Nonfarm Payrolls in focus

EU mid-market update: Nonfarm payrolls in focus; Next week could see first ECB hike since Sept 2023 and largest IPO in history with SpaceX (expected around Fri).

Notes/observations

- Europe opened mixed with a downward bias and weaker sentiment, tracking the Asian tech selloff, though Europe has largely shrugged off overseas headwinds this week and is now turning higher as session wears on. Notably Euro Zone Q1 GDP was revised into contraction for the first time since 2021. Denmark is closed for Constitution Day. Middle East risk (conflicting US-Iran headlines, Hezbollah rejecting the Israel-Lebanon truce) and the US payrolls print are the day's twin focal points.

- RBI left the repo rate at 5.25% as expected, in what read as a neutral, orthodox hold - it raised the FY27 core inflation forecast (CPI seen nearing 6% in Q4) and cut the GDP growth forecast by more than expected. Decision came packaged with FX support measures - India exempted foreign institutional investors from capital gains tax on government securities to draw in foreign capital. Gov Malhotra said uncertainty-driven forex moves are out of sync with fundamentals and pledged to curb excess volatility with a wide toolkit. Rupee firmed on the day. Some analysts expect the measures to anchor expectations and ease volatility amid oil shocks and sustained foreign selling

- US Nonfarm Payrolls estimates are unusually wide - UBS flags the range (+45K to 125K) as "particularly scattered." WSJ poll sits at +80k, SEB pencils in ~88k with unemployment holding at 4.3%, and Commerzbank sees upside toward +100k. Notable shift is in the rate narrative: resilient US data has the market weighing whether the Fed could raise rather than cut, so the dollar reaction hinges on how far the figures bolster hike expectations, while some argue an in-line print lets the Fed focus on inflation and pushes cuts further out. This is feeding through everywhere - DXY is down 0.6% but still near Wednesday's two-month high; Eurozone and UK yields are steady ahead of the data; and crypto is having a bruising week, with bitcoin at a four-month low partly on those rate-hike expectations and partly on Strategy's selling of BTC for first time since 2022.

- Senior U.S. officials, including discussions involving OpenAI CEO Sam Altman, have been exploring the idea of the federal government acquiring equity stakes in major AI companies since the start of President Trump's second term. The proposal centers on companies voluntarily transferring shares to the government, allowing investment returns to fund public benefits such as universal dividend payments to American households. Trump has privately emphasized that American taxpayers should share in the gains from artificial intelligence.

- ECB meets on Thursday next week with markets fully pricing a 25bp hike - the first move of the cycle - and at least one further hike priced by year-end. (markets pricing in 98.0% chance of 25bps hike). Remindar that at the April meeting the ECB held all three key rates, adopting a cautious stance while it assessed the impact of the Iran war on inflation and growth. Lagarde said that hold was unanimous but that a hike had been discussed "at length," and flagged the June meeting as the "right time" for a new assessment. Hawkish tilt reflects the energy shock: euro-area inflation has pushed up toward 3%, well above the 2% target, with the Iran war lifting oil to a four-year high and a further rise expected. June brings fresh staff projections, which the hawks are likely to lean on, watch for upward revisions to the inflation path against softer growth. That said, any tightening cycle should be more benign than 2022's 450bp of hikes: price pressures are weaker, second-round effects aren't yet visible, the labour market is softer, rates start higher, and euro-area growth is close to stalling. The risk skew is toward the hawkish side unless there's a rapid de-escalation in the Middle East and a sharp pullback in energy prices before Thursday.

- With a potential SpaceX IPO possibly arriving as soon as next week, TTN thinks that the narrative around orbital data centers has become a high-stakes valuation driver, yet the reality is narrower and more distant: the first practical product is not a “cloud in orbit” but a new class of orbital edge-intelligence machines optimized for heat, mass, radiation tolerance, and non-repairability. Serious technical analysis shows that space-based compute remains significantly more expensive than terrestrial alternatives on a useful-compute-per-kilogram basis, requiring radical new architectures (such as integrated power-compute-radiator “skins” or deployable panel grids) rather than simply lifting racks into orbit, with major constraints around networking, reliability, chip supply, and orbital real estate. While SpaceX is the only credible player positioned to push all these curves simultaneously, orbital hyperscale training is still a multi-year call option — promising for edge AI, geospatial intelligence, and sovereign workloads, but far from ready to displace Earth-based AI infrastructure.

