Фьючерсы падают из-за возобновившихся торговых потрясений на фоне резкого роста цен на золото и нефть

US equity futures are weaker along with Asian and European markets as the trade war escalates after US and China accused each other of violating the terms of their recent agreements while geopolitical uncertainty weakened investor confidence. As of 8:00am, S&P futures are down 0.3% with Nasdaq futures down 0.5% with Mag7/Semis lower while Cyclicals and Defensives outperform. According to media reports, the pace of China exporting rare earths may be the genesis of the latest trade spat, but Bessent/Hassett suggest Trump/Xi will have a call this week. Separately Trump announced late on Friday he will hike steel tariffs from 25% to 50%, upsetting both Canada and the EU. Pre-mkt, steel stocks are +13 – 25% as autos are under pressure. Meanwhile, geopolitics is also in the picture after the Russia-Ukraine war took a turn for the worse with Ukraine striking targets inside Russian borders. Brent crude oil advanced toward $65 a barrel as OPEC+ hiked production less than some had feared and geopolitical tensions flared. Spot gold soared over $60 to a one-week high as a flare-up in global trade tensions weighs on US assets. The dollar shed 0.4%, extending a run of five consecutive monthly losses. Treasury yields rose across the curve, with the 10-year rate up four basis points to 4.44%. Today’s macro data focus is on ISM-Mfg.

In premarket trading, Magnificent Seven were mostly lower (Apple -0.5%, Alphabet -1.6%, Microsoft -0.3%, Amazon -0.3%, Meta -0.7%, Nvidia -0.5%, Tesla -1.5%). Here are some other notable premarket movers:

• Boeing Co. shares (BA) rise 1.3% premarket after BofA Global Research upgraded the planemaker to buy from neutral, with analyst Ronald Epstein writing that company’s “aircraft emerged as the favored trade tool for the Trump administration in recent trade deals.”
• Kura Oncology (KURA) advances 4.4% in premarket trading after announcing the US Food and Drug Administration has accepted the pharmaceutical company’s New Drug Application seeking full approval for ziftomenib, according to a company statement.
• Moderna shares (MRNA) are up 4% in premarket trading after the drugmaker won FDA approval for its second-generation Covid vaccine for all adults over 65 and anyone over 12 who has at least one risk factor for severe disease.
• Shares in US steel and aluminum stocks are rallying in premarket trading on Monday as President Donald Trump said he would be increasing tariffs on steel and aluminum to 50% from 25%.
• Tesla shares (TSLA) are down 1.5%, leading Magnificent Seven stocks lower in premarket trading on Monday, along with US stock futures, as global trade tensions and geopolitical uncertainty erode risk appetite.

The latest twists in President Donald Trump’s tariff agenda have heightened market uncertainty, following mutual accusations between the US and China of breaching a trade deal, and Trump’s pledge to double tariffs on all steel and aluminum imports. The tensions have helped stall a rebound in US stocks as traders fear that the instability may persist in the absence of lasting agreements. Meanwhile, Ukraine staged a series of strikes deep inside Russia ahead of peace talks scheduled for Monday in Istanbul.

“Just when we thought the noise around tariffs was quietening down, recent events have shown that investors should take nothing for granted until it is signed and sealed,” said Daniel Murray, chief executive officer of EFG Asset Management in Zurich.

That said, while market volatility is once again picking up amid the latest tensions, strategists say it’s unlikely to match the levels seen during the selloff that followed Trump’s tariff announcement on April 2. Traders now increasingly view such moves as negotiation tactics aimed at securing more favorable terms.

“The sensitivity of investors and of traders toward this tariff news is probably going down a bit,” Max Kettner, chief multi-asset strategist at HSBC Holdings Plc, told Bloomberg TV. “It is primarily a negotiation tool. I don’t have to factor in a persistent drag on earnings, a persistent drag on the earnings outlook.”

Investors will be watching Friday’s nonfarm payrolls report to assess the impact of Trump’s trade policies on the US economy and the outlook for Federal Reserve rate cuts.

