Euro services PMI impresses and Trump's late-night truth stirs China trade call rumors

Notes/observations

- European Service PMIs were mixed overall but market is focusing on upwards final revision from France, Euro Zone and beat for Italy, highlighting some strength in services (or the lack of weakness).

- Pres Trump dropped a Truth Social post at an unusual time of 02:15 ET, about how difficult China Pres Xi is to make a deal with. Could this be hinting an overnight call that had taken place? Press Sec Leavitt did note yesterday that a call was coming ‘very soon’. Market unresponsive. Accordingly, fresh China speculation about an order for ‘hundreds’ of Airbus aircraft could be seen as negotiation leverage in US/China talks, given the seemingly intentional omittance of Boeing.

- US dollar seeing some optimistic support ahead of confirmaton of the call and its outcome. ING analysts note that after a confirmed call ‘expect the dollar to come under renewed pressure’.

- Corporate news flow is light. Remy Cointreau final FY24/25 results receiving interest as they pulled FY29/30 guidance citing tariffs, US market and macro context. However, not that surprising given extreme levels of trade uncertainty and industry themes of removing guidance.

- Looking ahead, US job figures likely to continue to be catalysts, following JOLTS job openings beat yesterday, ADP expected today and non-farm payrolls on Fri. UK spending review looms next week with increased NHS and Defense spending in focus.

- Asia closed higher with KOSPI outperforming +2.7%. EU indices -0.1% to +0.9%. US futures +0.1%. Gold +0.3%, DXY -0.2%; Commodity: Brent -0.4%, WTI -0.4%; Crypto: BTC +0.2%, ETH +0.9%.

Asia

- South Korea May CPI M/M: -0.1% v 0.1%e; Y/Y: 1.9% v 2.1%e; CPI Ex Food and Energy Y/Y: 2.0% v 2.0%e.

- Japan May Final PMI Services: 51.0 v 50.8 prelim (confirmed 7th month of expansion).

- Australia May Final PMI Services: 50.6 v 50.5 prelim (confirmed 16th month of expansion.

- Australia Q1 GDP Q/Q: 0.2% v 0.4%e; Y/Y: 1.3% v 1.5%e; may nudge RBA to cut rates faster.

Europe

- SNB Board Member Tschudin commented that its main task was price stability and looked for stability in (medium) term, not next month. Swiss inflation fell to -0.1% in May, but that's just one data point.

- Germany said to be seeking to pass a package of €46B in corporate tax break.

- US order exempting UK from fresh US Steel and Aluminum tariffs takes effect as rest-of-world tariff level for SLX and ALUM doubles to 50% [midnight Eastern Time in the US / 04:00 GMT].

Americas

- Fed's Logan (non-voter) noted that should focus on achieving 2% inflation goal, not try and make up for past inflation shortfalls.

- Fed's Goolsbee (voter) stated that had to wait and see tariff impact on inflation; Could see direct tariff effect on prices within a month. Escalating unbounded trade war could spiral up inflation rate.

- Sen Maj Leader Thune stated that sought floor vote on Tax Bill last week before July 4th. House SALT deal would have to change.

Trade

- President Trump signed an executive order doubling tariffs on imported steel and aluminum to 50 percent, effective June 4, 2025.

- White House Press Sec Leavitt stated that Pres Trump and China Pres Xi call to be very soon (**Note: unconfirmed reports circulating that Trump and Xi would speak on Friday (Jun 6th).

- Japan said to be forming a think tank to tackle Trump tariffs and Taiwan.

Energy

- Weekly API Crude Oil Inventories: -3.3M v -4.2M prior.

speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.5% at 551, FTSE +0.1% at 8790, DAX +0.9% at 24297, CAC-40 +0.7% at 7816, IBEX-35 +0.1% at 14131, FTSE MIB -0.1% at 3917, SMI +0.4% at 12286, S&P 500 Futures +0.1%].

Market focal points/key themes: European indices opened generally higher and advanced through the early part of the session; prospect of further easing from the ECB seen supporting risk appetite, with trade developments still in focus; among sectors leading to the upside are industrials and materials; lagging sectors include real estate and energy; focus on US ADP employment figurs later in the day; earnings expected in the upcoming US session include Greif and PVH.

Equities

- Consumer discretionary: WH Smith [SMWH.UK] +3.0% (trading update).

- Consumer staples: Remy Cointreau [RCO.FR] -4.0% to -4.5% (final FY24/25 results, withdrew FY29/30 guidance).

