Focus on day-early US Jun NFP and Jun ISM services PMI

Asia market update: July 9th trade deadline in focus as Vietnam crosses the line; JP 30-yr JGB well supported; US House struggles to pass OBBB; Focus on day-early US Jun NFP and Jun ISM Services PMI.

General trend

- Vietnam became the second country to nail down a trade deal with the US, and it is a good one for the US; Total access to the Vietnam market with zero tariffs, but Vietnam to pay 20% tariff into the US and 40% for trans-shipments. [For comparison, the original Liberation Day reciprocal tariff imposed on Vietnam was 46%]. Vietnam also to buy 50 Boeing jets. Vietnam Dong declined to a record low while Vietnamese stocks climb to highest in three years.

- [Note: The Vietnam deal may make other nations nervous with their own negotiations ahead of July 9th, as the Trump Admin seems to be okay with increasing the existing 90-day moratorium rate beyond the blanket 10% (ex-China)].

- For Japan and Korea trade deals by July 9th, extra uncertainty added with US Sec of State Rubio today canceling his just-announced trip to Japan and South Korea [trip to Malaysia for ASEAN still uncertain].

- South Korea Pres Lee said US tariff negotiations looking 'very difficult', not clear whether can finish tariff talks by Jul 8th. Kospi nevertheless outperformed +1.3% on a mixed day for Asia.

- Australia confirmed its 17th month of expansion) for June’s Final PMI Services, while Japan also confirmed its 8th month of expansion for June’s Final PMI Services.

- Japan’s 30-year bond auction had a tail of 31bps, but nevertheless was well supported at 3.58x, above the 12-month average demand ratio, and the highest demand since February.

- Japan OIS Probability of a 25bp rate hike by Japan’s BOJ mainly unchanged from day prior at 40.5% by October and 58.0% by December.

- China Caixin Services PMI maintained its 29th month of expansion but lowest since Sept 2024].

- China PBOC reported to have sought advice of at least two European lenders on “the impact of low to zero" interest rates.

- Several companies including Siemens, Synopsys and Cadence confirmed that their respective export curbs to China had been rescinded by the US.

- After yesterday failing to give full-throated support in the UK House of Commons for his Chancellor, Reeves [and UK 10-yr Gilts spiking +16bps], UK PM Starmer later stated that Reeves will be UK's Chancellor for “Years to come, and will be the Chancellor at the next election”.

- All eyes on the potential passage of the Trump Admin’s One Big Beautiful Bill (tax bill) through the US House. Currently stuck with 5 'Nays' when the Republicans can only afford to have 3. Speaker Johnson said he will keep the vote open 'for as long as it takes'. Pres Trump regularly expressing his displeasure with the hold-outs via social media posts.

- Attention also on US Non-Farm Payrolls tonight after negative ADP jobs data yesterday.

- US equity FUTs +0.1% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Thu July 3rd (Thu night US Jun NFP, US Jun ISM Services PMI).

- Fri July 4th JP May Household spending.

Holidays in Asia this week

- Tue July 1st Hong Kong.

- Thu July 3rd US early close 13:00ET.

- Fri July 4th US (Independence Day).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.2% at 8,610.

- Australia Jun Final PMI Services: 51.8 v 51.3 prelim (confirms 17th month of expansion).

- Australia May Trade Balance (A$): 2.2B v 5.0Be.

- Australia to invest ~A$2.12B in missile stocks, to be conducted through US foreign military sales program.

- New Zealand Jun ANZ Commodity Price M/M: -2.3% v 1.9% prior.

- New Zealand govt announces additional NZ$6.0B in May 2031 bonds issued through syndicated tap.

- New Zealand Government 11-Month Financial Statements; Budget Deficit NZ$7.91B (NZ$216M narrower than expected).

- New Zealand Jun Cotality Home Value M/M: +0.2% v -0.1% prior [overnight update].

China/Hong Kong

- Hang Seng opens flat at 24,234; Shanghai Composite opens +0.1% at 3,456.

- China Jun CAIXIN PMI services: 50.6 V 50.9E (29th month of expansion, but at Sept low).

- China finalizes CNY800B funding in 2025 for key national projects (prior CNY735B budget for investment on Mar 5th).

- Siemens resumes chip design software sales to China as US rescinds curbs for company - financial press.

- Synopsys Issues Statement in Connection to the Lifting of Recent U.S. Export Restrictions Related to China.