- In a rare direct open letter to Russia Pres Putin, Ukrainian President Zelenskyy proposed a bilateral meeting to end the war, offered a US-monitored ceasefire during talks, and vowed Ukraine will keep fighting if refused, while asserting Russia cannot occupy the entire Donetsk region this year. This was Zelenskyy’s first public message addressed personally to Putin since the 2022 full-scale invasion. In response, Putin made a notable public shift by stating for the first time that full Russian control of Donbas and reaching a peace deal “are not mutually exclusive,” signaling openness to negotiations on earlier Anchorage-style compromises without requiring complete Donbas control as an immediate precondition.

- Anthropic published a post warning that AI capabilities are accelerating rapidly toward recursive self-improvement — with internal data showing Claude now authoring over 80% of their merged code and benchmarks showing task lengths doubling roughly every four months — urging the creation of a global coordination mechanism to potentially slow frontier AI development and reduce risks of losing human control. However, intense commercial pressure complicates this: sharply raising token price have already prompted some Western firms to shift usage toward cheaper alternatives from China, such as DeepSeek and Qwen. As these lower-cost Chinese models continue improving and potentially converge toward Western performance levels while staying significantly cheaper, the competitive dynamic strongly incentivizes Western labs like Anthropic to accelerate rather than slow down progress to maintain technological and market leadership.

- Asia closed lower with KOSPI underperforming -5.5%. EU indices +0.1-0.8%. US futures +0.1% to -1.1%. Gold -0.2%, DXY -0.3%; Commodity: Brent -0.7%, WTI -0.7%; Crypto: BTC -0.2%, ETH -4.4%.

Asia

- India central bank (RBI) leaves repurchase rate unchanged at 5.25%; as expected; raises FY27 core inflation forecast, cuts real GDP growth forecast; announces FX measures.

- India exempts foreign institutional investors from capital gains tax on sale, exchange or transfer of government securities - Notification.

- Indonesia Fin Min Purbaya: Reiterates won't exceed 3% budget deficit cap; Deny rumors of leaving my post.

- Japan Fin Min Katayama: Direction on sales tax cut hasn't been decided; Exploring many options to fund food sales tax cut.

- South Korea Fin Min Koo: Will respond if FX volatility increases, inflationary pressure worsens.

- South Korea police secure ballot boxes from Seoul polling station after dispersing protestors – Yonhap.

- Oversight of China brokers said to be tightened at their trading access units, targeting preferential access given to some -clients - China press.

- Japan's Trade/Industry Min Akazawa: Japan invest additional ¥150B in Rapidus.

- Philippines Economic Planning Agency: Will continue targeted measures to stabilize prices.

- METI Panel: 2-5 Japan nuclear reactors set to need renewals by 2040s.

- China halts ABS related to ‘data’ assets - Caixin.

- China reportedly lets some banks offer higher rates on dollar deposits.

- Thailand Foreign Min Sihasak: Want to talk about boundary dispute with Cambodia before resource sharing.

Europe

- French Transport Min: No major concerns about supply of jet fuel, gasoline in our country; There will be no scarcity of fuel this summer in France.

- Norway's Stryke Labor Union: Has agreed wage deal for oil workers, will not go on strike.

- UK PM Spokesperson: Starmer will not walk away from PM job - Responding to Andy Burnham's bid for the post.

- Hungary plans to submit legislation next week aimed satisfying EU rule-of-law and anti-corruption criteria for frozen EU funds (in line).

Americas

- Reportedly, senior U.S. officials have held preliminary discussions with major AI companies about the potential for the federal government to acquire some shares in their firms.

- Pres. Trump lawyers refuse to reveal financial information to the BBC in $10B lawsuit - FT.

- US House Ways and Means Panel: Preparing bills to draw up Crypto tax structure.

- South Korea police said to have launched gambling probe targeting users of Polymarket.

Global conflict/tensions

- Oman suspends crude oil loading at Mina Al Fahal terminal following explosion [time frame uncertain] - Sources.

Energy/trade

- Indonesia's Coordinating Economic Ministry: US plans to exempt it from some 301 tariffs.