- Financials: Ninety One [N91.UK] +6.0% (final FY25 results).

- Industrials: Voestalpine [VOE.AT] -1.0% (FY24/25 results), - Airbus [AIR.FR] +3.5-4.0% (China considering ordering 'hundreds' of aircraft).

Speakers

- UK Chancellor (Fin Min) Reeves noted that the spending review next week would be 'focused on the priorities of working people'; UK faced binary choice, investment or decline.

- Germany Govt approved €46B tax package.

- China reportedly considering ordering 'hundreds' of Airbus aircraft in major deal.

- South Korea Pres-elect Lee noted that the key to economic recovery is extra budget.

- Pres Trump on Truth Social noted that he liked President XI of China, always have, and always will, but he was very tough and extremely hard to make a deal with!

- Federal judge dismissed California challenge against Trump tariffs.

- Iran Supreme Leader Khamenei commented that US nuclear proposal was 100% against the principle of our power.

Currencies/fixed income

- USD trying to recover from recent 6-week lows ahead of key jobs data this week (ADP on Wed, Jobless Claims on Thurs and Non-Farm Payrolls on Fri).

- EUR/USD drifting back towards the 1.14 area. Focus on Thurs ECB meeting where the central bank is expected to cut its key rates by another 25bps.

- GBP/USD at 1.3533 by mid-session.

- USD/JPY back below the 144 level.

- 10-year German Bund yield at 2.53% and 10-year Gilt yield at 4.66%. 10-year Treasury yield at 4.46%.

Economic data

- (RU) Russia May Services PMI: 52.2 v 50.3e; Composite PMI: 51.4 v 50.3e.

- (NO) Norway Q1 Current Account Balance (NOK): 286.5B v 203.7B prior.

- (SE) Sweden May PMI Services: 50.8 v 48.9e (1st expansion in 3 months) ; PMI Composite: 50.3 v 50.3 prior.

- (ES) Spain Apr Industrial Production M/M: -0.8% v 0.0%e; Y/Y: 0.6% v 0.9% prior; Industrial Output NSA (unadj) Y/Y: -5.7% v +8.5% prior.

- (CZ) Czech May Preliminary CPI M/M: 0.5% v 0.2%e; Y/Y: 2.4% v 2.0%e.

- (CZ) Czech Apr Retail Sales (ex-auto) Y/Y: 5.8% v 3.4%e.

- (CZ) Czech Q1 Average Real Monthly Wage Y/Y: 3.9% v 3.7%e; Nominal Monthly Wage Y/Y: 6.7% v 6.9% prior.

- (ES) Spain May Services PMI: 51.3 v 52.9e (21st month of expansion); Composite PMI: 51.4 v 52.3e.

- (ZA) South Africa May PMI (whole economy): 50.8 v 50.0 prior.

- (IT) Italy May Services PMI: 53.2 v 52.0e (6th month of expansion); Composite PMI: 52.5 v 51.4e.

- (FR) France May Final Services PMI: 48.9 v 47.4 prelim (confirmed 10th month of contraction); Composite PMI: 49.3 v 48.0 prelim.

-(DE) Germany May Final Services PMI: 47.1 v 47.2 prelim (confirmed 2nd month of contraction); Composite PMI: 48.5 v 48.6 prelim.

-(EU) Euro Zone May Final Services PMI: 49.7 v 48.9 prelim (confirmed 2nd month of contraction); Composite PMI: 50.2 v 49.5 prelim.

- (UK) May Final Services PMI: 50.9 v 50.2 prelim (confirms move back into expansion); Composite PMI: 50.3 v 49.4 prelim.

- (UK) May Official Reserves Changes: -$0.4B v +$4.1B prior.

- (NO) Norway May House Price Index M/M: 0.2%; Y/Y: 5.2% v 5.9% prior.

Fixed income issuance

- (IT) Italy Debt Agency (Tesoro) opened its book to sell 5-year and 12-year BTP via syndicate.

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

- (UK) DMO sold £4.75B in 4.375% Mar 2028 Gilts; Avg Yield: 4.062% v 3.834% prior; bid-to-cover: 3.08x v 3.48x prior; Tail: 0.3bps v 0.2bps prior.

- (SE) Sweden sold SEK6.0B vs. SEK6.0B indicated in 2.5% 2036 Bonds; Avg Yield: 2.4113%; bid-to-cover: 1.82x.

- (GR) Greece Debt Agency (PDMA) sold €600M vs. €500M indicated in 12-month bills; Avg Yield: 1.84% v 2.15% prior; Bid to cover: 1.71x v 1.87x prior.

