US JOLTS Job Openings Apr: 7.618M (est 6.866M; prev 6.866M; prev R 6.887M)
- Job Openings Rate: 4.6% (est 4.2%; prev 4.1%; prev R 4.2%)
- Quits Level: 2.977M (est 3.138M; prev 3.171M; prev R 3.160M)
- Quits Rate: 1.9% (est 2.0%; prev 2.0%)
- Layoffs Level: 1.692M (est 1.842M; prev 1.867M; prev R 1.884M)
- Layoffs Rate: 1.1% (est 1.2%; prev 1.2%)

Executive Summary:

• April’s JOLTS report sees job openings (SA) surge +731k from March, the the most since April 2021 and taking the index to 7.618mn — well above the 6.870mn estimate and highest since May 2024 — dominated by a record +668k jump in business/professional services.

• JOLTS hires though dropped -419k, the second most (after February) since July 2020.

• JOLTS quits (considered a measure of labor market tightness) also slipped -183k, the largest decline in a year. The quits rate fell a tenth to 1.9%, the joint-least since June 2020.

• Layoffs though also fell -192k, the most since November, to 1.692mn, the least since January.

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Note: All numbers m/m unless otherwise noted at a seasonally adjusted annual rate (SAAR). Note that prices for this report are all nominal (not adjusted for inflation) and are not necessarily new construction unless noted, but also improvements to existing structures.

Apr construction spending saw total construction edge up +0.37% from the prior month (m/m), the best sine December, but only after March saw a notable downward revision to +0.18% growth, leaving the year over year (y/y) picture remaining modestly positive at +0.88%, but solidly lower when adjusted for inflation (charts at the bottom).

Private construction similarly rebounded to +0.35% m/m, the best of the year, after a revised +0.18% in March (y/y essentially unchanged at +0.01%), with private residential a leader +0.78% m/m, also the best of the year, after +0.62% in March (+1.72% y/y) with new single-family residential construction +1.41% m/m (but -2.89% y/y as units under construction remain solidly lower from a year earlier as noted in the starts/permits report earlier this month), while new multifamily construction was -0.28% m/m (+1.12% y/y). With home sales remaining weak, remodeling remained very healthy also gaining +0.42% m/m and +7.53% y/y.

Non-residential private construction though fell -0.17% m/m after -0.37% in March (and -2.05% y/y), continuing to be dragged down by the largest component, manufacturing, which saw another decline falling -1.22% m/m (-18.48% y/y), from -1.46% in March and -2.51% in February.

Private office though remained a bright spot at +0.98% m/m (+9.43% y/y), driven by data center construction which eclipsed $50B SAAR for the first time in April (per Bloomberg/Census), now representing 44.5% of all private office construction and 2.3% of total US construction spending. AI-adjacent power was +0.56% m/m (+5.99% y/y) with electric power — the key AI infrastructure proxy — at $127.1B, +7.3% y/y and now 85.4% of total private power construction. Commercial slipped -0.72% m/m (+1.47% y/y).

Public construction was also again a solid performer up +0.41% m/m with the largest component highway & street +0.39% m/m (+3.85% y/y) and education +0.61% m/m (+1.21% y/y). Public construction spending is +3.67% y/y.

https://www.census.gov/construction/c30/pdf/release.pdf

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Quick Summary:

• US equity indices would start Monday’s session in negative territory as things seemed to be headed in the wrong direction on the Iran front with another round of strikes between the parties over the weekend along with an escalation in Israel’s attacks on Hezbollah all of which pushed crude prices higher with bond yields following:

  • U.S. and Iran exchanged strikes over the weekend, with U.S. Central Command saying Monday that U.S. forces intercepted two Iranian ballistic missiles overnight that were targeting American forces in Kuwait. Meanwhile, Israeli PM Netanyahu praised the country’s forces in capturing Beaufort castle in southern Lebanon as troops advanced into the territory.

• In response to Israel’s escalation, Iran’s Tasnim news agency reported that Iran would cease further talks until Israel withdrew its forces from Lebanon in accordance with the terms of the ceasefire. Initially President Trump was dismissive telling NBC news “I think we’ve been talking too much, if you want to know the truth. I think going silent would be very good, and that could be ... for a long time.” He also told CNBC that he doesn’t care if peace negotiations with Iran are over, saying “I really don’t care. I couldn’t care less.”

• That kept markets under pressure although the Nasdaq and S&P 500 (SPX) edged into positive territory on the back of continued strength in the Tech trade with software stocks remaining a new standout with a widely followed software ETF completing its best 3-day run since 2001. Also, Nvidia shares, which represent over 8% of the entire SPX climbed 5% after the company unveiled a new processor for personal computers. Other computer names such as Dell (coming off its best day on record last week) would follow. That trade looks set to continue Tuesday following a blowout report from Hewlett Packard Enterprise after the close which is seeing shares surge nearly 40% (after already gaining nearly 70% since the start of May (more in the subscriber section).

• Markets would later though get a lift from a change in tone from Trump who posted on Truth Social (below) that he “had a very productive call” with Netanyahu, and that “there will be no Troops going to Beirut, and any Troops that are on their way, have already been turned back,” adding he also had “a very good call with Hezbollah, and they agreed that all shooting will stop.” In a separate post (below) Trump said “[t]alks are continuing, at a rapid pace, with the Islamic Republic of Iran.”

• The posts would trim the gains in crude prices and bond yields, although not enough to bring the small cap Russell 2000 into positive territory, ending down for a second session -0.5%. Large cap indices would fare better led by the Nasdaq +0.4%. The SPX was +0.3% and Dow Jones Industrial Average +0.1%. It was the 8th consecutive advance for the SPX, its longest streak since last May. In addition, it is working on its 10th straight weekly gain, something it hasn’t done since 1985.

• Separately purchasing manager reports from the manufacturing sector would indicate the fastest pace of expansion in the sector in four years but also the most rapid pace of price increases in that time as well. For my substack post on the S&P report click here; for the ISM report click here.

• Elsewhere, bond yields would end little changed even as crude prices saw a solid advance as did copper futures. The dollar was also higher while gold, bitcoin, and US natural gas futures all were lower (all covered in the subscriber section).

• The market-cap weighted S&P 500 (SPX) was +0.3%, the equal weighted S&P 500 index (SPXEW) +0.2%, Nasdaq Composite +0.4% (and the top 100 Nasdaq stocks NDX) +0.6%, the SOX semiconductor index +1.1%, and the Russell 2000 (RUT) -0.5%.

Some market commentary:

• “A flare-up in geopolitical tensions caused some wobbles early, but Wall Street’s tech-led, teflon rally managed to power on,” said Kyle Rodda at Capital.com.

• “It’s sort of two steps forward, one step back, it seems with the U.S. and Iran, but clearly the market is not expecting a re-acceleration of hostilities to where we were” in the first two to three weeks of the conflict, Orion’s Tim Holland told CNBC. “We’re still closer to the off-ramp, I think, than the on-ramp.”

• “A lot of folks think even if we do get a drawdown, it will just be bought. It’s tough,” said Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets. “The old saying is ‘hedge when you can, not when you have to.’ The issue is, as cheap as skew looks, it just keeps getting cheaper.”

• “The market is keying off the fact that Trump does not want to reengage in widespread combat operations,” said Michael O’Rourke, chief market strategist at JonesTrading. “If the deal is rejected, the market will simply continue to wait for the next iteration of it. The market will react negatively if President Trump recommences significant combat operations or if oil prices rally sharply.”