- Cadence Confirms China export curbs 'rescinded'.

- China PBOC said to be seeking advice of European lenders on impact of "low to zero" interest rates - FT.

- EU Foreign Policy Commissioner Kallas and China Foreign Minister Wang Yi reaffirm EU's commitment to engage constructively with China to address global challenges [overnight update].

- China's PBOC: Did not buy or sell China sovereign bonds in June in the open market [overnight update].

- China prelim June NEV sales +29% y/y – PCA [overnight update].

- China PBOC said to have noted cash purchases of gold >CNY100K in China to need to be reported, effective from Aug 1st – Press [overnight update].

- China Communist Party magazine calls for crackdown on price wars; cites article in Qiushi - Press [overnight update].

- Hong Kong May Retail Sales Value Y/Y: +2,4% v -1.4%e; Retail Sales Volume Y/Y: +1,9% v -2.9%e [overnight update].

- China PBOC sets Yuan reference rate: 7.1523 v 7.1546 prior.

- China PBOC Open Market Operation (OMO): Injects CNY57B in 7-day reverse repos; Net drains CNY452B v drains CNY267B prior.

Japan

- Nikkei 225 opens +0.1% at 39,813.

- Japan Jun Final PMI Services: 51.7 v 51.5 prelim (confirms 8th month of expansion).

- Japan releases weekly flows data [period ended Jun 27th]: Foreign buying of Japan equities: +¥651.3B v -¥524.1B prior; Japan buying of foreign bonds: ¥182.8B v ¥615.1B prior.

- US Sec of State Rubio cancels trip to Japan, South Korea [trip to Malaysia for ASEAN still uncertain] - financial press.

- Japan sells ¥700B VS. ¥700B indicated in 30-year JGB bonds; AVG yield: 2.8080% V 2.9040% prior; bid-to-cover: 3.58X V 2.92X prior (Highest demand since Feb); Auction tail: 31bps 49bps prior.

- Japan 20-year JGB FUTs reported to have yesterday traded for first time in three years [ahead of today's 30-yr JGB auction] - financial press.

- Japan will chose 200 sites in Japan by 2033 to 'foster' anime, movie production and tourism sectors; Aiming to grow Japan's pop culture industry - Nikkei.

- Japan Trade Negotiator Akazawa: Japan and US continuing vigorous trade talks; Staff level trade talks were held on June 30th [overnight update]

- Fast Retailing (983.JP) Reports Jun Uniqlo Japan SSS +6.4% y/y [overnight update].

Korea

- Kospi opens +0.8% at 3,100.

- South Korea Jun Foreign Reserves: $410.2B v $404.6B prior.

- South Korea Pres Lee: Focusing on reviving citizens' livelihoods; South Korea to prepare for a "Kospi 5,000 era" - News conference to mark first 30 days in office.

- South Korea Industry Min: Affirms making all out efforts for trade negotiations with the US.

- South Korea trade rep said to visit US as July 9th deadline nears - financial press.

- Follow up: South Korea will send trade negotiation proposal to the US later this week - South Korea press.

- South Korea Pres Lee to visit Japan later in July - South Korean press.

- North Korea said to be sending another 30K troops to Russia - NHK.

- South Korea rival parties agree to commercial act revision – press [overnight update].

Other Asia

- Taiwan said to offer NT$720B in bank loan quotas for "homebound investment" - financial press.

- Singapore Jun PMI (whole economy): 51.0 v 51.5 prior.

- Singapore Jun Purchasing Managers Index (PMI): 50.0 v 49.7 prior(1st expansion in 3 months) [overnight update].

- Thailand Business Group: Trade talks unlikely to conclude soon; Urges Thailand Central Bank to cut rates further; affirms 2025 GDP growth forecast of 1.5-2.0%, exports seen -0.5% to +0.3% [overnight update].

- Thailand Central Bank (BOT) Dep Gov Roong: Thailand's economy faces a challenging second half of 2025 due to uncertainty about threatened U.S. tariffs; We do anticipate a marked slowdown in economic activities [overnight update].

- USD/VND Vietnam Dong declines to record low.

- Vietnam stocks reach highest level in three years post- US / Vietnam trade deal announcement.

- (VN) Pres Trump: Vietnam will pay 20% tariff on goods sent to US; 40% Tariff on any Transshipping; Vietnam will open their market to the US and impose zero tariffs [overnight update].

