Delta results this morning, while EasyJet being acquired at higher bid

EU mid-market update: SK Hynix to IPO today; Japanese assets nervous after Fin Min comments on pension funds; Delta results this morning, while EasyJet being acquired at higher bid.

Notes/observations

- Markets are looking through the collapsed US-Iran ceasefire on the view that technical talks continue oil off its highs, dollar softer and a risk-on tone into the European open. The live tail risk remains a prolonged Strait of Hormuz closure and energy supply shock. On rates, the re-escalation has firmed bets on a September ECB hike, while sterling hit a one-year high vs the euro with BoE's Pill reiterating a hawkish line. Final German (2.3% y/y) and French CPI came in as flagged; Norway and Denmark printed below expectations.

- European chips names under some pressure after Oracle’s credit rating downgrade and PrismML, a Caltech-affiliated AI startup, achieved a major breakthrough with the world’s first commercially viable 1-bit large language models ("Bonsai" models), which radically compress neural networks by using 1-bit quantization while largely preserving reasoning capabilities. This technology enabled PrismML to shrink Alibaba’s Qwen 3.6 model down to a 27-billion-parameter version capable of running on an iPhone 17 Pro, far larger than typical mobile models (Apple’s own on-device foundation model is reportedly ~3B parameters). Apple is said to have talked with PrismML about potential ways to use this technology, signaling the company’s interest in efficient on-device AI partnerships to strengthen its AI stack and Siri overhaul amid ongoing criticism.

- Japan Fin Min Katayama's push to steer GPIF and other pension funds toward domestic assets moved markets: yen +0.6%, JGB yields down 10-11bps. With GPIF (~$2T, the world's largest fund) currently ~50% allocated abroad, even a modest domestic tilt is a potential structural support for the yen, JGBs and equities - and a possible funding channel for the Takaichi government's growth agenda. The "Honebuto" blueprint is now expected 21st July. Separately, the BOJ is reported to hold in July while upgrading its growth outlook and pledging further hikes; note Japan's June PPI hit a 3-year high (+7.1% y/y, import prices +29.7%).

- SK Hynix IPO is a liquidity test for US tech. Priced its Nasdaq listing at $149/ADR to raise ~$26.5B (trimmed from $28–29B), the third-largest IPO ever behind SpaceX and Saudi Aramco. Demand approached ~$200B with heavy concentration (top 25 accounts took >two-thirds). Trading starts today - worth watching as a gauge of how US tech equity absorbs another ~$26B of demand after a very heavy 2026 issuance calendar.

- Notable European events, UK PM Candidate Burnham has effectively secured the numbers to become PM next week. Infineon signaled price rises and possible re-entry into allocation on supply shortages - a supply-tightness read-through for semis. EasyJet is ~15% higher after Apollo agreed in principle at £7.15/share cash, valuing equity at ~£5.7B - an 81% premium to the pre-offer-period close and topping Castlelake's £6.90. Includes a stub-equity rollover option; Barclays "highly confident" on debt financing.

- This week’s model releases underscore that the AI price war is defined by cost per completed job rather than simple token prices . Grok 4.5 raised input (+60%), output (+140%), and cached prices while halving context and enforcing always-on reasoning, prioritizing token efficiency and higher utilization so models complete tasks with far fewer tokens. OpenAI tiered its GPT-5.6 family for intelligent routing, Meta aggressively priced its proprietary Muse Spark 1.1 at $1.25/$4.25 per million tokens to capture high-volume corporate workloads via ecosystem subsidies after Chinese leaders drove the sharpest cuts through architectural breakthroughs.

- China has imposed temporary export restrictions on helium, a critical input for semiconductors, MRI machines, aerospace, fiber optics, and cryogenics. Despite holding only ~1.6% of global production (~3 million m³ out of ~190 million m³ annually), the move could tighten spot supply by an additional 1-3% on top of the already severe shortage caused by Qatar’s offline production (~33% of world supply disrupted via Hormuz). The direct volume impact is limited as China is a net importer, but the restrictions mainly affect re-exports (often Russian helium) to Asia and Europe, reinforcing Beijing’s strategic material controls and further pressuring semiconductor and electronics industries amid existing market deficit.