• “Once we move into the back half of June it is likely that we see oil prices rapidly appreciate unless [strait] throughput normalizes to pre-conflict levels,” said a note from JPMorgan’s trading desk. “While we acknowledge that this warning has been repeated throughout this conflict, there are mitigating factors which have kept oil prices relatively contained, including (i) the US draining its SPR, and inventory draws more generally; (ii) refinery run cuts; (iii) the role of China in adding supply; and (iv) substitution.”

• “The bottom line is really two areas that are shining today. One is the AI trade, which continues to rock since March 30, and the other is more volatile, and that’s the energy trade,” said Eric Diton, president and managing director at The Wealth Alliance.

• “Record concentration in handful of AI names is spurring index strength and subduing the side effects of a challenging geopolitical/consumer backdrop,” wrote Julian Emanuel, senior managing director at Evercore ISI in a note dated Sunday. “Record AI demand has meant that MU, NVDA and GOOGL alone account for 40%+ of the YTD revision in S&P 2026 EPS and contributed to the strongest EPS surprises outside recession recoveries.”

• “The market is priced for a lot to go right,” Anthony Saglimbene, chief market strategist at Ameriprise wrote in a Monday note — pointing to a crowded calendar that includes the Federal Reserve’s June policy meeting, key labor-market and inflation data, unresolved U.S.-Iran tensions, the expected IPO debut of SpaceX and the Russell reconstitution at month-end. While the S&P 500 has closed June higher in nine of the past 10 years, Saglimbene said investors may be more focused this month on whether the Fed still sees interest-rate cuts as likely this year. He also flagged the U.S.-Iran situation as a “significant binary risk” for markets — with any temporary agreement potentially pushing oil prices lower, while a breakdown could quickly reverse some of the late-May relief trade.

Now let’s take a deeper dive into today and what to watch for tomorrow.

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Executive Summary:

• ISM’s May manufacturing PMI expanded for a fifth straight month (only the sixth month in expansion since Sep ‘22), accelerating +1.3pts to 54.0, the highest since May 2022.

• New Orders rose +2.7pts to 56.8, expanding for a fifth straight month with positive demand sentiment at a 1.6-to-1 ratio.

• Production increased +0.9pts to 54.3, expanding for a seventh straight month. “Panelists had a 1.75-to-1 ratio of positive to negative comments regarding output.”

• Supplier Deliveries held steady at 60.6 (meaning longer delivery times), a repeat of its highest reading since May 2022.

• Employment rose +2.2pts to 48.6, still contracting for a 32nd consecutive month.

• Input Prices (ISM doesn’t measure output prices) remained a dominant story, easing slightly -2.5pts to 82.1 but still the second highest since April 2022 and the 20th straight month of expansion.

• 16 of 18 industries expanded with the % of manufacturing GDP that contracted falling to just 2%d.

• In the commentary, every single comment referenced higher prices but one, (Transportation) which referenced supply chain constraints.

Now let’s take a deeper look with lots more details, some charts, and Goldman’s initial takeaways.

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The S&P final May manufacturing PMI remained solidly in expansion, rising to 55.1, the highest since May 2022 (although slightly below the preliminary estimate of 55.3), from 54.5 in April, posting above the 50 breakeven level for 10 successive months. The report noted “notable upturns in production and new orders amid stockpiling efforts but prices surge higher again,” while cautioning that “at first glance, the manufacturing sector seems to be firing on all cylinders but lift the hood and the picture is not so clear.”

Production surged to a 4-year high for a second straight month, while new orders remained robust but softened leading to fastest build in finished inventories since November. Exports fell for an 11th straight month, employment returned to modest growth for the first time in five months, and prices hit the highest since mid-2022, while sentiment softened to a 4-month low despite the headline strength.

Looking more specifically at the components:

Production as noted the highest in just over four years, although continuing to bloat finished goods inventories — “The upturn in the PMI emanated in part from a stronger rise in production, with growth reaching the highest in just over four years. Output growth was notably faster than new orders and rose sufficiently strongly for firms to add to their stocks of finished goods for the second successive month and at the quickest pace since last November.”

New Orders rose markedly again but softer than April, driven by domestic stock building while exports fell for an 11th straight month — “Overall new orders increased at a sharp pace, albeit softer than in April and largely driven by client efforts to build stock given expectations of further price rises and supply delays. Exports remained a notable source of demand weakness, falling overall for the eleventh month in a row. Geopolitical instability and tariffs were reported to have weighed on foreign sales in the latest survey period.”

Employment returned to modest growth for the first time in five months — “May survey data signaled a renewed increase in staffing numbers. Although the rate of job creation was only modest, it was the best for five months. A positive outlook in part helped encourage additional hiring, with manufacturers generally anticipating an increase in sales and output over the coming 12 months.”

Supply Chains/Purchasing — delivery times deteriorated the most since August 2022 while purchasing rose solidly and raw material inventories grew for a second straight month — “Purchasing activity rose solidly since April and was often linked to higher production requirements and efforts to mitigate against further price increases and supply chain disruption. Subsequently, input stocks rose for the second successive month, with growth picking up to its highest since May 2025. That was despite difficulties sourcing and receiving inputs amid supply constraints and shipment delays from vendors. Overall, latest data showed the most severe deterioration in vendor delivery times since August 2022.”

Input Prices and Selling Prices both surged — input costs the highest since July 2022, output prices the highest since September 2022 — “Rising raw material prices, particularly for fuel and oil-related products, pushed up input prices during May. Input cost inflation increased from April to the highest since July 2022. Manufacturers’ own charges rose to the greatest extent since September 2022 as they sought to pass through their own higher expenses to clients wherever possible.”

Sentiment softened to a 4-month low despite the headline strength — “geopolitical concerns and higher inflation continued to weigh on the outlook. Sentiment subsequently fell to its lowest level in four months.”

Comments from Chris Williamson, Chief Business Economist, who warns the headline strength masks stockpiling distortions with inflation pressures building further:

“At first glance, the manufacturing sector seems to be firing on all cylinders but lift the hood and the picture is not so clear.

“The headline PMI has hit a four-year high, with strong factory production growth for a second successive month in response to a further marked upturn in order books, but since the outbreak of war in the Middle East we have seen production and demand buoyed by stock building as companies worry over rising prices and supply difficulties.

“This stockpiling was again widely evident in May and makes it hard to take an accurate reading on the underlying health of the manufacturing economy, as growth will cool once this stock build has run its course.

“The incidence of supply chain delays is the highest since August 2022, with the buying of safety stocks not only adding to the supply squeeze from the closure of the Strait of Hormuz but also pushing prices higher for a wide variety of inputs. The resulting steep jump in producer costs sends a worrying signal that broader economy inflation has further to rise in the coming months.”

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Note: I will be traveling to London June 2nd through the 9th. I will post as I am able, but there will be no morning or nightly updates until the 10th.

The Week Ahead

Next week is the first week of the month which also means it’s jobs week in the US, and with no shutdown to mess things up, we’ll get for the first time since then the normal first week of the month cadence of reports culminating in May’s Nonfarm Payrolls Friday (technically the Employment Situation report).

As usual before we get there we’ll get the May ADP monthly employment, Challenger job cuts, PMIs, and auto sales, April JOLTS, construction spending, factory orders, trade balance, and consumer credit, as well as the standard weekly reports (jobless claims, mortgage applications, and US petroleum inventories (not ADP though with the monthly report this week)). We’ll also get the final revision for Q1 productivity.

Fed speakers are lighter (at least scheduled) even though this is the last week before the start of the blackout with just Governor Barr and regional bank presidents Kashkari, Hammack, Logan, and Daly. We’ll also get the Fed’s Beige Book for the June meeting on Wednesday.

In terms of non-Bill (>1yr in duration) US Treasury auctions, we’re off next week.