- South Korea Minister says US reaffirms trade deal tariffs.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.05% at 624.80, FTSE +0.30% at 10,391.40, DAX +0.13% at 24,948.88, CAC-40 +0.28% at 8,268.51, IBEX-35 +0.60% at 18,383.65, FTSE MIB -0.04% at 50,152.50, SMI +0.19% at 13,367.00, S&P 500 Futures -0.53%].

Market focal points/key themes: European indices opened mixed with a downward bias but quickly reversed into the green; Denmark closed for holiday; markets reacting to situation in the Middle East; among sectors leading the way higher are utilities and consumer discretionary; lagging sectors include technology and materials; Apollo desists in offer for Bodycote; focus on US NFP coming out later in the day; no major earnings expected in the upcoming US session.

Equities

- Consumer discretionary: Heineken [HEIA.NL] +1.5% (investors said to push for the hiring of an outsider as the new CEO - FT), Adidas [ADS.DE] -0.5% (Lululemon results), Bodycote [BOY.UK] -10.0% (Apollo announces it will not make bid).

- Financials: Hiscox [HSX.UK] -2.0% (M&A chatter that Intact's move for Hiscox said to have stalled).

- Technology: Raspberry Pi [RPI.UK] +20.0% (trading update).

Speakers

-Japan Fin Min Katayama: Direction on sales tax cut hasn't been decided; Exploring many options to fund food sales tax cut.

-South Korea Fin Min Koo: Will respond if FX volatility increases, inflationary pressure worsens.

Economic data

-(IT) Italy Apr Retail Sales M/M: 0.0% v 0.8% prior; Y/Y: 1.6% v 3.7% prior.

- (GR) Greece Q1 GDP Q/Q: 0.2% v 0.7% prior; Y/Y: 2.0% v 2.3% prior.

-(EU) EURO ZONE Q1 FINAL GDP Q/Q: -0.2% V +0.1%E (1st contraction since 2021); Y/Y: 0.3% V 0.8%E.

-(HK) Hong Kong May Foreign Reserves: $446.5B v $442.1B prior.

-(TW) Taiwan May Foreign Reserves: $605.1B v $602.5B prior.

-(RU) Russia Narrow Money Supply w/e May 29th (RUB): 20.98T v 21.02T prior.

-(UN) May FAO World Food Price Index: 130.8 v 131.0 prior (off from highest levels since early 2023).

-(TW) Taiwan May CPI Y/Y: 2.2% v 2.1%e; CPI Core Y/Y: 2.1% v 2.0%e; PPI Y/Y: 14.1% v 8.5% prior.

-(TH) Thailand May Foreign Reserves w/e May 29th: $287.5B v $285.6B prior.

-(TR) Turkey May CPI M/M: 1.7% v 1.6%e; Y/Y: 32.6% v 32.5%e; CPI Core Y/Y: 30.4% v 30.0%e; PPI M/M: 2.8% v 3.2% prior; Y/Y: 28.9% v 28.6% prior.

-(AT) Austria May Wholesale Price Index M/M: 0.1% v 1.1% prior; Y/Y: 6.9% v 6.7% prior.

-(CH) Swiss May Foreign Currency Reserves (CHF): 710.8B v 715.8B prior.

-(CZ) Czech Apr Retail Sales (ex-auto) Y/Y: 1.6% v 3.4%e.

-(FR) France Apr industrial production M/M: +0.1% V -0.2%E; Y/Y: 2.8% V 1.8%E; Manufacturing Production M/M: 0.4% v 0.2%e; Y/Y: 2.5% v 1.6% prior.

-(FR) France Apr trade balance: -€5.6B V -€6.4B prior; Current Account: -€0.2B v -€0.6B prior.

-(AU) Australia May Foreign Reserves (A$): 100.6B v 102.9B prior.

-(HU) Hungary Apr Industrial Production M/M: -1.1% v -1.8%e; Y/Y: 0.9% v 0.2%e.

-(ZA) South Africa May Net Reserves: $73.5B v $73.8B prior.

-(SE) Sweden May Budget Balance (SEK): +18.1B v -27.7B prior.

-(RO) Romania Q1 Preliminary GDP Q/Q: 0.0% v -0.2%e; Y/Y: -1.2% v -1.7%e.

