Slow session as markets prepare for ECB hike and SpaceX IPO

EU Mid-Market Update: Slow session as markets prepare for ECB hike and SpaceX IPO; Emergency rate hike by Indonesia Central Bank; Mythos speculated to release to public today.

Notes/observations

- Quiet news flow with cautious market positioning before larger events hit later on in the week, US CPI on Wed, ECB decision on Thurs and SpaceX IPO on Fri. Layered on top is OpenAI's prospective mega-IPO: the group has filed a confidential S-1, but flagged timing is uncertain ("it may be a while").

- Fragile de-escalation in Mid East after Iran and Israel have again paused strikes after the weekend flare-up, improving sentiment and easing the safe-haven bid, though both sides warned they'll retaliate if fighting resumes and Israel continues its Lebanon/Hezbollah campaign.

- Overnight Trump said: “We're in the final throes of what will be a very, very good deal” and could have an idea within a few days, while adding he’ll declare “total victory on Iran in two weeks” and that “Victory will come ‘very soon.’” This continues a pattern of multiple high-confidence predictions Trump has made multiple times in recent weeks, framing the current phase as the decisive endgame where the sustained blockade - which he says has proven far more powerful than direct bombing - will force a stronger signed agreement than military strikes alone could achieve. Trump also addressed the safe rescue of the two U.S. Apache helicopter crew members downed near the Strait of Hormuz.

- Chip names recovered modestly through US and Asia sessions, analysts attributing it to ‘dip buying’. AI-adjacent news flow is heavy - the White House is reportedly negotiating federal preemption of state AI laws (following Anthropic's "recursive self-coding" warning and chatter on US "golden shares" in frontier models), and China is said to be weighing a $295B national AI data-center build-out. This dwarfs recent private-sector forecasts, including Goldman Sachs’ ~$70B estimate for top Chinese AI providers and Alibaba’s reported ~$69B three-year infrastructure push, signaling a state-orchestrated leap toward centralized, high-scale training clusters optimized for domestic chips and long-horizon workloads.

- OpenAI confidentially submitted its draft S-1 to the SEC, kicking off the formal path toward what could be history’s largest tech IPO at potential $1T+ valuation following its record $122B funding round in March 2026 that valued the company at $852B post-money. The company deliberately kept timing flexible - it may delay the actual debut for months or longer because key strategic moves (including aggressive compute deals, model scaling initiatives, and structural adjustments around its hybrid nonprofit/for-profit setup) remain easier while private, while the filing provides a ready option to accelerate if market windows or competitive pressures (post-Anthropic and amid SpaceX’s IPO) favor going public sooner.

- Anthropic’s potential public Mythos release today set to introduce a heavily safety-tuned variant of its unreleased Claude Mythos Preview, a frontier model whose core leap comes from dramatically enhanced agentic coding and long-horizon reasoning — enabling autonomous, multi-step vulnerability discovery and exploit chaining that routinely uncovers zero-days surviving decades of human scrutiny and automated fuzzing across major OSes, browsers, and foundational open-source projects. Technically, this may stem from superior test-time scaling: the model excels at sustained multi-turn interactions (with performance continuing to improve out to 100M+ token inference budgets), sophisticated chain-of-thought scaffolding for complex attack simulations (first model to solve UK AISI’s full 32-step corporate network attack range end-to-end), and deep code reasoning that powers both offensive cyber prowess in the Glasswing partner version and more controlled, long-context coherence in the public edition.

- Asia closed mixed with KOSPI outperforming +8.2%. EU indices -0.3% to +1.8%. US futures +0.1-0.7%. Gold -0.1%, DXY -0.2%; Commodity: Brent -2.0%, WTI -2.4%; Crypto: BTC -1.0%, ETH +0.3%.

Asia

- China May Trade Balance: $105.4B v $92.3B; Exports Y/Y: 19.4% v 15.0%e; Imports Y/Y: 27.4% v 26.0%e.

- New Zealand Q1 Manufacturing Activity Q/Q: 2.8% v 0.8% prior.

- South Korea Q1 Preliminary GDP (2nd reading) Q/Q: 1.8%e v 1.7% advance; Y/Y: 3.8% v 3.6% advance.

- Australia Jun Westpac Consumer Confidence Index: 80.6 v 83.0 prior.

- Australia May NAB Business Confidence: -14 v -24 prior.

Global Conflict/tensions

- Pres Trump noted of ongoing negotiations with Iran, could have an idea on Iran in 1-2days, blockade continued to hold and has turned out much stronger than bombing.

- President Trump said he warned Israeli PM Netanyahu that Israel could lose US support if it resumed war with Iran.

- US Apache helicopter down near Strait of Hormuz; 2 crew members were rescued.