Q1 earnings season will continue to wind down with 12 SPX components reporting, but we will get one top 10 SPX market cap name in chip supplier Broadcom (AVGO) on Wednesday. Two other >$100bn market cap reporters are cybersecurity providers PANW and CRWD.

Also, AI industry leaders will present at Computex Taipei, while Microsoft (MSFT) hosts its annual Build developer conference. Both events are expected to feature major announcements around AI, datacenters, software, and robotics. Honeywell-backed quantum computing company Quantinuum (QNT) is expected to debut, making it one of the largest technology offerings of the year, while FedEx (FDX) will complete the spinoff of FedEx Freight (seeking alpha).

In terms of the Iran war, as I have been saying for a while, “it continues to drag on with no end in sight.” As I have also noted “It seems that both sides feel they have the upper hand, and both need a conclusion which allows them to claim ‘victory’. Not a setup conducive to a quick conclusion,” but “it is also clear that President Trump’s patience is starting to wear thin.”

As I mentioned last week “recent events appear to indicate Trump is very much between a rock and a hard place. While it seems he wants to come to an agreement with Iran, Iran knows that and also that with each passing day pressure builds from the coming mid-term elections. And Trump is now getting counter-pressure to ‘finish the job’ from hard-line Republicans who came out with some blistering criticism after Trump said that a deal was imminent Memorial Day weekend.” So while Trump wants a deal, it also has to look like “a good deal,” again all of which Iran knows. It’s no wonder it continues to drag on.

FWIW Polymarket now just sees a 30% chance of a permanent US-Iran peace deal by June 30th, half of where it sat a week ago, and down from nearly 80% last Saturday night.

Ex-US highlights from DB:

In Europe, the highlights include the flash CPI print for May for the Eurozone on Tuesday. In addition, a read on inflation expectations will come from the ECB’s consumer expectations survey out on Monday. Briefly turning to central banks, speakers will include ECB President Lagarde on Thursday, BoE Governor Bailey (Tuesday, Thursday and Friday) and BoJ Governor Ueda on Wednesday.

Over in Asia, the focus will be on China’s PMIs, with the official gauges due this Sunday and private manufacturing and services PMIs following on Monday and Wednesday. In Japan, labour cash earnings are due Friday and there will be the financial statements statistics of corporations from the Ministry of Finance on Monday. Our Chief Japan economist expects wages growth to slow to around 2.5% YoY (2.8% in March). Elsewhere in the region, Australia’s Q1 GDP is due Wednesday.

Here’s their one-pager:

And BoA’s cheat sheets:

Executive Summary

• US equity indices saw solid gains last week continuing to be led by the Tech heavy Nasdaq which finished +2.5%. With interest rates falling back, the small cap Russell 2000 would come in at +1.9%, the S&P 500 (SPX) +1.4%, its 9th straight weekly gain, the longest streak since 2023, and the Dow Jones Industrial Average (DJIA) +0.9%.

• It would cap what would have been the best month since 2023 if it wasn’t for the even stronger performance in April.

• Economic reports were highlighted by April’s personal income and spending report which showed negative income growth when adjusted for inflation, personal spending as expected with modest growth when adjusted for price rises (seeing the savings rate fall to the least since June 2022), and PCE prices (the Fed’s preferred inflation index) slightly below expectations but compared to a year earlier core inflation was the highest since November 2023. More coverage on economic reports and indicators in the subscriber section.

• With Q1 earnings season mostly wrapped up, attention has turned to Q2 and beyond with estimates continuing to ratcheted higher.

• Positioning rebounded after softening a touch the prior week pushing up to levels where many (most?) analysts think falling volatility or another catalyst are needed to see them ratchet higher. Buybacks remain very solid with corporates in their open windows.

• Sentiment remained mixed with some indicators hitting frothier levels while others remained subdued.

• The Fedspeak continued to turn more hawkish but rates nevertheless softened last week, adding some fuel to equities.

Lots more on all of that including lots of charts and analyst commentary on the economy, earnings, positioning, breadth, sentiment, seasonality, Fed, and other factors that will play out in the week ahead.

Read more

• US equity indices would start Thursday’s session again little changed as markets awaited a clearer signal as to whether the US and Iran were going to sign some sort of peace agreement as discussed in the morning update.

• Things wouldn’t get any clearer during the session with President Donald Trump saying he would soon make a “final determination” on a preliminary deal to extend a ceasefire with Iran among continuing mixed messages from both sides. Trump reiterated Tehran “will never have a Nuclear Weapon or Bomb” and the Strait of Hormuz must be open and any mines destroyed, while an administration official told the New York Post it was the “closest” the two sides have been. Separately, Treasury Secretary Scott Bessent suggested the US could remove some sanctions on Iran depending on how matters proceed in the current standoff.

• A senior Iranian source likewise ​told Reuters an agreement was close but had not yet been approved. Iran's semi-official Fars news agency said the strait would be reopened under Tehran's conditions after the U.S. ​lifts its blockade on Iranian ships. Fars also said there was agreement ​to release $12 billion of Iran’s frozen assets.

• Separately, Bloomberg reported at least two shipowners, who asked not to be identified discussing sensitive information, said they were in touch with American military forces, which advised them on how best to navigate the Strait. If sustained, the increase in transits could signal that more shipping companies are willing to make the journey, boosting the flow of everything from oil and gas to consumer goods

• The large cap indices would see modest gains while the small cap Russell 2000 (RUT) would log a loss of -0.6% but still finish with a gain of +1.9% for the week just behind the Nasdaq’s strong +2.5% performance. The S&P 500 (SPX) and Dow Jones Industrial Average (DJIA) would also see solid gains for the SPX its 9th straight, the longest streak since 2023.

• Friday also marked the final trading session of May, and all four averages notched robust gains for the month as well. The Nasdaq outperformed, recording an advance of more than +8% for the month, paired with April’s +15.3% gain, it was the best back-to-back months for the Nasdaq since 2009. The S&P 500 finished up +5.2%, the RUT +4.3%, while the DJIA posted an almost +3% gain.

• Elsewhere, bond yields edged lower as did copper futures while gold futures would continue their bounce from support. The dollar, US natural gas and bitcoin futures would end little changed (all covered in the subscriber section).

• The market-cap weighted S&P 500 (SPX) was +0.2%, the equal weighted S&P 500 index (SPXEW) +0.2%, Nasdaq Composite +0.2% (and the top 100 Nasdaq stocks NDX) +0.4%, the SOX semiconductor index UNCH, and the Russell 2000 (RUT) -0.6%.

Some market commentary:

• “We suppose there is still the risk that this deal will fall through. However, it does look like there will be at least an extension of the ceasefire,” said Matt Maley at Miller Tabak. “The only question now is whether the stock market has already priced in this outcome.”

• “Brent below $90 by the end of next week seems at our reach,” wrote Florian Ielpo, head of macro at Lombard Odier Investment Managers. “It would create a rather supportive environment should it happen, clearly as oil prices have been the source of most macro fears this year.”

• “The recent pullback in oil prices is helping to ease some of those worries,” said Angelo Kourkafas at Edward Jones. “However, with inflation moving further away from the Fed’s 2% target and labor-market trends stabilizing or even improving, policymakers may begin to shift away from their easing bias at the June meeting.”

• “The enthusiasm for stocks is warranted,” said Emily Bowersock Hill at Bowersock Capital Partners. “Investors expect the AI infrastructure boom to continue to mask the negative impact of geopolitical disruption. Stock markets care about company profits. As long as earnings grow, stock prices can continue to rise.”