“This is a backdrop where markets are increasingly discounting the tariff news,” Laura Cooper, global investment strategist at Nuveen, told Bloomberg TV. “We’re more focused on the extent of economic damage that is potentially going to come through in US data.”

European stocks are also in the red as an escalation in the Russia-Ukraine conflict provides investors with another reason to shun risk assets. The Stoxx 600 is down 0.3% with auto, consumer product and technology shares leading declines. Here are the biggest movers Monday:

• European defense stocks are outperforming as the UK plans to spend £1.5 billion to build six munitions factories, expand its fleet of attack submarines and invest in its nuclear deterrent
• Hensoldt shares jump as much as 11% to a record after JPMorgan upgraded the stock and hiked its price target to a new Street-high, arguing the outlook over the coming years looks very strong for the defense electronics specialist
• JCDecaux rises as much as 2.9% and Stroeer gains 3.7% as Berenberg initiates coverage of both advertising firms with a buy rating, citing upside from the digitalization trend and saying the firms trade at a discount to peers
• Warehouse REIT shares rise as much as 4.8% after the company said it received a final revised offer from Blackstone after the markets closed on Friday
• Telkom rises as much as 7.2% in Johannesburg to its highest intraday level since October 2022 after the telecommunications company said it expects full-year adjusted headline earnings per share from continuing operations to increase by between 95% and 105%
• Raubex rises as much as 9.3% in Johannesburg, the most since March 24, after the construction company’s board found no evidence of any unlawful conduct or ethical impropriety as alleged by an anonymous whistleblower
• Warsaw WIG20 index drops as much as 3.4% in early trading after the nationalist opposition candidate wins Poland’s presidential election
• Sanofi slides after agreeing to buy Blueprint Medicines for at least $9.1 billion as the French drugmaker further expands its rare immunological disease portfolio
• European steel stocks are on the move Monday, after US President Donald Trump announced that he would increase tariffs on steel to 50% from 25%, saying the move would help protect American workers

Earlier in the session, Asian stocks dropped, as risk-off sentiment prevailed amid resurgent US-China trade tensions, with the world’s two largest economies accusing each other of violating their trade deal last month. The MSCI Asia Pacific Index fell as much as 1% before paring losses to 0.2%, with TSMC and Toyota among the biggest drags on the benchmark. Benchmarks in Japan and Taiwan declined more than 1%, while a gauge of Chinese shares trading in Hong Kong slid 0.9%. Markets in mainland China, Thailand and Malaysia were closed for holidays. Trade tensions dialed up again after President Donald Trump said on Friday that China “violated a big part of the agreement” the countries made in Geneva. Meanwhile, Beijing called on the US to immediately correct “discriminatory” measures and uphold the consensus reached in Geneva. Further adding to investor caution are the Trump administration’s plans to broaden restrictions on China’s tech sector, as well as the US president’s announcement that he would hike tariffs on steel and aluminum to 50% from 25%. While such fresh concerns have cooled the recent rally, the key Asian stock benchmark is still up almost 20% from an April low.

The latest headlines suggest that the Trump administration will “try to regain control of the trade war narrative,” said Charu Chanana, chief investment strategist at Saxo Markets. “We could see some headline-driven volatility, but the impact is unlikely to be sticky. Markets have become relatively desensitized to tariff threats, and with the economy and earnings holding up, underlying fundamentals still provide support.”

In FX, the dollar traded near the lowest level since 2023 after extending losses for the year to 7.6%. Slowing US growth and interest rate cuts will further push the greenback into a tumble to levels last seen during the pandemic, according to Morgan Stanley strategists. “We think rates and currency markets have embarked on sizable trends that will be sustained — taking the US dollar much lower and yield curves much steeper — after two years of swing trading within wide ranges,” they wrote. EUR/USD rallies by 0.8% to 1.1437, highest since April 23. The Scandinavian currencies lead G-10 gains; USD/NOK down 1.2% to 10.0866. GBP/USD +0.7% to 1.3550; figures from Nationwide Building Society showed UK house prices unexpectedly rose in May.