- A Tier 1 firm reiterated its Buy rating on META, emphasizing three major positives from recent reporting: Meta is planning significantly higher AI capacity additions in GW than previously modeled for 2026, it may be achieving this at substantially lower costs per GW than Street expectations (potentially under $30bn/GW), and its custom silicon efforts (including the Iris chip entering manufacturing in September) are hitting a positive inflection point that should improve long-term economics. The analysts view the accelerated capacity build as a strong positive for Meta’s AI infrastructure returns — potentially delivering better Cloud-like margins than Amazon or Google — and maintain their 2027 capex forecast at $185B, even while acknowledging risks that higher GW targets could drive elevated spending. This stance aligns with recent reports from early June 2026 that Meta is exploring a potential multibillion-dollar equity offering to help finance its surging AI capital expenditures with SemiAnalysis echoes this optimism, stating that Meta is the only hyperscaler/neolab on track to be world-class at infrastructure, custom chips, and models — positioning it with the best chance of catching up to leaders like Anthropic and OpenAI.

- TSMC delayed publication of its monthly sales as Typhoon Bavi approached Taiwan, with the storm’s exceptionally broad 380km wind radius posing risks to semiconductor production through prolonged impacts on infrastructure rather than direct damage to chip machines. The primary threats are voltage sags disrupting sensitive tools, degraded cooling systems that prevent proper heat rejection from EUV scanners and other equipment, and overwhelmed drainage/wastewater handling that could force fabs to curtail operations to avoid chemical releases or environmental violations. Even after power returns, full production recovery requires lengthy process qualification and tool seasoning, meaning a short utility event can translate into days of lost output and cycle-time disruptions across Hsinchu Science Park.

- Asia closed higher with KOSPI outperforming +2.5%. EU indices -0.1% to +0.5%. US futures -0.5% to +0.1%. Gold -0.6%, DXY -0.1%; Commodity: Brent -0.1%, WTI -0.2%; Crypto: BTC +2.0%, ETH +1.6%.

Asia

- Japan Jun PPI (domestic CGPI) M/M: 0.4% v 1.1% prior; Y/Y: 7.1% v 6.6% prior (strongest annual pace since early 2023).

- Japan Fin Min Katayama stated that sought support financial asset investment by GPIF, other pension funds to bring investment into Japanese financial assets. Would not comment on specific bond yield levels (**Note: comments sent 10-year JGB yield lower by 10bps to 2.78%).

- Japanese cabinet set to decide on 'Honebuto' ("big-boned") economic framework policy document on the July 21st.

- South Korean computer chip maker SK Hynix raised $26.5B in its New York share offering (largest ever listing by a foreign firm in the US).

- Markets were closed in Taiwan as Typhoon Bavi approached. New Zealand markets were closed for a local holiday.

Global conflict/tensions

- US official said nuclear talks with Iran would continue despite recent tanker attacks in the Strait of Hormuz.

- US Official noted that had moved to the implementation stage of the framework in the Lebanon-Israel deal; The first pilot zone would launch in a matter of days.

- Qatar, Pakistan and other regional mediators said to be trying to de-escalate tensions between the U.S. and Iran and revive negotiations on a nuclear deal.

Europe

- Bank of France (BOF): Raises Q2 growth from 0.0% to 0.2%. Saw upward risks to 2026 GDP forecast.

- BOE’s Pill (chief economist, hawkish dissenter): Will need to raise rates in the year ahead **Note: - The last hike was back in Aug 2023).

Americas

Fed Chair Warsh: Provides information on Task Forces, such as the leaders, that will work independently of the Fed to examine areas key to monetary policy conduct.

Energy

- US CENTCOM stated that Iran did not control the Strait of Hormuz. US has helped >800 commercial vessels transit the Strait of Hormuz since May.

- Overall market sentiment views US as remaining committed to the MoU despite Iranian provocations.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.09%, FTSE 0.00% at 10,472.88, DAX -0.18% at 25,058.85, CAC-40 -0.08% at 8,320.12, IBEX-35 +0.33% at 19,385.60, FTSE MIB +0.39% at 52,587.50, SMI +0.18% at 14,241.20, S&P 500 Futures -0.18%].