• “Dell is like the poster child for [the] AI broadening earning story,” said David Nicholas, CEO and Founder of XFUNDs by Nicholas Wealth. “We started with chips, memory, but it’s really now about the broad kind of AI infrastructure stack.”
  “There’s always that black swan risk that something pops off, but my gut tells me that this thing should be coming to an end very quickly,” Nicholas said. “The market has priced a lot of that in, but I just think it unlocks the market to continue moving higher.”

• However, Kate Moore, chief investment officer at Citi Wealth, believes that the market’s rally to new heights may continue to be dictated more by strong earnings growth versus headlines about any Middle East tensions.

  “I think a lot of the snapback we saw since the lows in March was this acceptance that there was going to be a resolution at some point, but obviously the scope of that and the timing of that is still anybody’s guess,” she said on CNBC’s “Closing Bell: Overtime” on Thursday afternoon. “I really do think what’s been driving the market higher is, frankly, the power of the technology earnings … this has been happening company after company throughout the course of this earnings season.”

Now let’s take a deeper dive into today and what to watch for next week.

Read more

US Vice President JD Vance told reporters Thursday that the parties are “going back and forth on a couple of language points,” including issues relating to Iran’s nuclear capabilities, but Iran’s armed forces reportedly fired missiles at unspecified targets late Thursday, according to state media outlet Fars, just hours after the Pentagon said Tehran had fired a ballistic missile toward Kuwait and deployed attack drones in and around the Strait of Hormuz.

Technology stocks were though getting a boost after Dell Technologies jumped 34% following its sales outlook that far surpassed analysts’ estimates, fueled by servers designed to run AI workloads also discussed in last night’s update.

The major indices are up for the week and month with the S&P 500 on pace for a 9th consecutive weekly gain, the longest streak since 2023.

Earlier this morning we got the April preliminary goods trade balance and inventories data with the former showing a much smaller deficit than expected due to strong exports which should be a boost to Q2 GDP estimates. We also heard from Kansas City Fed President Schmid (not a voter this year) who echoed other Fed speakers in saying “[m]y primary concern is inflation, which is too hot and has been above target for too long.”

Later today we’ll hear from Fed Governor Bowman and regional Fed Presidents Paulson and Daly (Bowman and Paulson 2026 FOMC voters).

Elsewhere, despite the questions over the tentative US-Iran agreement crude prices and bond yields are edging lower again as are copper and bitcoin futures while gold and US natural gas futures are trading higher. The dollar is little changed (charts below).
SPX +0.1%; NDX +0.2%, RUT -0.2%.

[Note the International Update is below the US update]

US Advance Goods Trade Balance (USD) Apr: -82.4B (est -87.0B; prev -87.4B)
- Advance Goods Imports SA (M/M): 1.9% (est 1.8%; prev 3.5%)
- Advance Goods Exports SA (M/M): 4.0% (est 2.5%; prev 3.0%

US Wholesale Inventories (M/M) Apr P: 0.5% (est 0.8%; prev 1.3%; prev R 1.5%)
- Retail Inventories (M/M): 0.7% (est 0.5%; prev 0.6%)

SPX futures (/ES) - record high territory

10yr Yield - down for seventh session

DXY US dollar index

US WTI crude - getting to bottom of post-war range

Gold futures (/GC)

US copper futures (/HG)

US natural gas futures (/NG) - up to 200-DMA, highest since February

Bitcoin futures - 6-week low

CNBC:

BBG:

Some pre-market company news from CNBC, BBG.

International Update:

Europe’s benchmark STOXX 600 as of 8.00 am ET were +0.4%. While below the highs of the week, it still was enough to put the index on track for a weekly gain.

Major European indices are also tracking a higher finish to the week.

Germany's DAX: +0.1%, U.K.'s FTSE 100: +0.3%, France's CAC 40: +0.7%, Italy's FTSE MIB: +0.7%, Spain's IBEX 35: +0.8%.

The MSCI Asia All-Country index saw a larger +1.7% gain Friday which took it to an all-time high.

Major equity indices in the Asia-Pacific region ended the week on a mixed note with Japan's Nikkei (+2.5%) and South Korea's Kospi (+3.6%) reaching fresh records.

Japan's Nikkei: +2.5%, Hong Kong's Hang Seng: +0.7%, China's Shanghai Composite: -0.7%, India's Sensex: -1.4%, South Korea's Kospi: +3.6%, Australia's ASX All Ordinaries: +1.7%.

Some ex-US highlights:

CNBC - A Russian drone collided with an apartment building in Romania, a NATO member state, early on Friday morning.

• Romanian President Nicușor Dan said in a post on X on Friday morning that he had convened a meeting of his national defense council in response to what he called “the most serious incident to affect the national territory” since Russia’s full-scale invasion of Ukraine began in early 2022. The collision occurred in Galați, Dan said, a city near Romania’s border with Ukraine.

• “We will order proportionate measures in relation to the Russian Federation,” he said, adding that the strike had resulted in injuries. “The unprecedented nature of the event demands a firm, coordinated, and appropriate response — at the national, allied, and international levels.”

• All NATO allies and EU member countries had been informed of the incident, Dan said. His government has requested additional deployments of NATO anti-drone capabilities to Romania, and will alert the UN Security Council about Russia’s “repeated violation of international law.”

• In a post on X, NATO chief Mark Rutte said he had told Dan the military alliance stood in solidarity with Romania. “NATO stands ready to defend every inch of Allied territory,” Rutte said. “We will continue to enhance our readiness to deter and defend against any threat, including from drones. Russia’s reckless behavior is a danger to us all.”

• EU Commission President Ursula von der Leyen said in a post on X on Friday morning that “Russia’s war of aggression has crossed yet another line.” Von der Leyen added that the EU was preparing a 21st package of sanctions on Russia.

BBG - Inflation stayed well above 2% in the euro zone’s four top economies, backing the case for the European Central Bank to raise interest rates for the first time since 2023.

• Propelled by the war-induced surge in energy costs, May readings for France, Italy and Spain quickened to 2.8%, 3.3% and 3.6%, data Friday showed. While moderating in Germany, the headline number of 2.7% held far beyond the ECB’s comfort zone.

• Somewhat softer inflation in Germany is unlikely to deter policymakers from tightening given it reflects a temporary reduction in value-added taxes on fuels and cheaper food. Without those two categories, price pressures intensified, while a separate poll by the Munich-based Ifo institute showed a large share of firms still plans to pass rising costs on to clients.

• A reading of consumer-price increases for the 21-nation euro zone will be published next week, with economists predicting a push further beyond the 3% level reached in April.

• And the chances that households will anticipate more rapid increases in prices have also increased after the 2022 price spike that followed Russia’s invasion of Ukraine and earlier geopolitical tensions left a “double scar,” according to a European Central Bank blog post that appears to underpin the case for hiking interest rates. “When looking ahead, consumers tend to extrapolate from their short-term to their medium-term inflation expectations, and they may have yet to witness the full pass-through to prices at the retail level,” Friday’s blog said. “As a result, there is certainly a risk of further upward revisions in medium-run inflation expectations in the future.”

• While the “the general shift towards a more stagflationary outlook is, so far, somewhat less pronounced” than four years ago, they cautioned that current data “provide only a snapshot.” Officials are widely expected to raise borrowing costs by a quarter-point in two weeks.

• There are concerns though about the Iran war’s drag on economic expansion, which could in turn pull down inflation. Separate data Friday showed France contracted at the start of the year as consumer spending and business investment both fell. Indicators of more recent activity also point to a slowdown, while confidence gauges have continued to deteriorate. Gross domestic product fell 0.1% in the three months through March, the first quarterly contraction since the Covid pandemic with a 0.2% decline in consumer spending, a 0.4% fall in business investment, and exports dropping 3.5%. Consumer confidence has dropped to the lowest in more than three years and a separate report Friday from Insee showed household spending in April fell 0.5%.