In rates, treasuries are cheaper across the curve with losses led by long-end tenors amid a similar bear-steepening move in core European rates as global trade tensions and geopolitical uncertainty continues to play out across financial markets. US yields are 1.5bp-4bp higher across maturities with 2s10s and 5s30s spreads 1bp-2bp steeper on the day. 10-year around 4.43% is ~3bp cheaper, while 30-year yields are 5 bps higher to 4.98%. Rising oil prices add to upside pressure on yields, after OPEC+ increased production less than expected. European government bonds underperform their US peers, with UK and German 30-year borrowing costs rising some 6 bps each. US session includes manufacturing gauges and remarks by Fed Chair Powell.

In commodities, WTI crude futures rally 3.5% to near $63 a barrel on a combination of heightened geopolitical tensions and an OPEC+ production increase that was less than some had feared; spot gold soared over $60 to a one-week high as a flare-up in global trade tensions weighs on US assets.

On today’s calendar, US economic data includes May final S&P Global US manufacturing PMI (9:45am New York time), May ISM manufacturing and April construction spending (10am). Fed speaker slate includes Logan (10:15am), Goolsbee (12:45pm) and Powell giving opening remarks at the Board of Governors IF 75th Anniversary Conference (text expected, 1pm).

Market Snapshot

• S&P 500 mini -0.5%
• Nasdaq 100 mini -0.7%
• Russell 2000 mini -0.6%
• Stoxx Europe 600 -0.2%
• DAX -0.4%
• CAC 40 -0.5%
• 10-year Treasury yield +4 basis points at 4.44%
• VIX +1.4 points at 19.93
• Bloomberg Dollar Index -0.5% at 1209.64
• euro +0.8% at $1.1435
• WTI crude +3.5% at $62.9/barrel

Top Overnight News

• China has accused the US of “seriously violating” a trade between the two powers and vowed to take strong measures to defend its interests as tensions reignited over the supply of critical minerals. FT
• Trump could hold a call with Xi as soon as this week in an effort to quell the recent escalation in tensions between the two countries. WSJ
• White House sent a ‘partial’ FY26 budget proposal to Congress, leaving out standard projections.
• Japan’s top trade negotiator Ryosei Akazawa is considering a return to the US for another round of trade negotiations this week. Last week’s talks saw progress toward an agreement, he said, without elaborating. BBG
• The UK will urge Trump to apply an agreed zero-tariff accord to steel, the FT said, after the president vowed on Friday to double levies to 50%. BBG
• Ukrainian drones hit Russian airfields as far away as eastern Siberia, while Moscow launched one of its longest missile and drone attacks. Delegations from each side are set to meet in Turkey today. BBG
• AFP on a source in the Ukrainian delegation to the peace talks in Istanbul: Kiev is ready to take 'big steps towards peace'”, according to Sky News Arabia
• Britain’s labor market is loosening and “waves of disinflation” may continue, the BOE’s Sarah Breeden told the Sunday Times. UK house prices posted a surprise 0.5% gain in May, Nationwide data showed. BBG
• GE will pass along to consumers some additional charges caused by tariffs. BBG
• Fed’s Waller says tariff policy (so far) hasn’t been as bad as his worst-case scenario, and he signals support for rate cuts later this year (“given my belief that any tariff-induced inflation will not be persistent and that inflation expectations are anchored, I support looking through any tariff effects on near term-inflation when setting the policy rate”). Fed
• The US “is never going to default” on its debt, Scott Bessent told CBS, and declined to specify an “x date” when the Treasury would run out of cash. An increase in the debt limit is included in Trump’s tax bill, which the Senate is due to take up this week. BBG

