Trump Gulf tour continues – Markets mixed amid $600B Saudi deal and CPI hangover

EU mid-market update: Trump Gulf tour continues; Markets mixed amid $600B Saudi deal and CPI hangover; Putin keeps silence on tomorrow's Istanbul talks.

Notes/observations

- European equities opened mixed but turned modestly lower. Main focus on Trump visit in Gulf for any geopolitical developments or additional investment deals (yesterday signed for $600B of investments by Saudi Arabia). Trump to travel to Doha in Qatar later.

- Macro sentiment sits on optimism over US-China tariff de-escalation which drove recent rallies and lowered downside growth risks. However, this also reduced expectations for Fed, ECB, and BoE rate cuts. Market also still digesting US CPI from yesterday.

- Analyst commentary notes that lower US tariff risks could reduce chances of Chinese goods flooding Europe and dragging down EU inflation. Others sees tariff relief as temporary and likely keeping high duties.

- Germany and Spain Final CPI readings were in line.

- EU earnings saw E.ON beat across segments; Telefonica, Compass, Burberry, Brenntag, Lundbeck also reported.

- Asia closed mixed with Hang Seng outperforming +2.3%. EU indices -0.1% to -0.8%. US futures -0.1% to +0.1%. Gold -0.5%, DXY -0.5%; Commodity: Brent -0.4%, WTI -0.4%; Crypto: BTC -0.4%, ETH +4.3%.

Asia

- South Korea Apr Unemployment Rate: 2.7% v 3.0%e.

- Japan Apr PPI (domestic CGPI) M/M: 0.2% v 0.3%e; Y/Y: 4.0% v 4.0%e.

- Australia Q1 Wage Price Index Q/Q: 0.9% v 0.8%e; Y/Y: 3.4% v 3.2%e.

- Australia Q1 Home Loans Value Q/Q: -1.6% v 0.0%e.

Europe

-ECB's Villeroy (France) noted that another interest rate cut was likely by this summer.

- France central Bank (BdF) noted that the domestic economy would grow slightly in Q2 after +0.1% growth in Q1.

Americas

- Pres Trump posted on social media that US had no Inflation, and Prices of Gasoline, Energy, Groceries, and practically everything else, were DOWN!!! THE FED must lower the RATE, like Europe and China had done.

- House Republicans may reach a compromise on the state and local tax (SALT) deduction as early as Wed.

Energy

- Weekly API Crude Oil Inventories: +4.3M v -4.5M prior.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.50% at 542.46, FTSE -0.35% at 8,572.91, DAX -0.54% at 23,492.17, CAC-40 -0.79% at 7,811.98, IBEX-35 -0.07% at 13,761.71, FTSE MIB -0.12% at 40,031.00, SMI -0.27% at 12,116.70, S&P 500 Futures -0.08%].

Market focal points/key themes: European indices opened mixed but turned negative in the early hours of trading; loss of risk appetite coincides with growing speculation that the ECB might take a more gradual easing path; among sectors managing gains are financials and telecom; sectors leading lower include consumer discretionary and industrials; GDK acquires efimosfermin; reportedly MFE considering raising bid for ProSiebenSat; earnings expected in the upcoming Americas session include Cisco, Pirelli and Dynatrace.

Equities

- Consumer discretionary: Burberry [BRBY.UK] +9.0% (results), TUI [TUI.UK] -10.5% (results; summer bookings update) - Consumer staples: Imperial Brands [IMB.UK] -6.5% (trading update; CEO retires).

- Financials: ABN Amro [ABN.NL] +5.5% (results).

- Industrials: Hapag-Lloyd [HLAG.DE] +7.0% (results), Daimler Truck [DTG.DE] +1.5% (results) - Telecom: Telefonica [TEF.ES] -0.5% (earn.

- Utilities: E.ON [EOAN.DE] +1.5% (results).

Speakers

- ECB’s Nagel (Germany) noted that saw good probability the ECB would get to inflation target of 2%. Jun rate decision to be data dependent.

- Sweden Central Bank (Riksbank) May Minutes noted that was best to keep policy steady for now. Economic activity abroad and in Sweden would probably become weaker, possibly significantly weaker, compared with the forecast made in the MPR for March.

- Turkey Fin Min Simsek stated that saw inflation staying on track.

- Pres Trump stated that wants to do a deal with Iran; Days of turning back on Gulf allies was over; Want peaceful and prosperous Middle East.

- Iran Foreign Min Araghchi stated that hoped for more realistic US approach in nuclear talks.

- South Korea confirmed it held FX talks with US.

Currencies/fixed income

- USD was softer as the session progressed in the aftermath of softer US CPI data from Tuesday. President Trump renewed his call that the Fed should lower interest rates.

- EUR/USD at 1.1250.

- GBP/USD at 1.3350.

- USD/JPY at 146.35.

- 10-year German Bund yield at 2.67% and 10-year Gilt yield at 4.68%. 10-year Treasury yield at 4.47%.

Economic data

- (SE) Sweden Apr PES Unemployment Rate: 3.6% v 3.7% prior.

- (FI) Finland Apr CPI M/M: 0.0% v 0.0% prior; Y/Y: 0.5% v 0.5% prior.

- (DE) Germany Apr Final CPI M/M: 0.4% v 0.4% prelim; Y/Y: 2.1% v 2.1% prelim.