Market focal points/key themes: European shares paused on Friday, with the STOXX 600 flat in early trade after a minor bounce, as initial euphoria from SK Hynix’s record $26.5B Nasdaq listing gave way to renewed AI spending and geopolitical fears. Germany’s DAX and France’s CAC 40 trade flat, while the UK’s FTSE 100 and Italy’s FTSE MIB each gained 0.3%; the pan-European benchmark is on track for a nearly 2% weekly loss — its sharpest since mid-April. Selective strength appeared in takeover targets like EasyJet (+13%), Hays (+10%) and Vodafone (+12%), but broader market caution persisted amid high valuations and macro uncertainties.

Equities

- Consumer discretionary: Easyjet [EZJ.UK] +14.5% (Apollo offer), Hays [HAS.UK] +12.5% (trading update).

- Industrials: Salzgitter [SZG.DE] +10.5% (double analyst upgrade).

- Technology: Infineon [IFX.DE] -2.5% (CFO comments on raising prices), ASML [ASML.NL] -2.0% (Oracle credit rating downgrade; PrismML shrunk down an open-source large language model developed by China's Alibaba, Qwen 3.6, to run on an iPhone 17 Pro).

- Telecom: Vodafone [VOD.UK] +11.0% (stake sale).

Speakers

- Spain Econ Min Cuerpo stated that the govt was making good on defense spending promises.

- Poland Central Bank (NBP) Member Wnorowski noted that a rate cut talk in Sept was theoretical; Polish zloty currency level was not a problem for economy.

- Czech Central Bank (CNB) Vice Gov Zamrazilova noted that household demand fueled core inflation.

- BOJ reportedly to keep policy steady at July meeting but raise its growth outlook; To pledge to continue raising rates.

- China said to impost export restrictions on helium.

- IEA Monthly Oil Report (OMR) raised the 2026 global oil demand growth from -1.1M to -1.0M (total demand seen at 103.5M v 103.3M ) and raised the 2026 global oil supply growth from -3.9M to -3.7M. Report maintained 2027 global oil demand growth at 2.0M (total demand seen at 105.5M v 105.3M prior ) while cutting 2027 global oil supply growth from 8.0M to 7.5M. Escalation of hostilities between U.S and Iran clouded outlook and could upend 2027 surplus forecast. Added that oil supply might expand 7.5M b/d in 2027 if transits improved.

Currencies/fixed income

- USD on softer footing as geopolitical concerns eased.

- EUR/USD at 1.1440 as dealers noted swaps currently implied 20bps of ECB hikes by September and 31bps by year end (roughly unchanged since Thursday).

- USD/JPY moved away from recent 40-year lows for the yen currency. The stronger yen currency aided by Japan Fin Min Katayama comments on seeking support to have pension funds bring investment back into domestic financial assets (aka repatriation theme).

- 10-year German Bund yield last at 3.06%, France 10-year Oat at 3.84% and 10-year Gilt yield at 4.88% 10-year Treasury yield: 4.53%; 10-year JGB: 2.75%.

Economic data

- (NL) Netherlands May Manufacturing Production M/M: 0.1% v 1.6% prior; Y/Y: 4.9% v 4.9% prior; Industrial Sales Y/Y: 8.2% v 7.3% prior.

- (NL) Netherlands Jun Producer Confidence: +1.3 v -2.0 prior.

- (DE) Germany Jun Final CPI M/M: -0.3% v -0.3% prelim; Y/Y: 2.3% v 2.3% prelim.

- (DE) Germany Jun Final CPI EU Harmonized M/M: -0.2% v -0.2% prelim; Y/Y: 2.4% v 2.4% prelim.

- (NO) Norway Jun CPI M/M: -0.2% v +0.2% prior; Y/Y: 2.7% v 3.1%e.

- (NO) Norway Q2 House Price Index Q/Q: 0.4% v 0.6% prior.

- (DK) Denmark Jun CPI M/M: 0.2% v 0.6% prior; Y/Y: 1.9% v 1.9% prior.

- (DK) Denmark Jun CPI EU Harmonized M/M: 0.3% v 0.6% prior; Y/Y: 1.8% v 1.8% prior.

- (FR) France Jun Final CPI M/M: -0.3% v -0.2% prelim; Y/Y: 1.8% v 1.8% prelim.