Trade/Tariff

• US President Trump said he will double US steel and aluminium tariffs from 25% to 50%, effective June 4th.
• US President Trump is finalising an executive order for new restrictions that could effectively end Chinese drone sales to the US, according to the Washington Post.
• US Treasury Secretary Bessent said China is holding back products essential to the industrial supply chain and he believes President Trump will talk to Chinese President Xi very soon, according to a CBS interview. Bessent stated the US will never default on its debt, and they are on the warning track and will never hit the wall.
• China’s Mofcom said China has taken seriously, strictly implemented and actively upheld the consensus reached at the talks with the US in Geneva, while it is firm in safeguarding its rights and interests, and it is honest in implementing the consensus. Mofcom added the US has successively introduced a number of ‘discriminatory restrictive measures’ against China after talks in Geneva and that these practices by the US seriously violate the consensus reached by both sides. It also stated that if the US insists on going its own way and continues to undermine China’s interests, China will continue to resolutely take forceful measures to safeguard its legitimate rights and interests. Furthermore, it urged the US to immediately correct the relevant ‘wrong practices’ and said the US has made ‘groundless accusations’ against China for violating the consensus with China resolutely rejecting these ‘unreasonable accusations’.
• Japan’s tariff negotiator Akazawa plans to visit the US for tariff talks for four days from Thursday, according to Jiji News.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly in the red, albeit to varying degrees, at the start of a new trading month and ahead of this week’s risk events, while trade uncertainty lingered after President Trump announced to double steel and aluminium tariffs to 50% from this Wednesday. ASX 200 was rangebound with the index constrained by weakness in miners and the commodity-related sectors amid trade uncertainty following US President Trump’s latest tariff offensive but with the downside cushioned given the actual boost to underlying commodity prices. Nikkei 225 slumped at the open with headwinds from recent currency strength and after US and Japanese officials met on Friday for trade talks, while Economic Minister Akazawa said the latest round of discussions have them on track towards a deal as early as this month but stated that nothing is agreed until everything is agreed and there was no change in the US stance on tariffs, including those on auto parts, which was regrettable. Hang Seng underperformed amid the closure in the mainland and Stock Connect trade, while participants also reacted to mixed PMI data and recent criticisms between the US and China including from US President Trump who stated that China has violated the deal with the US.

Top Asian News

• BoJ set aside maximum provisions for losses on bond transactions for fiscal 2024 which was increased to 100% for the first time with the provisions raised by JPY 427.7bln.
• Taiwan’s Central Bank warned exporters against currency speculation.

European bourses (STOXX 600 -0.2%) opened entirely in the red following a mostly subdued APAC session; selling pressure briefly exacerbated in early morning trade, but this proved fleeting. Thereafter, the risk tone improved a touch, alongside the release of the EZ PMIs – they were mixed, but with the underlying narrative shown by the metrics as constructive. European sectors opened with a negative bias and have remained subdued throughout the morning. Energy tops the index given the recent surge in oil prices as the complex reacts to the latest OPEC+ decision over the weekend. Consumer Products and Services sits at the foot of the pile, with Luxury doing much of the dragging.
US equity futures are lower across the board, with sentiment in the complex hit following Trump’s decision to double steel import tariffs to 50% and after hawkish rhetoric from the US side on China.

Top European News

• EU is said to be poised to curb China’s access to medical device procurement, according to Bloomberg
• BoE Deputy Governor Breeden highlighted a weakening labour market and slow economic growth, while she stated that „waves of disinflation are continuing” and noted the BoE’s narrative about continuing interest rate cuts was „not a million miles away from where the market is”.
• UK is to build a billion-pound weapons works as UK PM Starmer calls for war readiness.
• US President Trump is to meet with German Chancellor Merz on Friday.
• German Finance Minister Klingbeil is planning a number of corporate tax breaks aimed at spurring investment and lifting the economy out of stagflation, according to DPA.
• Official results showed Polish nationalist candidate Nawrocki won 50.89% of the vote vs 49.11% for pro-EU candidate Trzaskowski. Subsequently, Polish PM Tusk said to consider asking Parliament for a vote of confidence.