- (VN) Vietnam opens market for American cars; US will significantly cut tariffs for several Vietnamese products - Vietnam media [overnight update].

- Boeing (VN) Vietnam said to spend $8B on 50 Boeing aircraft as part of US trade deal framework; Final deal to be agreed 'in coming weeks' - Politico cites draft agreement (update) [overnight update].

- (VN) Commerce Sec Lutnick: Vietnam deal is a huge deal for farmers [overnight update].

- Foxconn (2317.TW) Reportedly pulls Chinese staff from India in hurdle for Apple - press
[overnight update].

North America

- (US) Pres Trump: Largest Tax Cuts in History and a Booming Economy vs. Biggest Tax Increase in History, and a Failed Economy .. - post on Truth Social.

- (US) House Speaker Johnson: We are in a good place right now [referring to House vote on OBBB tax bill].

- (US) Pres. Trump: It looks like the House is ready to vote tonight. We had GREAT conversations all day, and the Republican House Majority is UNITED... - Truth Social post.

- (US) Pres Trump: “Too Late” should resign immediately!!! “Fed Chair Should Be Investigated by Congress, FHFA Head Says... - post on Truth Social.

- (US) Trump administration said to shelve U.S. Navy's F/A-XX futuristic fighter in favor of the Air Force counterpart, the F-47, amid concerns U.S. defense contractors can't handle both - Axios.

- (US) MBA Mortgage Applications w/e Jun 27th: +2.7% v +1.1% prior.

- (US) Jun Challenger Job Cuts: 48.0K v 93.8K prior; Y/Y: -1.6% v +47.0% prior.

- (US) Punchbowl's Sherman: I’m already hearing from people that the vote could slip tomorrow due to flight problems. I kept and will continue to keep an eye on DCA and IAD.

- (US) June ADP employment change: -33K V +98KE (1st negative print since Feb 2021); Notes hesitancy to hire and a reluctance to replace departing workers; Slowdown in hiring has yet to disrupt pay growth.

- (CA) Canada May Manufacturing PMI: 45.6 v 46.1 prior (6th month of contraction).

- (US) Fed’s Barkin (non-voter for 2025): Will focus on unemployment rate in tomorrow's jobs numbers.

Europe

- (EU) CEOs of 44 European companies write letter urging EC Pres von der Leyen to halt for two-years its planned AI law - FT.

- (IE) Ireland Jun PMI Services: 51.5 v 54.7 prior (51st month of expansion).

- (EU) China and EU hold 'new round' of strategic dialogue (as expected).

- (UK) PM Starmer: Reeves will be UK's Chancellor for 'Years to come, and will be the Chancellor at the next election.

- (IE) Ireland June Unemployment Rate: 4.0% v 4.0% prior.

- MAERSK Asia Pacific Market Update: Many customers are reassessing shipment timing in light of the potential reintroduction of US-China tariffs in August, making Q3 planning more complex.

- (EU) ECB’s Rehn (Finland): Can't allow inflation undershoot to shift expectations; Risks to inflation are two-sided; Not committed to any particular rate path - TV interview.

- (IE) Ireland Trade Min: USTR Greer made clear open to creative solutions regarding pharma.

- (UK) PM Starmer declined to confirm Chancellor of the Exchequer Reeves will stay until next general elections after a U-turn on the government’s flagship welfare reforms derailed her fiscal plans - press.

- (UK) Times reporter: Chancellor Reeves has not resigned. A spokesman for Rachel Reeves said, of her upset: “It’s a personal matter, which - as you would expect - we are not going to get into. The chancellor will be working out of Downing Street this afternoon.”

- (PL) Poland central bank (NBP) cuts base rate by 25bps to 5.00%; not expected.

Levels as of 01:20 ET

- Nikkei 225 -0.1%, ASX 200 -0.1%, Hang Seng -0.9%; Shanghai Composite +0.1%; Kospi +1.3%.

- Equity S&P500 Futures +0.1%; Nasdaq100 +0.1%; DAX +0.2%; FTSE100 +0.1%.

- EUR 1.1788-1.1810; JPY 143.33-144.25; AUD 0.6565-0.6587; NZD 0.6065-6093.

- Gold +0.2% at $3,364/oz; Crude Oil -0.8% at $66.90/bbl; Copper +0.6% at $5.1853/lb.