- (FR) France Jun Final CPI EU Harmonized M/M: -0.3% v -0.3% prelim; Y/Y: 2.0% v 2.0% prelim; CPI Index (ex-tobacco): 102.09 v 102.37 prior.

- (CH) Swiss Jun SECO Consumer Confidence: -35.8 v -35.0e.

- (AT) Austria May Industrial Production M/M: +0.3% v -0.5% prior; Y/Y: 0.7% v 0.1% prior.

- (CZ) Czech Jun Final CPI M/M: -0.3% v -0.3% prelim; Y/Y: 1.5% v 1.5% prelim.

- (CZ) Czech May Import Price Index Y/Y: 3.2% v 1.8% prior; Export Price Index Y/Y: 0.8% v -0.4% prior.

- (TR) Turkey May Industrial Production M/M: -2.9% v +3.8% prior; Y/Y: 0.0% v 6.1% prior.

- (CN) Weekly Shanghai Deliverable Copper Inventories (SHFE): 100.3K v 122.7K tons prior.

- (TH) Thailand May Foreign Reserves w/e July 3rd: $281.1B v $279.3B prior.

- (IT) Italy May Industrial Production M/M: -0.3% v -0.2%e; Y/Y: 1.1% v 1.3%e; Industrial Production NSA (unadj) Y/Y: -1.9% v +4.8% prior.

- (RU) Russia Narrow Money Supply w/e July 3rd (RUB): 21.59T v 21.37T prior.

- (GR) Greece May Industrial Production Y/Y: 3.9% v 2.1% prior.

Fixed income issuance

- (IT) Italy Debt Agency (Tesoro) sold total €7.5B vs. €6.0-7.5B indicated range in 3-year, 7-year and 15-year BTP Bonds.

- (IN) India sold total INR320B vs. INR320B indicated in 2031 and 2066 bonds.

Looking ahead

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

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2031, 2043 and 2050 Bonds.

- 06:00 (PT) Portugal May Trade Balance: No est v -€2.9B prior.

- 06:00 (PT) Portugal Jun Final CPI M/M: No est v 0.1% prelim; Y/Y: No est v 3.2% prelim.

- 06:00 (PT) Portugal Jun Final CPI EU Harmonized M/M: No est v 0.1% prelim; Y/Y: No est v 3.1% prelim.

- 06:00 (UK) DMO to sell £6.5B in 1-month, 3-month and 6-month bills (£1.5B, £2.0B and £3.0B respectively).

- 07:30 (IN) India Forex Reserve w/e July 3rd: No est v $666.9B prior.

- 08:00 (PL) Poland Central Bank (NBP) Jun Minutes (2 decisions ago).

- 08:00 (BR) Brazil Jun IBGE Inflation IPCA M/M: 0.3%e v 0.6% prior; Y/Y: 4.8%e v 4.7% prior.

- 08:00 (IS) Iceland Jun Unemployment Rate: No est v 4.2% prior.

- 08:00 (MX) Mexico May Industrial Production M/M: -0.7%e v +2.1% prior; Y/Y: 0.1%e v 2.3% prior; Manufacturing Production Y/Y-1.2%e v 0.0% prior.

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

- 08:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming issuance.

- 08:00 (IN) India announces upcoming bill issuance (held on Wed).

- 08:30 (CA) Canada Jun Net Change in Employment: +10.0Ke v +87.8K prior; Unemployment Rate: 6.6%e v 6.6% prior; Full Time Employment Change: No est v 154.0K prior; Part Time Employment: No est v -66.2K prior; Participation Rate: 65.0%e v 65.0% prior; Hourly Wage Rate Y/Y: 3.6%e v 3.2% prior.

- 08:30 (CA) Canada May Building Permits M/M: +1.0%e v -7.6% prior.

- 08:30 (CL) Chile Central Bank Economist Survey.

- 12:00 USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report.

- 12:00 (RU) Russia Jun CPI M/M: 0.8%e v 0.2% prior; Y/Y: 6.0%e v 5.3% prior.

- 12:00 (RU) Russia Jun CPI Core M/M: No est v 0.6% prior; Y/Y: No est v 4.9% prior; PPI Y/Y: No est v 9.4% prior.

- 12:00 (EU) Potential sovereign ratings after European close (Fitch on Netherlands).

- 13:00 (US) Weekly Baker Hughes Rig Count data.