FX

• Hefty losses for the dollar so far as the „sell America” trade resumes following the punchy rhetoric seen between the US and China since Friday, alongside Trump upping the blanket steel and aluminium tariffs to 50% from 25%. To recap, the US President on Friday took aim at China in which he noted how they are violating their agreement with the US after Trump dialled back the tariffs on Chinese goods. Traders look ahead to the US ISM Manufacturing data at 15:00 BST followed by a speech by Fed Chair Powell at 18:00 BST. DXY has ventured as low as 98.67 today from a 99.358 high.
• EUR is benefitting from the slide in the Dollar and with strength also emanating from the EUR’s stable status in a „sell America” environment. Aside from that, newsflow for the bloc has been light with no reaction seen to mixed Final Manufacturing PMI data from countries in the region. EUR/USD topped 1.1400 at the time of writing and resides in a 1.1340-1.1436 range at the time of writing.
• JPY is firmer amid the softer US dollar coupled with risk aversion amid Trump upping steel and aluminium tariffs, coupled with the punchy rhetoric between the US and China. USD/JPY resides towards the bottom of a 142.77-144.09 range.
• GBP is another beneficiary of the softer Dollar whilst UK specifics remain light. BoE’s hawk Mann is due for a text release at 15:00 BST. GBP/USD resides towards the upper end of a 1.3455-1.3557 range at the time of writing.
• Antipodeans are the biggest gainers on the dollar weakness and upside in base metals on the back of Trump upping steel and aluminium tariffs to 50% from 25%, with the high-beta pairs unfazed by the downbeat risk tone and New Zealand holiday closure.
• The Polish Zloty initially strengthened on the second round exit poll, which showed Trzaskowski the victor with 50.3% of the vote, following this, he claimed victory in the Presidential election. However, the full vote count showed right-wing Nawrocki was the victor and new Polish President. A result that has hit the PLN.

Fixed Income

• USTs were relatively contained overnight, but into the European session the complex came under pressure. A move that has been relatively pronounced with USTs trimming by just under 10 ticks from overnight levels to a 110-19 base. No clear or overt driver behind this and the move occurred without a broader risk move but was more pronounced in EGBs. Focus today is on US ISM Manufacturing and then Fed Chair Powell thereafter. Note, today’s move has been relatively noteworthy in European hours thus far but the benchmark remains just above Friday’s 110-18 base.
• As mentioned, Bunds also found themselves coming under pressure in the European morning but to a larger extent than USTs. Again, no clear fundamentals behind it as the action has not coincided with PMIs or other updates. Thus far, down to a 130.72 base. While there has not been anything specific behind the EGB pressure the accompanying upside in yields, particularly relative to the US, has led to some modest strength emerging in the EUR and GBP vs the USD.
• Gilts are in-fitting with the above, no reaction to its own PMI being upwardly revised though the 91.16 session low printed around 15 minutes after. Down to a 91.16 base and holding around that mark, last Tuesday’s base at 91.08 the next point to watch and from an events perspective, BoE’s Mann at 15:00 BST is the next catalyst, a text is expected.

Commodities

• Crude complex is boosted amid an as-expected OPEC+ confab on Saturday but also following a few updates from Iran, in which this weekend’s IAEA report was damning towards the nation, whilst Iranian media quoting informed sources suggested the US proposal on the nuclear deal is „imaginary, one-sided and very far from being a fair basis for any possible settlement”. ING suggests „Despite the large increase, oil prices rallied this morning. This could be because there had been suggestions that the group may go for an even larger supply increase”, albeit it’s working, noting most sources flagged the 411k BPD increase for weeks beforehand.
• Firmer trade across precious metals amid the punchy US-Sino rhetoric and Iran-related headline from the weekend. Traders look ahead to the US ISM Manufacturing data at 15:00 BST followed by a speech by Fed Chair Powell at 18:00 BST, whilst risk events towards the end of the week include the US NFP. XAU/USD rose from a USD 3,288.75/oz low to a USD 3,358.79/oz intraday peak at the time of writing, with the 23rd May peak seen at USD 3,365.76/oz.
• Copper futures rallied overnight despite the absence of its largest buyer and the mostly downbeat risk sentiment in the Asia-Pac region, with prices lifted after US President Trump announced late on Friday to double US steel and aluminium prices, with the tailwinds in copper due to potential stockpiling and supply-side concerns.
• OPEC+ members that voluntarily restricted output agreed to a 411k BPD oil production increase in July, as expected, which could be paused or reversed subject to market conditions.