• In Italy, though, first-quarter growth was actually revised higher, with all demand components, from consumer spending to investment and trade, showing improvements.

BBG - While the ECB is widely expected to hike rates at its next meeting, Bank of England Governor Andrew Bailey cast doubt on near-term hikes saying the Bank could tolerate inflation temporarily staying above its 2% target in order to support the UK’s weak economy so long as second-round price effects do not emerge.

• Speaking at an economic conference in Reykjavík, Iceland, Bailey said the BOE had already influenced the economy by removing market expectations for rate cuts, thus tightening monetary conditions. Bailey said it was a tough call for his Monetary Policy Committee, due to the length of time it takes for second-round effects to come through.

• “Given the context of softness in the real economy and uncertainty around the scale and duration of the shock, tolerating temporarily above target inflation to provide some support for the real economy is an appropriate way to approach the trade-off,” the Governor said, Friday morning. “But that tolerance would weaken if signs of second-round effects begin to emerge.”

• The prospect of rate hikes from the BOE has slid sharply in May, with swaps pricing in one quarter point increase by the end of 2026. As recently as late April, the market was expecting three rate hikes this year.

• Consumers are spending less, businesses are holding back investment, building up inventories and cutting jobs amid higher energy costs and greater political turbulence at home. A softer-than-expected inflation print in April handed more ammunition to officials who favor keeping interest rates on hold for longer.

• But the Governor also said that the BOE will get limited evidence of how the Iran price shock is feeding into wage demands in the next months, as most pay settlements for this year had already been agreed before the start of the conflict. This can lead to a situation where inflation expectations rise without a corresponding acceleration in wage growth. Bailey also warned of the threat of persistent price pressures and said the “legacy of four years ago,” when inflation soared into double-digits following Russia’s invasion of Ukraine, has to be taken into consideration.

BBG - Also in the UK, Andy Burnham, who is seeking to become the UK prime minister this summer, said a government led by him would increase regulations on technology companies and intervene more widely in the economy.

• Burnham, the mayor of Greater Manchester, is running in a parliamentary special election in northwest England next month which, if he wins, would make him eligible to challenge Starmer for the premiership.

• In an article for the Times newspaper on Thursday evening, Burnham responded to criticism by former premier Tony Blair in an essay published earlier this week that warned the governing Labour Party should not pivot to the left if it replaces the beleaguered incumbent, Keir Starmer.

• Burnham accused Blair, who led Britain between 1997 and 2007, of being part of “40 years of neoliberalism” and failing to change course from the period of Conservative government under Margaret Thatcher in the 1980s.

• “You can’t just leave it to the market,” Burnham wrote, warning that deregulation was the “principal cause” of the 2008 global financial crisis.

• Wes Streeting, another potential leadership candidate who is on the right of the Labour Party, used an article in the Guardian newspaper on Wednesday to criticize Blair for attempting to “recreate yesterday.

BBG - Tokyo’s key inflation gauge unexpectedly cooled to the slowest pace in four years, complicating the messaging while not necessarily derailing an expected interest-rate hike from the Bank of Japan as early as next month.

• The consumer price index excluding fresh food rose 1.3% in May from a year earlier in the capital, according to the Ministry of Internal Affairs and Communications Friday. That marked a sixth straight month of cooling and was lower than all but one estimate in a Bloomberg survey of economists. The metric is considered a cleaner read of price trends because it strips out distortions related to subsidies, however it remains skewed by some food price comparisons after items such as rice saw an unprecedented surge last year. The Tokyo CPI is considered a leading indicator for nationwide price trends.

• Meantime, a measure that excludes both fresh food and energy — closely watched by the BOJ as a gauge of underlying inflation — increased 1.6% while the overall CPI climbed 1.4%.

• The CPI was restrained by the price of processed foods, which rose at a slower rate than last year, as well as a steep drop in fees for water services. Energy prices continued to fall thanks to gasoline subsidies implemented by Prime Minister Sanae Takaichi.

• Service prices — a key indicator of demand-driven inflation — rose 1.1% from a year earlier. Food prices excluding fresh items increased 4.1%, slower than the previous month. Rice prices fell 1%, the first decline since August 2022 and a far cry from last year when they surged nearly 94%.

• As of Friday morning, traders were assigning a roughly 77% probability of a hike at that gathering, according to overnight index swaps.

• “We think the Bank of Japan will look through the weaker headline reading and stay alert to upside inflation risks from higher oil prices. We continue to expect the BOJ to hike rates by 25 basis points to 1% in June.” — Taro Kimura.

BBG - The yen is another factor keeping Japan price pressures elevated by raising the cost of imported goods. It traded just under the 160 level vs the dollar on Friday, still near the weakest level since April 30 when the Finance Ministry conducted a currency intervention.

• After the CPI report, Finance Minister Satsuki Katayama reiterated that authorities can step into the foreign exchange market if there’s volatility or speculative moves.

• Japan used a record of almost $74 billion over the past month to prop up the yen after the currency slid past 160 per dollar, according to Finance Ministry data confirming the government’s first market intervention since 2024. The figures underscore the authorities’ determination to prevent a freefall of the yen and are the first official acknowledgment that the authorities stepped into the market after the yen hit 160.72 against the dollar. The total came in larger than expected.

• Traders will need to wait until early August for more precise information on action undertaken, when the ministry releases figures for the second quarter detailing the exact timing and size of operations on a day-by-day basis.

• The currency has remained under pressure from the wide US-Japan interest rate differential and mounting inflation concerns linked to the Middle East conflict, with few clear catalysts that might reverse that dynamic.

• “The authorities bought about a month of time, from April 30 through late May. During that period, markets were dealing with extraordinary uncertainty surrounding the Middle East conflict,” said Yuji Saito, executive adviser at SBI FXTrade Co. Despite those risks stemming from the Strait of Hormuz and the upward strength of the dollar, the ministry kept the exchange rate within a ¥5 range. “From that perspective, I would say the intervention succeeded in its main objective of containing volatility.”

BBG - China’s export prices surged 5% y/y in April, the quickest pace since April 2023. Before April they had been positive y/y only one other month since then (June 2025).

• The increases were unsurprisingly tied to energy and AI led by crude oil, metals and semiconductors with gains of around 20%.

• This feeds through into US prices. As a reminder, US import price data showed the largest monthly advance in China prices since January 2008, and the first year-over-year advance since December 2022 (charts below). (https://neilsethi.substack.com/p/import-prices-april-2026).

• Outside of these sectors, though, the picture looks very different with prices for most Chinese goods still falling due to intense domestic competition and an oversupply of products. Rubber and plastic product prices fell 4%, textile and apparel 6% and car and related parts prices were also 6% lower.

BBG - The Canadian economy edged into a technical recession as weak business and government spending drove a slight contraction in the first quarter.

• The last time Canada recorded two consecutive quarters of negative growth was in 2020 during the Covid-19 pandemic. Before that, it was in 2015 amid low oil prices.

• Real gross domestic product fell by 0.1% on an annualized basis during the first three months of the year, Statistics Canada reported on Friday. That follows a 1% contraction in the fourth quarter, a downward revision from a 0.6% decrease previously reported by the federal agency.

• The surprise decline in the first quarter stands in contrast with forecasters’ expectations. Economists surveyed by Bloomberg were anticipating a 1.5% annualized increase in the first quarter, aligning with the Bank of Canada’s projection.