Europe

- UK May BRC LFL Sales Y/Y:3.4% v 0.8%e.

- Confederation of British Industry (CBI) downgraded its 2026 UK GDP growth outlook to 1.1%.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.47% at 624.64, FTSE -0.30% at 10,341.76, DAX +0.51% at 24,766.97, CAC-40 +0.84% at 8,268.00, IBEX-35 +0.93% at 18,392.30, FTSE MIB +1.73% at 51,078.50, SMI +0.41% at 13,376.00, S&P 500 Futures +0.39%].

Market Focal Points/Key Themes: European indices opened mixed with an upward bias that became more pronounced through the early part of the session; markets seen rebounding after yesterday’s decline; outperforming sectors include technology and consumer discretionary; among lagging sectors are health care and energy; oil & gas subsector under pressure after Brent falls below $93; GSK confirms to acquire Nuvalent; Breedon acquires Falling Springs Quarry; focus on US trade balance coming out later in the day; earnings expected in the upcoming US session include JM Smucker and Cracker Barrel.

Equities

- Financials: Bellway [BWY.UK] +3.0% (trading update), Unicredit [UCG.IT] +2.5% (said to mull 17.5% stake in Delfin to make Intesa's takeover bid fail).

- Healthcare: AlzeCure Pharma [ALZCUR.SE] +300% (pact with Lilly), GSK [GSK.UK] -3.5% (acquires Nuvalent), Astrazeneca [AZN.UK] -2.5% (obesity trial results).

- Industrials: Oxford Instruments [OXIG.UK] -6.5% (earnings).

Speakers

- Poland Central Bank (NBP) Member Maslowska: Rate hike still an option, but less likely; Rate cuts more likely than hikes now.

- Indonesia Central Bank (BI) raised the Bi Rate by 25bps to 5.50% (not expected) in an off cycle move.

- Indonesia Central Bank (BI) Gov Warjiyo stated that saw the IDR currency (Rupiah) strengthening in 2027.

- Indonesia Fin Min Purbaya reiterated to keep budget deficit to GDP under 3.0%. Saw 2026 GDP growth between 5.4-6.0% range.

- South Korea financial watchdog (FSC/FSS) said to be meeting with bank on FX.

- BOJ said to be prepared to raise interest rates by 25bps at the upcoming Jun meeting. Also said to consider halting quarterly reduction in bond buying.

Currencies/fixed income

- USD was steady in a quiet EU session what overall sentiment saw an improvement in risk appetite. Sentiment recovered after Israel and Iran halted exchanges of fire on Monday.

- EUR/USD at 1.1545 by mid-session with focus on Thurs ECB decision. The central bank is widely expected to embark on tightening. Markets expecting two hikes before year end as a result of the Iran war and rising energy prices.

- USD/JPY holding above the 160 level despite more press reports that BOJ was likely to hike at the upcoming Jun policy decision.

- 10-year German Bund yield last at 3.05%, France 10-year Oat at 3.82% and 10-year Gilt yield at 4.92% 10-year Treasury yield: 4.55%; 10-year JGB: 2.67%.

Economic data

- (NL) Netherlands Apr Consumer Spending Y/Y: 1.0% v 0.9% prior.

- (NL) Netherlands May CPI M/M: 0.1 v 1.1% prior; Y/Y (final): 3.5% v 3.5% prelim.

- (NL) Netherlands May CPI EU Harmonized M/M: 0.0% v 0.0% prelim; Y/Y: 3.4% v 3.4% prelim.
- (DE) Germany Apr Trade Balance: €14.5B v €15.9Be; Exports M/M: +0.9% v -0.5%e; Imports M/M: +1.2% v -2.0%e.

- (DE) Germany Apr Industrial Production M/M: 0.4% v 0.4%e; Y/Y: -0.5% v -1.1%e.

- (NO) Norway May PPI (including Oil) M/M: -1.8% v -0.5% prior; Y/Y: 24.0% v 22.7% prior.

- (FI) Finland Apr Preliminary Trade Balance: -€0.3B v +€0.1B prior.

- (DK) Denmark Apr Current Account Balance (DKK): 37.5B v 37.4B prior.

- (DK) Denmark Apr Industrial Production M/M: -1.1% v +8.3% prior.

- (JP) Japan May Preliminary Machine Tool Orders Y/Y: 37.4% v 45.1% prior.

- (HU) Hungary May CPI M/M: 0.0% v 0.3%e; Y/Y: 1.8% v 2.2%e (moved back below target range).

- (MY) Malaysia end-May Foreign Reserves: $130.6B v $129.5B prior.

- (CZ) Czech May International Reserves: $182.1B v $181.8B prior.