Geopolitics: Middle East

• „Iranian media quoting informed sources: The US proposal on the nuclear deal is „imaginary, one-sided and very far from being a fair basis for any possible settlement”
• It was reported that an Israeli strike on an aid distribution point operated by a US-based Gaza aid group killed at least 26 in Rafah. However, the Israeli military said initial findings indicated that the army did not fire at Palestinian civilians near or within the humanitarian aid distribution site, while it added that drone footage showed armed and masked individuals opened fire at Gazan civilians attempting to collect looted humanitarian aid in southern Khan Younis.
• Israeli PM Netanyahu said Hamas is continuing its refusal of US envoy Witkoff’s proposal for a Gaza ceasefire, and Israel will continue its action in Gaza for the return of hostages and defeat of Hamas.
• US envoy Witkoff said Hamas’s response to the US proposal is totally unacceptable and only takes us backwards.
• Hamas said it submitted a response regarding US envoy Witkoff’s proposal to mediators and it expressed to immediately start a round of indirect negotiations on points of contention in a Gaza ceasefire deal, while a spokesperson said they have considered US envoy Witkoff’s proposal acceptable for negotiations and that Israel’s response was ‘incompatible’. Furthermore, they have not rejected Witkoff’s ceasefire proposal but stated that Witkoff’s position towards Hamas was unfair and shows complete bias toward Israel.
• White House Press Secretary Leavitt said envoy Witkoff sent a “detailed and acceptable” nuclear deal proposal to Iran and it is in their interests to accept it.
• Iran’s Foreign Minister said his Omani counterpart visited Tehran on Saturday to present the elements of the US proposal for a nuclear deal. In relevant news, Iran said the UN nuclear watchdog is politically motivated and repeats baseless accusations.

Geopolitics: Ukraine

• A bridge collapsed in Russia’s Kursk as a freight train passed, according to the regional governor, while a senior Russian senator said the blowing up of the bridge and derailment of the train in Bryansk indicate that Ukraine has turned into a terrorist enclave. Furthermore, it was reported that Russia’s security service thwarted Ukraine-ordered railway sabotage in the Far East region of Primorye, according to RIA.
• Russian Defence Ministry said Ukraine carried out a terrorist attack using drones against airfields in Murmansk, Ikutsk, Ivanovo, Ryazan and Amur regions, while it stated that all attacks on airfields have been repelled although several aircraft caught fire, according to RIA and Interfax. Furthermore, Ukrainian President Zelensky said the attack on Russian bases was a brilliant operation and their longest-range operation, while he stated that 117 drones were used in the operation and there were very tangible Russian losses.
• Russian Foreign Minister Lavrov discussed the Ukraine settlement and talks with US Secretary of State Rubio, while Rubio expressed condolences to Lavrov over the death in the Russian rail bridge incident.
• Russian Defence Ministry said Russian forces captured Oleksiivka in Ukraine’s Sumy region, while it was separately reported that Ukraine experienced one of the longest barrages from Russian missiles and drones early on Sunday, in which air sirens sounded for more than 9 hours, according to Bloomberg.
• Ukrainian negotiators at peace talks in Istanbul are to propose a roadmap for peace which includes a 30-day ceasefire, release of all POWs, negotiations involving the US and Europe, as well as a meeting between Putin and Zelensky. Furthermore, Ukraine wants reparations, no curbs on its military, no international recognition for territory taken by Russia and with the current front lines to be the starting point for talks, while the framework for Ukrainian terms for peace are largely unchanged from Kyiv’s previous position.
• Meeting between Russian and Ukrainian delegates in Istanbul is expected to take place at 11:00BST/06:00EDT in Ciragan Palace on Monday, according to a Turkish Foreign Ministry source.

