Oil reverses back up on Trump's Iran comments

Asia market update: Oil reverses back up on Trump's Iran comments; JP BOJ holds rates and reduces JGB purchases (as expected); US May Retail Sales.

General trend

- Softer oil prices reversed course, up 1%, Gold initially ticked higher +0.3% and equity FUTs -0.5% on Pres Trump posting that “Everyone should immediately evacuate Tehran”; Came as reports of explosions and heavy defense fire in Tehran. Followed a little later by Trump’s early return from G7 Summit in Canada to the White House “to attend to many important matters', including the Middle East; Around the same time the Chinese Embassy in Israel warned its citizens to leave Israel 'as soon as possible'. Media speculation as to whether US would join in the bombardment of Iran, particularly its underground nuclear facilities, as US carriers moved closer to the area.

- Japan BOJ rate decision was unanimous to hold rates at 0.5%, as expected. Further, as Japanese press had foreshadowed BOJ also voted 8-1 to reduce JGB purchases by ¥200B per quarter from Apr 2026. JGB yields post-decision ticked up 1-2bps. No forward guidance on rates in BOJ statement.

- Ahead of BOJ Gov Ueda's press conference at 02:30ET / 06:30 GMT, OIS chances of a July 25bp hike 11.0% last night vs 6% Friday, and a 25bps hike by Oct stood at 54.0% vs 47% Friday. [Ueda himself at the previous BOJ press conference on May 1st made No mention of Jul or Oct ["No need to raise rates in haste when underlying inflation is stalling"]..

- Focus for JGB markets now shifts to the Jun 20th Japan MOF meeting with bond market participants.

- In trade news Japanese PM Ishiba said he and US Pres Trump had Not yet reached agreement on tariffs, while the talks continue. Meanwhile, Thailand inches closer to being the second country to strike a trade deal with the US, submitting a formal trade proposal this week.

- Nikkei outperformed a mixed Asian equity session, +0.5%, with the Kospi at first enjoying a winning session within striking distance of last July’s highs and onto highs not seen since 2021, but then sliding from +1.0% to be down -0.7%, then again recovering late to be on track once more, +0.3%.

- Reminder that China's annual financial Lujiazui Forum for 2025 starts tomorrow for 2 days (Jun 18-19th).

- US equity FUTs -0.3% during Asian trading.

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

- Tue Jun 17th (Tue eve DE Jun ZEW Sentiment, (Tue night US May Retail Sales).

- Wed Jun 18th NZ Q1 Current Account, JP May Trade Balance (Wed eve UK May CPI, Wed night US May Housing starts, US Fed / FOMC Projections, Rate Decision + Presser).

- Thu Jun 19th NZ Q1 GDP, AU May Jobs, (Thu eve BOE Rate Decision).

- Fri Jun 20th JP May CPI, CN Jun LPR.

Holidays in Asia this week

- Thu Jun 19th (USA Juneteenth).

- Fri Jun 20th New Zealand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 8,549.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 85.4 v 86.7 prior.

- Australia sells A$300M v A$300M indicated in 4.75% Jun 2054 Bonds; Avg Yield: 4.9497%% v 4.9633% prior; bid-to-cover: 2.84x v 2.48x.

- New Zealand May Food Prices M/M: 0.5% v 0.8% prior.

China/Hong Kong

- Hang Seng opens +0.2% at 24,107; Shanghai Composite opens -0.1% at 3,388.

- China Embassy in Israel; Warns Chinese citizens to leave Israel 'as soon as possible'; Security situation has become “more severe" - financial press.

- (G7) Draft statement: Leaders will work together on critical miners supply chain, recognizing a threat to their economies.

- China govt said to leave restrictions on rare-earth exports for certain military uses in place amid talks with US - press (update 06/15).

- BNP Paribas: China’s next rate cut could occur in August and government bond yields are likely to remain within a narrow range until then.

- China NAFMII: To support automakers in boosting bond sales - following seminar with automaker execs.

- China PBOC sets Yuan reference rate: 7.1746 v 7.1789 prior [strongest since Mar 19th].

- China PBOC Open Market Operation (OMO): Injects CNY197B in 7-day reverse repos; Net drains CNY1.3B v injects CN68B prior.

Japan

- Nikkei 225 opens +0.2% at 38,387.

- Bank of Japan (BoJ) leaves target rate unchanged at 0.50%; as expected.

- Japan Fin Min Kato: Will appropriately consider funding for cash handouts - financial press.

- Japanese PM Ishiba and US Pres Trump said Not to reach tariff agreement; Confirmed to continue talks.

- Softbank seeks up to $4.9B in T-Mobile 21.5M share block sale, asking $224-228/shr - press.