- (TW) Taiwan May Trade Balance: $17.9B v $17.5Be; Exports Y/Y: 51.7% v 41.2%e; Imports Y/Y: 54.9% v 40.3%e.

- (ZA) South Africa Q1 GDP Q/Q: 0.5% v 0.3%e; Y/Y: 1.9% v 1.7%e.

Fixed income issuance

- (IT) Italy Debt Agency (Tesoro) opened its book to sell 2033 and 2055 BTP bonds via dual-tranche syndication.

- (EU) European Union opened its book to sell EUR-denominated 2030 and 2040 NGEU bonds via syndicate.

- (UK) DMO opened its book to sell GBP-denominated 5.25% 2041 Gilts; guidance seen 6.5-6.75bps to Jan 2040 Gilts.
(ES) Spain Debt Agency (Tesoro) sold total €2.964B vs. €2.0-3.0B indicated range in 3-month and 9-month bills.

- (AT) Austria Debt Agency (AFFA) sold total €1.44B vs. €1.44B indicated in 2030 and 2051 RAGB Bondss.

- (NL) Netherlands Debt Agency (DSTA) sold €2.5B vs. €2.5B indicated in 2.5% July 2035 DSL Bonds; Avg Yield: 3.102% v 2.810% prior
(SE) Sweden sold total SEK12.5B vs. SEK12.5B indicated in 3-month and 12-month Bills.

Looking ahead

- (ID) Indonesia to sell bills and bonds.

- 05:30 (DE) Germany to sell combined €2.0B in 2033, 2035 and 2053 Green Bunds.

- 05:30 (CH) Switzerland to sell 3-month Bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €3.3B in 3-month and 12-month bills.

- 05:30 (ZA) South Africa to sell combined ZAR2.55B in 2037, 2039 and 2042 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR).

- 06:00 (US) May NFIB Small Business Optimism: 96.0e v 95.9 prior.

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

- 06:00 (IL) Israel Apr Chain Store Sales M/M: No est v -1.7% prior.

- 06:00 (FI) Finland to sell €1.0-1.5B in 2036 and 2041 RFGB Bonds.

- 6:30 (TR) Turkey to Sell TLREF Indexed Bonds.

- 06:30(RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 07:00 (UR) Ukraine May CPI M/M: No est v 1.4% prior; Y/Y: 8.3%e v 8.6% prior.

- 07:00 (BR) Brazil May FGV Inflation IGP-DI M/M: 0.8%e v 2.4% prior; Y/Y: 2.4%e v 0.8% prior.

- 07:00 (FR) ECB’s Moulin (France).

- 08:00 (MX) Mexico May CPI M/M: -0.1%e v +0.2% prior; Y/Y: 4.0%e v 4.5% prior.

- 08:00 (MX) Mexico May CPI Core M/M: 0.2%e v 0.3% prior; Y/Y: 4.2%e v 4.3% prior.

- 08:15 (US) ADP Preliminary Employment Change for 4-weeks ending May 23rd: No est v +35.8K prior.

- 08:30 (US) Apr Trade Balance: -$56.1Be v -$60.3B prior; Exports M/M: 2.6%e v 2.0% prior; Imports M/M: 1.2%e v 2.3% prior.

- 08:30 (CA) Canada Apr Int'l Merchandise Trade (CAD):2.6Be v 1.8B prior.

- 09:00 (EU) ECB financial statements.

- 10:00 (US) May Existing Home Sales: 4.07Me v 4.02M prior.

- 10:00 (US) Apr Final Wholesale Inventories M/M: 0.6%e v 0.5% prelim; Wholesale Trade Sales M/M: 1.2%e v 2.8% prior.

- 11:30 (US) Treasury to sell 6-Week Bills.

- 11:30 (US) Treasury to sell 52-Week Bills.

- 12:30 (EU) ECB chief Lagarde with EU Commissioner.

- 13:00 (US) Treasury to sell 3-Year Notes.

- 15:00 (AR) Argentina Apr Construction Activity Y/Y: No est v 12.7% prior.

- 15:00 (AR) Argentina Apr Industrial Production Y/Y: 0.0%e v 5.0% prior.

- 19:50 (JP) Japan May PPI (domestic CGPI) M/M: 0.8%e v 2.3% prior; Y/Y: 5.6%e v 4.9% prior.

- 21:30 (CN) China May CPI Y/Y: 1.3%e v 1.2% prior; CPI Core Y/Y: 1.23%e v 1.2% prior; PPI Y/Y: 3.8%e v 2.8% prior.

- 22:35 (CN) China to sell 1-month and 3-month bills.

- 22:35 (CN) China to sell 10-year Bonds.

- 23:00 (ID) Indonesia May Consumer Confidence: No est v 123 prior.

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

- (US) Primary Elections: ME, NV, ND, SC.