held meeting in Beijing.

Ukraine conflict

- Ukraine's Pres Zelenskiy: Ready to meet with Trump and Putin; Sees one more technical groups meeting with Russia; Russia has gathered 50K soldiers for an offensive in Ukraine's Sumy region.

Energy

- Energy Intel's Bakr: Today OPEC+ will hold their meeting virtually at 15:30 Vienna time. No announcements with regards to policy are expected, (the further unwinding of the voluntary cuts will be discussed later on Saturday with the group of 8 states). Reviewing the current market outlook, stressing the importance of compliance etc are issues that are expected to be on the agenda today.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.04% at 552.52, FTSE +0.19% at 8,794.97, DAX -0.03% at 24,251.55, CAC-40 +0.16% at 7,839.67, IBEX-35 -0.14% at 14,224.89, FTSE MIB +0.58% at 40,358.00, SMI -0.50% at 12,278.50, S&P 500 Futures -0.15%].

Market focal points/key themes: European indices opened mixed but took on a positive bias in the early part of the session; with little news in the EU-US trade negotiations, risk appetite seen supported by signs of slowing consumer prices in Europe; among sectors leading to the upside are energy and real estate; underperforming sectors include technology and materials; oil & gas subsector seen rising on Venezuelan supply risks; ExxonMobil in talks to sell its stake in Esso SAF to North Atlantic; Rentokil sell sits France Workwear unit to HIG Capital; Unicredit raises its stake in Alpha Bank, seeks regulatory approval for further stake increase; focus on FOMC minutes coming out later in the day; earnings expected in the upcoming Americas session include Macy’s, Nvidia, HP and Salesforce.

Equities

- Consumer discretionary: Kingfisher [KGF.UK] -2.5% (trading update), Remy Cointreau [RCO.FR] -1.5% (names CEO), Pets at Home [PETS.UK] +4.5% (FY24/25 results).

- Financials: Pierre & Vacances [VAC.FR] -3.5% (final H1 results).

- Industrials: Stellantis [STLA.FR] +1.0% (appoints new CEO), Rheinmetall [RHM.DE] +1.5% (Trump's hawkish comments on Putin).

- Technology: Soitec [SOI.FR] -24.5% (earnings; withdrew guidance; new CFO), Frontier Developments [FDEV.UK] +7.5% (trading update).

Speakers

-RBNZ Acting Gov Hawkesby: Future decisions to be driven by developments; Considerable uncertainty around global economy - post-rate decision press conference.

-BOJ Gov Ueda: US-China trade 'truce' is positive development - parliamentary testimony.

-Japan Fin Min Kato: Will closely monitor bond market 'situations' - parliamentary testimony.

-Japan BOJ’s Dep Gov Himino and US Fed's Williams (voter): Williams: Wants to avoid allowing highly persistent inflation - Fireside chat at BOJ .Conference in Tokyo

Economic data

-(BE) Belgium Q1 Final GDP Q/Q: 0.4% v 0.4% prelim; Y/Y: 1.1% v 1.1% prelim.

-(IS) Iceland Apr Final Trade Balance (ISK): -53.9B v -53.5B prelim.

-(IS) Iceland May CPI M/M: 0.2% v 0.9% prior; Y/Y: 3.8% v 4.2% prior.

-(EU) ECB Apr Consumer Expectation Survey: 1-year ahead CPI Expectations: 3.1% v 2.8%e; 3-year ahead CPI Expectations: 2.5% v 2.8%e.

-(CH) Swiss May Expectations Survey: -22.0 v -51.6 prior.

-(DE) Germany May unemployment change: +34.0K V +12.0KE (above all estimates); claims rate: 6.3% V 6.3%E.

-(TR) Turkey May Economic Confidence: 96.7 v 96.6 prior.

-(FR) France Apr PPI M/M: -4.3% v -0.5% prior; Y/Y: -0.8% v -0.2% prior.

-(FR) France Apr Consumer Spending M/M: 0.3% v 0.8%e; Y/Y: -0.1% v -1.9% prior.

-(FR) France Q1 Final Private Sector Payrolls Q/Q: -0.1% v 0.7% prelim; Total Payrolls: -0.1% v 0.0%e.

-(FR) France Q1 final GDP Q/Q: 0.1% V 0.1%E; Y/Y: 0.6% V 0.8%E.