Looking ahead

- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 5.25%.

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

- 06:00 (ZA) South Africa Q2 BER Business Confidence: No est v 45 prior.

- 06:00 EU) European Union to sell combined €3.0B in 6-month and 12-month bills.

- 07:00 (US) MBA Mortgage Applications w/e May 30th: No est v -1.2% prior.

- 07:30 (TR) Turkey May Real Effective Exchange Rate (REER): No est v 72.12 prior.

- 08:00 (MX) Mexico Mar Gross Fixed Investment M/M: 0.2%e v 0.1% prior; Y/Y: -0.5%e v -7.8% prior; Private Consumption Y/Y: +1.7%e v -1.9% prior.

- 08:00 (MX) Mexico Apr Leading Indicators M/M: No est v -0.18 prior.

- 08:00 (MX) Mexico May Vehicle Domestic Sales: No est v 108.3K prior.

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

- 08:01 (NZ) New Zealand May CoreLogic Home Value M/M: No est v 0.3% prior.

- 08:15 (US) May ADP Employment Change: +112Ke v +62K prior.

- 08:30 (CA) Canada Q1 Labor Productivity Q/Q: 0.1%e v 0.6% prior.

- 08:30 (US) Fed's Bostic and Cook moderate Fed Listens Event.

- 09:00 (BR) Brazil May Services PMI: No est v 48.9 prior; Composite PMI: No est v 49.4 prior.

- (PL) Poland Central bank (NBP) Interest Rate Decision.

- 09:30 (CA) Canada May Services PMI: No est v 41.5 prior; Composite PMI: No est v 41.7 prior.

- 09:45 (CA) Bank of Canada (BOC) Interest Rate Decision: Expected to leave Interest Rates unchanged at 2.75%.

- 09:45 (US) May Final S&P Services PMI: 52.3e v 52.3 prelim; Composite PMI: 52.1e v 52.1 prelim.

- 10:00 (US) May ISM Services Index: 52.0e v 51.6 prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:00 (CO) Colombia Apr Exports: $4.1Be v $4.3B prior.

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

- 12:00 (RU) Russia Apr Real Retail Sales Y/Y: 2.9%e v 2.2% prior.

- 12:00 (RU) Russia Apr Unemployment Rate: 2.3%e v 2.3% prior.

- 12:00 (RU) Russia Mar Real Wages Y/Y: 0.5%e v 3.2% prior.

- 14:00 (US) Fed Beige Book.

- 17:00 (KR) South Korea May Foreign Reserves: No est v $404.7B prior.

- 18:00 (NZ) New Zealand Government 10-Month Financial Statements.

- 18:45 (NZ) New Zealand Q1 Volume of All Buildings Q/Q: No est v -4.4% prior.

- 19:00 (KR) South Korea Q1 Preliminary GDP Q/Q: -0.2%e v -0.2% advance; Y/Y: -0.1%e v -0.1% advance.

- 19:00 (KR) South Korea Apr Current Account Balance: No est v $9.1B prior; Balance of Payments (BOP): No est v $8.5B prior.

- 19:30 (JP) Japan Apr Labor Cash Earnings Y/Y: 2.6%e v 2.3% prior (revised from 2.1%); Real Cash Earnings Y/Y: -1.5%e v -1.8% prior (revised from -2.1%);; Cash Earnings - Same Sample Base Y/Y: 2.8%e v 2.7% prior (revised from 2.4%); Scheduled Full-Time Pay - Same Base Y/Y: 2.4%e v 2.1% prior (revised from 2.0%).

- 20:01 (IE) Ireland May PMI Services: No est v 52.8 prior; PMI Composite: No est v 54.0 prior.

- 21:00 (NZ) New Zealand May ANZ Commodity Price M/M: No est v 0.0% prior.

- 21:00 (PH) Philippines May CPI M/M: -0.1%e v -0.4% prior; Y/Y: 1.3%e v 1.4% prior.

- 21:30 (AU) Australia Apr Trade Balance (A$): 6.0Be v 6.9B prior; Exports M/M: No est v 7.6% prior; Imports M/M: No est v -2.2% prior.

- 21:30 (AU) Australia Apr Household Spending M/M: +0.2%e v -0.3% prior; Y/Y: 3.6%e v 3.5% prior- 21:45 (CN) China May Caixin PMI Services: 51.0e.

v 50.7 prior; PMI Composite: No est v 51.1 prior.

-23:35 (JP) Japan to sell 30-year JGB Bonds.