Geopolitics: Other

• US Secretary of Defense Hegseth said the US does not seek conflict with China, but Beijing wants to control and dominate the Indo-Pacific, while he added that Beijing is credibly preparing to use force to alter the balance of power in the region and that the threat from China is real and could be imminent.
• China’s Defence Ministry spokesperson said the US is accustomed to using the Shangri-La Dialogue to create disputes, sow discord and seek selfish interests, which China strongly deplores and resolutely opposes. Furthermore, the spokesperson said the US has no right to make irresponsible remarks about the Taiwan issue, let alone use it as a bargaining chip to contain China, while it stated regarding the South China Sea issue that the US is the biggest threat to regional peace and stability.

US Event Calendar

• 9:45 am: May F S&P Global U.S. Manufacturing PMI, est. 52.3, prior 52.3
• 10:00 am: May ISM Manufacturing, est. 49.5, prior 48.7
• 10:00 am: May ISM Prices Paid, est. 69, prior 69.8
• 10:00 am: Apr Construction Spending MoM, est. 0.2%, prior -0.5%

Central Banks (All Times ET):

• 10:15 am: Fed’s Logan Participates in Moderated Q&A
• 12:45 pm: Fed’s Goolsbee Participates in Moderated Q&A
• 1:00 pm: Fed’s Powell Gives Opening Remarks

DB’s Jim Reid concludes the overnight wrap

Two weeks ago was all about fiscal and US debt sustainability, and last week was all about trade again, so what will this week have in store? It’s hard to see past trade at the moment and late on Friday night Trump doubled tariffs on imported steel and aluminium to 50%, starting this Wednesday. It is really hard to keep up or predict what’s going to happen on trade at the moment, and that’s before we factor in the full ramifications from the court ruling last Thursday night, and then subsequent brief stay of execution for them on appeal. For now it seems likely that the tariff uncertainty will linger for a long time ahead even if we’re still likely past the peak aggressiveness of US policy.

Oil might grab some attention today after OPEC+ on Saturday announced that supply would increase for a third month in a row in July where 411,000 barrels will be added. An increase of this magnitude was flagged on the wires on Friday afternoon and there was some prospect of it being higher than this. This morning in Asia, oil futures are +2.85% higher in a relief that the output increase wasn’t higher.

Geopolitics have also been in headlines over the weekend at a defence forum in Singapore (Shangri-La Dialogue) where US Defense Secretary Pete Hegseth’s speech, told its Asia allies it wouldn’t abandon them and also criticised China for not sending a high profile representative from its defence team. Hegseth’s main strand in his speech was that US partners in Asia should boost defense spending towards 5% of GDP as the region should prepare for a potential Chinese invasion of Taiwan. Clearly that hasn’t gone down well with China and comes after Trump accused China on Friday of violating its recent agreements with the US. China have responded this morning by also accusing the US of violating the agreement. So the surprisingly positive agreement between China and the US on tariffs on May 12th now seems a more distant memory.

Talking of China, the official manufacturing PMI came in at 49.5 on Saturday, up from 49 in April and in line with expectations. The non-manufacturing PMI dipped a tenth of a point to 50.3, two-tenths below expectations. This composite PMI edged up to 50.4 from 50.2.

Asian equity markets are lower this morning, with the Hang Seng (-2.20%) leading the declines, followed by the Nikkei (-1.39%), also pressured by a stronger yen. Other regional markets like the S&P/ASX 200 (-0.29%) and KOSPI (-0.31%) are also experiencing losses. Elsewhere, mainland Chinese markets are closed for holidays. S&P 500 (-0.43%) and NASDAQ 100 (-0.62%) futures are also trending lower as we start the new month. 10yr USTs are +2.2bps higher.