-(SE) Sweden Q1 Current Account Balance (SEK): 93.9B v 101.6B prior.

-(UK) May Halifax house price index M/M: -0.1% V -0.1% prior; Y/Y: 0.5% V 0.4% prior.

-(NO) Norway Apr Industrial Production M/M: +0.6% v -1.0% prior; Y/Y: 1.2% v 2.3% prior; Manufacturing Production M/M: -0.9% v +2.0% prior; Y/Y: -0.6% v +3.2% prior.

-(SG) Singapore Apr Retail Sales M/M: 0.3% v 3.4% prior; Y/Y: 5.4% v 4.4%e; Retail Sales (ex-auto) Y/Y: 4.5% v 3.0% prior.

-(JP) Japan Apr Preliminary Leading Index CI: 115.9 v 114.5e; Coincident Index: 117.9 v 117.4e.

-(SE) Sweden May Maklarstatistik Housing Prices: 2.2% v 1.5% prior.

-(JP) Japan end-May Foreign Reserves: $1.31T v $1.38T prior.

-(JP) Japan Apr labor cash earnings Y/Y: 3.5% V 3.1%E; real cash earnings Y/Y: 1.9% v 1.0% prior; Cash earnings - same sample base Y/Y: 3.1% v 2.5% prior; Scheduled full-time pay - Same base Y/Y: 2.6% v 2.6% prior.

Fixed income issuance

- France Debt Agency (AFT) announces upcoming issuance; To sell €6.3-7.9B in 3-month, 6-month and 12-month bills on Tues, Jun 11th (4 tranches).

- Japan sells ¥4.1T vs. ¥4.1T indicated in 3-Month Bills; Avg Yield: 0.9242% v 0.8835% prior; bid-to-cover: 3.51x v 3.08x prior.

Looking ahead

- 05:30 (IN) India to sell combined INR340B in 2036 bonds.

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2033, 2043 and 2058 bonds.

- 06:00 (UK) DMO to sell £6.0B in 1-month, 3-month and 6-month bills.

- 06:30 (IN) India Q1 GDP Y/Y: No est v 7.8% prior; GVA Y/Y: No est v 7.8% prior; 2026 GDP Estimate Y/Y: 2026: No est v 7.6% prior.

- 07:30 (IN) India Forex Reserve w/e May 29th: No est v $B prior.

- 08:00 (PL) Poland May Official Reserves: No est v $297.6B prior.

- 08:00 (PL) Poland Central Bank (NBP) Minutes.

- 08:00 (MX) Mexico May Consumer Confidence: No est v 44.4 prior.

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

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

- 08:30 (US) May Change in Nonfarm Payrolls: No est v +115K prior; Private Payrolls: No est v +123K prior; Manufacturing Payrolls: No est v -2K prior.

- 08:30 (US) May Average Hourly Earnings M/M: No est v 0.2% prior; Y/Y: No est v 3.6% prior; Average Weekly Hours All Employees: No est v 34.3 prior.

- 08:30 (US) May Unemployment Rate: No est v 4.3% prior; Underemployment Rate: No est v 8.2% prior; Labor Force Participation Rate: No est v 61.8% prior.

- 08:30 (CA) Canada May Net Change in Employment: No est v -17.7K prior; Unemployment Rate: No est v 6.9% prior; Full Time Employment Change: No est v -46.7K prior; Part Time Employment Change: No est v +29.0K prior; Participation Rate: No est v 65.0% prior; Hourly Wage Rate Y/Y: No est v 4.8% prior.

- 09:00 (IN) India announces upcoming bill issuance (held on Wed).

- 09:00 (RU) Russia May Official Reserve Assets: No est v $758.7B prior.

- 09:00 (CL) Chile Apr Nominal Wage Y/Y: No est v 5.1% prior.

- 10:00 (CA) Canada May Ivey Purchasing Managers Index (PMI): No est v 57.7 prior.

- 10:30 (TR) Turkey May Cash Budget Balance (TRY): No est v -251.2B prior.

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

- 15:00 (US) Apr Consumer Credit: No est v $24.855B prior.

- 19:00 (CO) Colombia May CPI M/M: No est v 0.8% prior; Y/Y: No est v 5.7% prior; CPI Core M/M: No est v 0.6% prior; Y/Y: No est v 5.4% prior.