• Business capital investment in the first quarter posted a fifth consecutive decline, shrinking 3% on an annualized basis, driven by lower spending on engineering structures. Household spending increased 1.5% annualized in the first quarter, led by higher spending on financial services. However, the report noted Canadians pulled back on travel and vehicle purchases. The household saving rate slowed to 3.5%, reaching its lowest level since the first quarter of 2024 as spending rose faster than incomes. Exports fell 0.5%, led by a decline in passenger cars and light trucks, which have been battered by US tariffs. Final domestic demand fell 0.4%, following a 2.7% increase in the previous quarter.

• A flash estimate for industry-based data in April though suggests the economy bounced back with 0.4% growth, driven by increases in mining, quarrying and oil and gas extraction and manufacturing, as well as transportation and warehousing and defense spending.

BBG - Brazil’s economy picked up more than expected at the start of the year, powered by government stimulus and robust mining that fueled growth in the face of double-digit borrowing costs.

• Official data released Friday showed gross domestic product expanded 1.1% in the first three months of 2026, above the 1.0% median estimate of analysts surveyed by Bloomberg. From a year prior, the economy grew 1.8%.

• President Luiz Inácio Lula da Silva is rolling out social aid to cushion the Iran war’s energy shock and spur consumption ahead of his October reelection bid. That helped growth rebound after tepid growth in the previous quarter, dragged down by the weight of the benchmark interest rate set at nearly 15%.

• With his approval rating below 50%, Lula has unveiled programs including debt relief, fuel tax cuts and subsidies for the poor. Together, the stimulus could add over 1 percentage point to GDP growth this year, according to economists’ estimates.

Some international corporate highlights:

• Shares of Samsung Electronics surged over 5% after the company said it had begun shipping samples of its latest high-bandwidth memory chip to its customers globally.

• Defense stocks extended their rally on Friday, with the regional Stoxx Aerospace and Defense index adding 0.8% in early afternoon trade after a Russian drone hit a Romanian apartment building. Romania, which borders Ukraine, is a member of both NATO and the EU. Creotech Instruments, up more than 3.5%, and Airbus, up 3%, were among the sector’s top performers on Friday.

Europe/Asia economic highlights from Briefing.com:

• Germany’s May Unemployment Change -12,000 (expected 11,000; last 20,000) and May Unemployment Rate 6.3% (expected 6.4%; last 6.4%). April Import Price Index 1.2% m/m, as expected (last 3.6%); 5.3% yr/yr, as expected (last 2.3%)

• France’s Q1 GDP -0.1% qtr/qtr (expected 0.0%; last 0.2%); 0.9% yr/yr (expected 1.1%; last 1.3%). May CPI 0.1% m/m (expected 0.2%; last 1.0%); 2.4% yr/yr (expected 2.5%; last 2.2%). April Consumer Spending -0.5% m/m (expected -0.1%; last 0.9%). Q1 nonfarm payrolls 0.0% qtr/qtr (expected -0.1%; last -0.1%)

• Italy’s May CPI 0.4% m/m (expected 0.1%; last 1.1%); 3.2% yr/yr, as expected (last 2.7%). Q1 GDP 0.3% qtr/qtr (expected 0.2%; last 0.3%); 0.8% yr/yr (expected 0.7%; last 0.8%). April Unemployment Rate 5.1% (expected 5.3%; last 5.2%)

• Spain’s May CPI 0.1% m/m (expected 0.2%; last 0.4%); 3.2% yr/yr (expected 3.3%; last 3.2%). May Core CPI 2.9% yr/yr (last 2.8%). March Current Account surplus EUR4.61 bln (last surplus of EUR4.04 bln)

• Swiss May KOF Leading Indicators 98.0, as expected (last 97.8)

• Japan’s May Tokyo CPI 1.4% yr/yr (last 1.5%) and Tokyo Core CPI 1.3% yr/yr (expected 1.5%; last 1.5%). April Industrial Production 0.8% m/m (expected -0.4%; last -0.4%), April Retail Sales 2.1% yr/yr (expected 1.4%; last 1.4%), April jobs/applications ratio 1.18, as expected (last 1.18), and April Unemployment Rate 2.5% (expected 2.7%; last 2.7%). April Housing Starts 11.4% yr/yr (expected 14.7%; last -29.3%) and Construction Orders -32.3% yr/yr (last -14.4%). May Household Confidence 33.6 (expected 32.3; last 32.2)

• South Korea’s April Retail Sales -3.6% m/m (last 1.9%), April Industrial Production -0.7% m/m (expected 0.3%; last 0.6%); 1.5% yr/yr (expected 2.2%; last 3.9%). April Service Sector Output -1.0% m/m (last 1.5%)

• Singapore’s April Bank Lending SGD908.4 bln (last SGD902.3 bln)

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• US equity indices would start Thursday’s session little changed after another exchange of fire earlier in the day between US and Iran as discussed in the morning update.

• Equities were also digesting a deluge of economic data:

  • April personal income growth from March came in well under expectations in large part due to what should have been an expected end to farm assistance payments which surged in March, as compensation grew although was negative when adjusted for inflations.

  • April personal spending came in as expected with modest growth when adjusted for price rises.

  • April PCE prices (the Fed’s preferred inflation index) came in slightly below expectations as did core (ex-food and energy) but compared to a year earlier core inflation was the highest since November 2023.

  • April durable goods orders (lasting more than 3 years) came in well above expectations boosted by transport and defense orders, but core business orders were weak, a change from the past few months (report tomorrow).

  • Weekly jobless claims once again were little changed, remaining very low historically, with y/y continuing claims the lowest since Dec ‘22.

  • Q1 GDP was revised lower to 1.6% Q/Q growth (annualized) from +2.0% initially on weaker consumer and IT spending than was originally estimated (report coming).

  • Later in the morning we would get April new home sales which would drop -6.2% from March and -11.3% from a year ago to a seasonally adjusted annual rate of 622,000, well below expectations of 663,000 (report tomorrow).

• Today, though, some apparent tangible progress on the Mid-East impasse would send indices higher. Axios, citing two U.S. officials and a regional source, reported that the U.S. and Iranian negotiators agreed on a 60-day memorandum of understanding to extend the ceasefire, and further negotiations on Iran’s nuclear program. However, the report indicated President Donald Trump has yet to agree to the terms (which many speculate means that it has not yet been blessed by Iranian officials either). Treasury Secretary Scott Bessent on Thursday would only say “the teams have been going back and forth” when pressed if an interim deal has been clinched. The US-Iran memorandum of understanding would state that shipping through the vital Strait of Hormuz would be “unrestricted,” Axios reported. Iran would have to remove all mines from the strait within 30 days, according to the report.

• Fada-Hossein Maleki, an Iranian lawmaker and member of the country’s parliamentary commission for national security, said negotiations between the US and Iran have shown “significant progress,” according to the semi-official Iranian Students’ News Agency. The US still has to decide on a number of Iran’s conditions, the ISNA quoted Maleki as saying, without giving details. WTI crude prices pared gains to trade near $95 a barrel, having earlier risen after the two sides accused each other of breaching the ceasefire.

• Indices would be led Thursday by the Nasdaq on the back of another run higher in tech stocks boosted by the best day on record for Snowflake as discussed this morning (and which looks set to continue tomorrow following Dell’s blowout report discussed in the subscriber section). The Nasdaq would finish +0.9%, the small cap Russell 2000 (RUT) and S&P 500 +0.6% while the Dow Jones Industrial Average would lag +0.1% but enough to join the others with a quartet of all-time highs.

• Elsewhere, bond yields would ease for a fifth session and the dollar and bitcoin futures would also finish lower while US natural gas futures would jump to the highest close since early February, and gold and copper futures would also end higher (all covered in the subscriber section).