- (DE) Germany Apr Final CPI EU Harmonized M/M: 0.5% v 0.5% prelim; Y/Y: 2.2% v 2.2% prelim.

- (SE) Sweden Apr Final CPI M/M: 0.1% v 0.1% prelim; Y/Y: 0.3% v 0.3% prelim.

- (SE) Sweden Apr Final CPIF M/M: 0.2% v 0.2% prelim; Y/Y: 2.3% v 2.3% prelim.

- (SE) Sweden Apr Final CPIF (ex-energy) M/M: 0.5% v 0.5% prelim; Y/Y: 3.1% v 3.1% prelim; CPI Level: 416.69 v 416.70e.

- (IN) India Apr Wholesale Prices (WPI) Y/Y: 0.9% v 1.5%e.

- (ES) Spain Apr Final CPI M/M: 0.6% v 0.6% prelim; Y/Y: 2.2% v 2.2% prelim.

- (ES) Spain Apr Final CPI EU Harmonized M/M: 0.6% v 0.6% prelim; Y/Y: 2.2% v 2.2% prelim.

- (ES) Spain Apr CPI Core M/M: 1.0% v 0.4% prior; Y/Y (final): 2.4% v 2.4% prelim.

- (CZ) Czech Mar Current Account Balance (CZK): 42.5B v 29.0Be.

- (CN) China Apr YTD New Yuan Loans (CNY): 10.06T v 10.48Te.

- (CN) China Apr YTD Aggregate Financing (CNY): 16.3T v 16.6Te.

- (CN) China Apr M2 Money Supply Y/Y: 8.0% v 7.3%e.

Fixed income issuance

- (BE) Belgium Debt Agency (BDA) opened book to sell EUR-denominated 5-year OLO bond via syndicate; guidance seen +30bps to mid-swaps.

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

- (ID) Indonesia sold total IDR10.0T vs. IDR10.0T target in Islamic bills and bonds (sukuk).

- (UK) DMO sold £4.25B in 4.5% Mar 2035 Gilts; Avg Yield: 4.673% v 4.638% prior; bid-to-cover: 3.13x v 2.85x prior; Tail: 0.3bps v 0.4bps prior.

- (SE) Sweden sold total SEK17.5B vs. SEK17.5B indicated in 3-month and 6-month Bills.

- (NO) Norway sold total NOK2.0B vs. NOK2.0B indicated in 2029 and 2042 Bonds.

Looking ahead

- 05:15 (US) Fed’s Waller.

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

- 05:25 (CH) Switzerland to sell new May 2040 Bonds.

- 05:30 (DE) Germany to sell combined €2.5B in 2048 and 2054 Bunds.

- 05:30 (PT) Portugal Debt Agency (IGCP) to sell €1.0-1.25B in 2032 and 2045 OT bonds.

- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

- 06:00 (PT) Portugal Q1 Labour Costs Y/Y: No est v 9.6% prior.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 07:00 (US) MBA Mortgage Applications w/e May 9th No est v +11.0% prior.

- 07:00 (UK) Weekly PM Question time in House.

- 08:00 (HU) Hungary Central Bank (MNB) Apr Minutes.

- 08:00 (BR) Brazil Mar IBGE Services Volume M/M: 0.5%e v 0.8% prior; Y/Y: 2.0%e v 4.2% prior.

- 08:00 (PL) Poland Mar Current Account Balance: +€0.1Be v -0.2B prior; Trade Balance: -€0.6Be v -€0.9B prior; Exports €29.6Be v €27.2B prior; Imports: €30.3Be v €28.2B prior.

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

- 08:30 (CA) Canada Mar Building Permits M/M: -1.2%e v +2.9% prior.

- 08:40 (IT) ECB’s Cipollone (Italy).

- 09:10 (US) Fed’s Jeffereson.

- 10:00 (AT) ECB’s Holzmann (Austria).

- 10:30 (US) Weekly DOE Oil Inventories

- 11:00 (CO) Colombia Mar Retail Sales Y/Y: No est v 7.5% prior.

- 11:00 (CO) Colombia Mar Manufacturing Production Y/Y: No est v -1.2% prior; Industrial Production Y/Y: No est v -2.2% prior.

- 11:30 00 (US) Treasury to sell 17-Week Bills.

- 12:00 (CA) Canada to sell 2 Year Bonds.

- 15:00 (AR) Argentina Apr National CPI M/M: No est v 3.7% prior; Y/Y: No est v 55.9% prior.

- (CO) Colombia Apr Consumer Confidence: No est v -7.1 prior.

- 17:40 (US) Fed’s Daly.

- 18:45 (NZ) New Zealand Apr Food Prices M/M: No est v 0.5% prior.

- 21:00 (AU) Australia May Consumer Inflation Expectations: No est v 4.2% prior.

- 21:30 (AU) Australia Apr Employment Change: +20.0Ke v +32.2K prior; Unemployment Rate: 4.1%e v 4.1% prior; Full Time Employment Change: No est v +15.0K prior; Part Time Employment Change: No est v +17.2K prior; Participation Rate 66.8%e v 66.8% prior.

- 23:00 (KR) South Korea Mar M2 Money Supply M/M: No est v 0.6% prior; ‘L’ Money Supply M/M: No est v 0.5% prior.

- 23:00 (ID) Indonesia Mar External Debt: No est v $427.2B prior.

- 23:35 (JP) Japan to sell 5-year JGB Bonds.