Korea

- Kospi opens +0.5% at 2,959.

- South Korea May Export Price Index M/M: -3.4% v -1.5% prior; Y/Y: -2.4% v +0.4% prior.

- South Korea Finance Ministry: Extending fuel tax cut by 2 months through end-Aug; To introduce measures to stabilize food prices.

Other Asia

- Thailand Fin Min Pichai: Formal trade proposal will be submitted to the US this week.

- (IN) India Central Bank (RBI) Gov Malhotra reiterates policy room to 'open up' if CPI is below projection; current bond yield levels remain 'congenial' - Indian press.

- Singapore May Non-Oil Domestic Exports M/M: -12.0%; Y/Y: -3.5% v 12.4% prior.

North America

- US Trump Card 'investor visa' said to have attracted nearly 70K applications - FT.

- (US) Trump Admin said to have considered broader export controls on Semiconductor Equipment to China prior to US-China trade talks in London -

WSJ.
- (US) Pres Trump's team said to propose Iran talks this week on nuclear deal, as well ceasefire - Axios.

- (US) White House: Pres Trump to return to US tonight due to the Middle East situation; To attend to 'many important matters' [Note: G-7 Summit scheduled for Jun 15-17] - financial press.

- (IR) US Pres Trump: Everyone should immediately evacuate Tehran; Iran should have signed the “deal” I told them to sign. What a shame, and waste of human life - Truth Social post.

- (CA) Canada May Annualized Housing Starts: 279.5K v 247.5Ke.

- (US) JUN EMPIRE MANUFACTURING: -16.0 V -6.3E; New Orders: -14.2 v +7.0 prior; "Supply availability continued to worsen"; Notes employment grew slightly for the first time in several months; Input price increases slowed but remained substantial.

- (IR) USS Nimitz carrier strike group on its way to Middle East, ahead of schedule - Fox News.

- (US) US Senate Tax Bill will omit proposed cuts to medicare advantage; Medicare pharmacy benefit manager limits will be removed from the bill - press.

- (CA) Canada Trade Min Leblanc: Confident Canada is making progress on a deal with the US; We're not there yet as regards to a deal with the US' Canada and US Officials have agreed to meet later this week.

- (CA) US Pres Trump: Trade deal with Canada is achievable within days or weeks, both parties has to agree; Throwing Russia out of the G8 was a mistake.

Europe

- (UK) Bank of England (BOE) finances said to be 'squeezed' in the wake of Bernanke reforms - US financial press.

- (IR) Follow up: IAEA Dir Grossi confirms radiological contamination of Iranian nuclear energy facilities [site not specified] - China media.

- (IR) Air defenses reported to be activated in Natanz, Iran (nuclear installation site) - Iran media.

- (IT) Italy PM Meloni: Ready to follow Canada's lead on critical minerals - financial press.

- (IL) Iran: Targets Israel base tied to attack on its TV headquarters - Iran state media.

- (IR) Top Iranian Diplomat Araghchi reportedly told three European counterparts that Iran was serious about diplomacy, and never left the negotiating table, but the focus has now shifted to confronting Israel's 'aggression' - press.

- (RU) European Commission Pres Von der Leyen: Discussed Ukraine and trade with Trump.

- UK Official: US tariffs on UK steel will remain at 25%, for now.

- (EU) EU to propose ban on new Russian gas contracts, citing trade law to bypass vetoes - FT.

- (EU) EU Commission said to be prepared to accept a flat 10% US tariff under clear conditions, but US has not yet agreed to limit their car tariffs against the EU to 10% - German press.

- (IR) Reportedly Iran will resume talks with US if US stays out of the fight - WSJ.

- (EU) Trade Commissioner Sefcovic to meet with US Trade Rep Greer at G-7 to discuss trade and tariffs.

- (IL) Iran preparing for 'largest and most intense missile attack in history on Israeli soil' - Iranian state media.

- (IR) Israel PM Netanyahu: Not interested in peace talks with Iran; Hasn't ruled out killing Iran's Supreme Leader Ayatollah Khamenei - ABC interview.

Levels as of 01:20 ET

- Nikkei 225 +0.5%, ASX 200 flat, Hang Seng -0.3%; Shanghai Composite -0.1%; Kospi +0.3%.

- Equity S&P500 Futures -0.4%; Nasdaq100 -0.4%; DAX -0.8%; FTSE100 -0.3%.

- EUR 1.1543-1.1569; JPY 144.40-145.11; AUD 0.6504-0.6539; NZD 0.6045.6073.

- Gold -0.2% at $3,411/oz; Crude Oil +0.9% at $70.89/bbl; Copper flat at $4.8153/lb.