The final estimate of the S&P Global Australia Manufacturing PMI indicated a weakening to 51 in May, a decrease from 51.7 in April and the lowest level since February. This marks the second consecutive month of decline, driven by a deceleration in the growth of new orders, which offset a rebound in export demand.

In terms of data this week, we have US payrolls on Friday as the main event but the US manufacturing ISM today and the services equivalent on Wednesday will also be important. We will also get various global PMIs spread across this week. You can see the main ones in the day-by-day calendar at the end as usual. The ECB rate decision on Thursday (25bps cut widely expected – see our preview here), and what the tone suggests going forward, will also be a big focus. The BoC meet on Wednesday (a 25bps cut also expected). May CPI prints are due in the Eurozone, Switzerland (tomorrow) and Sweden (Thursday). Broadcom, which sits just outside the Mag-7, sees their earnings on Thursday and this might give us some latest thoughts on current AI trends.

Given its payrolls week we also have JOLTS (Tuesday) and ADP (Wednesday), with jobless claims (Thursday) of added interest given we saw a small but notable increase last week. For payrolls our economists expect the headline (+125k forecast vs. +177k previously) and private (+125k vs. +167k) gains to slow relative to their trailing three-month averages of 155k and 148k, respectively, with the unemployment rate staying at 4.2%. For the rest of the week ahead see the diary at the end.

Our US economists also flag that the Senate will return to Washington DC this week to begin marking up the “One Big Beautiful Bill Act”. They think it will be interesting to see if the GOP Senators are as eager to make deep cuts to clean energy tax credits and Medicaid as their House counterparts. At the same time, the latest legal developments on the trade front pose risks to tariff revenues. See these reports for more on this. (“US Economic Notes: Tax bill details suggest still-elevated deficits in the near term” and “US Economic Perspectives: The dark matter determining debt stability “).

Recapping last week now and markets were a bit all over the place trying to make sense of where trade policy was headed. The S&P gained +1.88% on the week thanks to a +2.05% gain on Tuesday following a delay to a threatened higher 50% US tariff on the EU, but then treaded water for the rest of the week. Investors initially felt further relief over news that a US court had blocked most of Trump’s tariffs on Wednesday night, but this was very short-lived as the Court of Appeal temporarily left the tariffs in effect while it considers the case and amid reports that the Trump administration is considering alternative measures to implement new tariffs. Meanwhile, in bond markets, the US 10yr yield ended the week down -11.0bps to 4.40% (-1.7bps Friday), as investors returned to treasuries amidst the trade uncertainty as well as a weaker set of US data last Thursday.

The stock market’s resilience was tested last Friday, when Trump claimed that China had violated its trade agreement with the US from May 12, following comments by US Treasury Secretary Bessent the previous day that trade talks with China had stalled. Reports from Bloomberg and the WSJ say that tensions arose from the pace of Beijing lifting its rare earth export licenses. With US Trade Representative Jamieson Greer saying that there are still ongoing efforts to arrange a call between the two presidents, it looks like we may be back in the “waiting for the call” scenario that we were in originally during April and the early weeks of May. This morning’s strong response from China probably reducing the likelihood of that call being imminent.

Performance in Europe was relatively upbeat, with the STOXX 600 rising +0.65% (+0.14% Friday) and the DAX up +1.56% (+0.27% Friday) to a new all-time high amid the partial retreat in tariff concerns. Meanwhile, European rates saw a sizeable curve flattening. 10yr bund yields were -6.7bps lower on the week to 2.50%(-0.7bps Friday), but the 2yr yield rising +1.2bps over the week (+0.7bp Friday) in part following Germany’s May flash inflation print, which came modestly above expectations at +2.1 y/y (vs +2.0 y/y consensus). So while investors are fully pricing in an 25bps rate cut at this week’s ECB meeting, they’re pricing only a little over one further cut for the rest of the year.