• The market-cap weighted S&P 500 (SPX) was +0.6%, the equal weighted S&P 500 index (SPXEW) +0.4%, Nasdaq Composite +0.9% (and the top 100 Nasdaq stocks NDX) +0.8%, the SOX semiconductor index +1.0%, and the Russell 2000 (RUT) +0.6%.

Some market commentary:

• “The market has been expecting some type of MOU — memorandum of understanding — here,” said David Wagner, head of equities at Aptus Capital Advisors. “You’re going to see the discretionary names run as a first knee-jerk reaction to a lot of this news, which can drive the market higher.”

• “The market has been caught between two very different worlds,” said Aneeka Gupta, director of macro-economic research at Wisdomtree. “One where we get a deal, and you have a follow-through of a very powerful cyclical recovery, and another where the conflict process deepens the stagflation impact on the economy.”

• “If a peace deal takes another two weeks or two months, I don’t think markets care as much anymore unless oil meaningfully breaks higher,” Mathias Heim, chief investment officer at Belle Capital said. “The elephant in the room is the AI capex cycle, which drives profit growth and multiples. Structurally, equities remain the go-to asset class.”

• “From a pure technical perspective, if we had to own one here, our money is on Small Caps,” Wolfe Research’s Rob Ginsberg wrote on Wednesday.

• “Although the core rate was on the softer side of consensus, I would not take much solace from today’s result, as core inflation is likely to be firmer next month and risks to the upside from the lagged impact of the energy surge remain in place,” said Omair Sharif, president of Inflation Insights LLC.

• “Core inflation moderated slightly, though the Iran war kept headline price pressures elevated. However, real spending growth has continued to moderate as higher goods prices weigh on volumes. Overall, the April data suggest a resilient labor market is still generating enough income to keep consumers spending, with elevated prices only modestly denting real activity.” — Chris G. Collins and Stuart Paul, BBG

• “While prices are rising faster than comfortable, incomes are not, putting consumers in an uncomfortable spot,” said Elizabeth Renter, a senior economist at the personal finance website NerdWallet. “Rising prices, sluggish income and economic uncertainty could set the stage for a broader pullback in consumer spending and therefore economic growth.”

• “We think it’s unlikely the Federal Reserve hikes rates, given how the oil price spike is likely to be short-term, and since there is immense pressure on the Fed to keep rates in check and a hike would require an especially rare set of circumstances, such as a year or longer of $100 per barrel oil, and we are nowhere near that point yet,” said David Laut at Kerux Financial.

Now let’s take a deeper dive into today and what to watch for tomorrow.

Read more

After falling to 190k six weeks ago, the joint least since 1969, initial jobless claims have edged marginally since then, rising +5k to 215k in the week through May 23rd (from revised 210k the prior week), still very low historically.

The four-week average rose +6.25k to 209k (~-19.75k y/y), still just +7k from the least since Jan ‘24 (which was the least since Oct ‘22).

Continuing claims (SA) in the week through May 16th (1-week lagged) rose +15k to 1.786mn (after a -11k revision to the prior week), remaining towards the bottom of their range since mid-2023 (~1.75mn to 2.0mn).

The four-wk avg of continuing claims rose +2.5k to 1.773mn from the least since Jan ‘24, remaining lower y/y for a 17th straight week (-118.75k), and the most over that period (the most since Dec ‘22), evidencing that while workers may be having a harder time finding a new job, the deterioration in that metric has for now reversed.

The 20yr pre-pandemic avg for initial claims is 345k & continuing claims ~2.9mn.

https://dol.gov/ui/data.pdf

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US Core PCE Price Index (M/M) Apr: 0.2% (est 0.3%; prev 0.3%)
- Core PCE Price Index (Y/Y): 3.3% (est 3.3%; prev 3.2%)
- PCE Price Index (M/M): 0.4% (est 0.5%; prev 0.7%)
- PCE Price Index (Y/Y): 3.8% (est 3.8%; prev 3.5%)
-US Core PCE Supercore (Y/Y) Apr: 3.289% (prev 3.203%)
-Core PCE Supercore (M/M): 0.239% (prev 0.293%)

Executive Summary:

• April PCE prices came in a tenth below expectations at the headline level form the month earlier (m/m) at +0.40% (after a revised +0.66% in Mar) and from a year earlier (y/y) at 3.77% (up from 3.52% in Mar) — the hottest y/y reading since May 2023.

• Core (ex-food & energy) also came in slightly below expectations at +0.24% (after +0.29% in Mar) with the core y/y rising to 3.29% (up from 3.20% in Mar) — the highest since November 2023.

• Turning to incomes, nominal personal income was essentially flat in April at -0.00% (-$19M) m/m, a significant miss vs the +0.4% estimate, however much of the weakness was reversion following the March boost in Farmer Bridge Assistance payments

• Real personal income (RPI) came in at -0.40%, down for a third consecutive month, while removing taxes (which rose +0.62%) real disposable personal income (RDPI) fell -0.48% m/m the least since May, and taking out transfer receipts (government assistance) as well saw RPI ex-transfer receipts -0.44% m/m, the least since Jan 2022.

• On a y/y basis things looked even worse: RPI is now -1.18%, the least since July 2022; RDPI -1.10%, the least since October 2022; and RPI ex-transfer receipts -1.04%, the least since June 2020. Pre-pandemic RPI ex-transfer receipts wasn’t this negative since 2013.

• Turning to spending, personal spending rose +0.51% m/m nominally, in line with estimates In real (inflation-adjusted) terms, spending was a more modest +0.11%, as prices again absorbed the bulk of the nominal gain.

• On a y/y basis headline consumption is 5.94%, the highest since Jan 2025, while real spending is 2.10%

• With spending outpacing income for another month, the personal saving rate fell to 2.6% the lowest since June 2022.

Now let’s take a deeper look with more details and charts (Goldman takeaways to be posted when available).

Read more

Markets are also digesting quite a bit of economic data we got this morning:

• April personal income came in well under expectations but mostly due to the reversion in farm assistance payments after the jump in March, with compensation growing although still less than expected.

• April personal spending came in as expected with modest growth when adjusted for price rises.

• April PCE prices (the Fed’s preferred inflation index) came in slightly below expectations as did core (ex-food and energy).

• April durable goods orders (lasting more than 3 years) came in well above expectations boosted by transport and defense orders but core business orders were weak.

• Weekly jobless claims remained subdued.

• Q1 GDP was revised lower to 1.6% Q/Q growth (annualized) on weaker consumer and IT spending than was originally estimated.

Later this morning we’ll get April new home sales and EIA petroleum inventories (delayed a day due to the Monday holiday).

In terms of Fed speakers we heard from Governor Cook this morning who moved into the camp of rate hikes being appropriate if inflation does not move lower. Also Vice Chair Jefferson expects inflation to cool, but warned inflationary risks remain tilted to the upside, while Minneapolis Fed President Kashkari told CNBC that bringing down inflation remains his top priority. Later today we’ll hear from regional Fed Presidents Williams, Musalem, Daly, and Barkin (just Williams a 2026 FOMC voter). We’ll also get a 7-year Treasury auction in the afternoon.

Elsewhere, despite the rise in crude prices bond yields are edging lower while the dollar and copper, US natural gas, and bitcoin futures are lower while gold and copper futures are trading higher (charts below).
SPX UNCH; NDX +0.1%, RUT UNCH.