-(FI) Finland Mar Final Trade Balance: -€0.9B v -€0.9B prelim.

-(DK) Denmark Apr Unemployment Rate: 2.5% v 2.5% prior.

-(SE) Sweden Apr Retail Sales M/M: 0.9% v 0.2%e; Y/Y: 5.3% v 3.6% prior.

-(SE) Sweden Mar Non-Manual Workers’ Wages Y/Y: 3.3% v 3.5% prior.

-(SE) Sweden Apr Household Lending Y/Y: 2.3% v 2.1% prior.

-(NO) Norway Apr Retail Sales (with auto/fuel) M/M: 0.7% v 0.4%e.

-(SE) Sweden Apr Trade Balance (SEK): 6.6B v 11.2B prior; Exports (SEK): 169.5B v 187.4B prior (revised from 174.0B); Imports (SEK): 162.9B v 176.2B prior (revised from 159.0B).

-(DE) Germany Apr Import Price Index M/M: -1.7% v -1.4%e; Y/Y: -0.4% v 0.0%e.

-(FI) Finland Apr House Price Index M/M: 1.2% v 0.8% prior; Y/Y: -0.5% v -1.8% prior.

Fixed income issuance

-(NO) Norway sells total NOK3.0B vs. NOK3.0B indicated in 2029 and 2039 Bonds.

-(IT) Italy Debt Agency (Tesoro) sells €6.5B vs. €6.5B indicated in 6-month Bills; Avg Yield: 1.981% v 2.069% prior; Bid-to-cover: 1.46x v 1.78x prior.

-(UK) DMO sells £2.75B in 0.875% July 2033 green GILTS; AVG yield: 4.511% V 4.473% prior; bid-to-cover: 3.56X V 3.10X prior; tail: 0.3BPS V 0.7BPS prior.

-(IN)India sells total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills.

-(VN) Vietnam Finance Ministry sells total VNM3.875T vs. VND9.5T indicated in 5-year, 10-year, 15-year bonds and 30-year bonds.

-(FI) Finland to sell 9-month and 12-month bills on Tues, June 3rd.

-(UK) DMO announces syndicated launch of new index-linked gilt maturing Sept 2038 in week commencing June 9th.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell €2.0B in 2038 and 2040 bunds.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (RU) Russia to sell 2029 and 2039 OFZ Bonds.

- 06:00 (CZ) Czech Republic to sell combined CZK10.0B in 2033, 2035 and 2037 Bonds.

- 06:00 (IE) Ireland Apr Retail Sales Volume M/M: No est v -0.9% prior; Y/Y: No est v -1.3% prior.

- 06:30 (IN) India Apr Industrial Production Y/Y: 0.9%e v 3.0% prior.

- 07:00 (US) MBA Mortgage Applications w/e May 23rd: No est v -5.1% prior.

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

- 08:55 (US) Weekly Redbook LFL Sales data.

- 10:00 (US) May Richmond Fed Manufacturing Index: -9e v -13 prior.

- 10:30 (US) May Dallas Fed Services Activity: No est v -19.4 prior.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 11:30 (US) Treasury to sell 2-Year FRN Reopening.

- 12:00 (CA) Canada to sell 10-Year Bonds.

- 12:00 (RU) Russia Apr PPI M/M: No est v -1.5% prior; Y/Y: No est v 5.9% prior.

- 12:00 (RU) Russia Apr Industrial Production Y/Y: 1.3%e v 0.8% prior.

- 13:00 (US) Treasury to sell 5-Year Notes bonds.

- 14:00 (US) May FOMC Meeting Minutes.

- 14:00 (NZ) RBNZ's Hawkesby.

- 14:30 (MX) Mexico Central Bank (Banxico) Quarterly Inflation Report.

- 16:30 (US) Weekly API Crude Oil Inventories.

- 21:00 (KR) Bank of Korea (BOK) Interest Rate Decision.

- 21:00 (NZ) New Zealand May ANZ Business Confidence: No est v 49.3 prior; Activity Outlook: No est v 47.7 prior.

- 21:10 (JP) BOJ Outright Bond Purchase Operation for 3~5 Years; 5~10 Years; 10~25Years and Inflation-indexed.

- 21:30 (AU) Australia Q1 Private Capital Expenditure: No est v -0.2% prior.