[Note the International Update is below the US update]

US Initial Jobless Claims May 2: 215K (est 211K; prev 209K; prev R 210K)
- Continuing Claims May 1: 1786K (est 1784K; prev 1782K; prev R 1771K)

US Personal Income (M/M) Apr: 0.0% (est 0.4%; prev 0.6%; prev R 0.5%)
US Personal Spending (M/M): 0.5% (est 0.5%; prev 0.9%; prev R 1.0%)
- Real Personal Spending (M/M): 0.1% (est 0.1%; prev 0.2% prev R 0.3%)

US Core PCE Price Index (M/M) Apr: 0.2% (est 0.3%; prev 0.3%)
- Core PCE Price Index (Y/Y): 3.3% (est 3.3%; prev 3.2%)
- PCE Price Index (M/M):0.4 % (est 0.5%; prev 0.7%)
- PCE Price Index (Y/Y): 3.8% (est 3.3%; prev 3.2%)

US Durable Goods Orders (M/M) Apr P: 7.9% (est 4.0%; prev 0.8% prev R 1.3%)
- Durables Ex-Transportation (M/M): 1.1% (est 0.5%; prev 0.9% prev R 1.1)
- Cap Goods Orders Nondef Ex Air (M/M): -1.1% (est 0.4%; prev 3.4% prev R 3.9%)
- Cap Goods Ship Nondef EX Air (M/M): 0.4% (est 0.6; prev 1.2% prev R 1.3%)

US GDP Annualised (Q/Q) Q1 S: 1.6% (est 2.0%; prev 2.0%)
- GDP Price Index: 3.5% (est 3.6%; prev 3.6%)
- Personal Consumption: 1.4% (est 1.6%; prev 1.6%)
- Core PCE Price Index (Q/Q): 4.4% (est 4.3%; prev 4.3%)

SPX futures (/ES) - record high territory

10yr Yield - down for sixth session

DXY US dollar index - reversed from gains

US WTI crude

Gold futures (/GC) - again testing 200-DMA (brown line)

US copper futures (/HG)

US natural gas futures (/NG)

Bitcoin futures - falling below 50-DMA to 6-week low

CNBC:

BBG:

Some pre-market company news from CNBC, BBG, MarketWatch.

International Update:

Europe’s benchmark STOXX 600 as of 8.00 am ET was -0.8% falling to the lows of the week still not far from all-time high territory.

Major European indices are also mostly lower .

Germany's DAX: -0.8%, U.K.'s FTSE 100: -1.1%, France's CAC 40: -0.6%, Italy's FTSE MIB: +0.1%, Spain's IBEX 35: -0.6%.

The MSCI Asia All-Country index was also -0.8% Thursday as it fell back from an all-time high Wednesday.

Major equity indices in the Asia-Pacific region ended Thursday on a mostly lower note while markets in India were closed for a holiday.

Japan's Nikkei: -0.5%, Hong Kong's Hang Seng: -1.3%, China's Shanghai Composite: +0.1%, India's Sensex: CLOSED, South Korea's Kospi: -0.5%, Australia's ASX All Ordinaries: -1.4%.

Some ex-US highlights:

BBG - Chinese imports of crude oil are set to drop to levels not seen since the pandemic, as the war in Iran reveals the extent to which demand has disappeared and may not be coming back.

• Inbound shipments could fall to an average of 10.9 million barrels a day this year, according to London-based consultancy Energy Aspects Ltd. That would be the weakest since 2022, when the economy was stricken by lockdowns to prevent the spread of Covid-19. China’s daily imports averaged 11.6 million barrels in 2025, a figure inflated by the government’s drive to buttress energy security by hoarding crude.

• Over the past two years, its aggressive stockpiling absorbed much of the world’s surplus oil and helped support prices. But with Brent crude largely holding above $100 a barrel since the US and Israel first struck Iran, China no longer has the appetite. Transport in the country is increasingly electric, and its vast refining and petrochemicals industries simply have too much capacity relative to demand.

• State refiners cut runs to record lows last week. Gasoline and diesel sales both fell more than 15% in April from March. The upshot is that refiners can cut throughput by nearly 2 million barrels a day without significantly tightening the domestic market for oil products, said Energy Aspects analyst Jianan Sun.

• Beijing’s stock-building has masked the country’s real demand, said Michal Meidan, the head of China energy research at the Oxford Institute for Energy Studies. She estimates the country’s actual requirement for crude at 10.4 million barrels a day. Chinese refiners can sustain run cuts of 10% for several months, and if domestic production is maintained at current levels and imports via pipeline are maximized, then the country’s seaborne purchases could fall as low as 7.2 million barrels a day without materially damaging product supplies, she said.

BBG - Traders trimmed wagers on the extent of interest rate hikes from the Bank of England this year, fueled by falling oil prices on optimism over signs of progress in talks between the US and Iran.

• Money markets briefly bet on 36 basis points of hikes by year-end — the fewest in more than one month — representing one quarter-point increase with less than a 50% chance of another, according to swaps tied to policy-meeting dates. UK two-year yields, which are sensitive to changes in monetary policy, slid as much as eight basis points to a one-month low at 4.22%.

• Two hikes from the BOE were expected as recently as two weeks ago, while four hikes were anticipated in the weeks after the US and Israel attacked Iran at the end of February. Traders assign around a 50% chance of the first hike coming in July.

• “Gilts certainly should see some outperformance where the repricing has been extreme as compared to February levels,” said Pooja Kumra, senior UK and European rates strategist at Toronto Dominion Bank. “Talks around Strait traffic returning to pre-war numbers within a set timeframe of one month is really positive for markets.”

BBG - A Bank of Japan survey of market participants found a split over whether the central bank should stop tapering its bond purchases or continue to reduce them from next April after sticking with its current plan until then.

• The feedback from the survey and the discussions will inform the BOJ when it reviews its bond-buying plans at the next policy board meeting on June 15-16, and sets a plan for the fiscal year starting April 2027.

• At the heart of the debate is whether the central bank should continue to trim its bond purchases at a pace of ¥200 billion ($1.3 billion) per quarter, slow down that pace or stop the reductions altogether. Current monthly purchases amount to around ¥2.7 trillion. Opinions expressed in the survey largely found support for continuing that pace of tapering as planned through the end of the current fiscal year.

BBG - China let the interest rate on a one-year policy loan to banks decline to a record low, according to people familiar with the matter, a sign Beijing is stepping up efforts to support an economy that’s losing momentum.

• Some banks borrowed from the People’s Bank of China’s one-year medium-term lending facility, or MLF, at rates as low as 1.45% in May, down from 1.5% in April, said the people, who asked not to be identified discussing private matters. This follows a similar drop of five basis points in January.

• While China has shifted to prioritizing the seven-day reverse repurchase rate as its main policy rate anchor and downplayed the official role of the MLF, a cut still signals the PBOC is comfortable with the recent declines in money-market rates, helps lower banks’ funding costs and may spill over to cheaper financing for other borrowers.

BBG - South Korea’s central bank kept its benchmark interest rate unchanged and sharply raised its forecasts for inflation and growth, as policymakers weigh rising price pressure from higher oil costs against uncertainty surrounding the broader economic outlook.

• The Bank of Korea held the seven-day repurchase rate at 2.5% on Thursday, extending a pause that has been in place since July last year after four cuts between October 2024 and May 2025. The decision matched the expectations of 22 out of 23 economists surveyed by Bloomberg, with the other one predicting a quarter-point hike.

• The BOK bumped up its inflation outlook for this year to 2.7% from a 2.2% projection given in February, reflecting higher energy costs following the Iran war-driven closure of the Strait of Hormuz. The central bank also raised its 2026 growth forecast to 2.6% from 2%. Economists had expected big increases in both forecasts, and the new projections are likely to fuel speculation of a hawkish tilt by the bank.

• The meeting marked the first policy decision chaired by Governor Shin Hyun Song, and the first involving new board member Kim Jinill, a former Federal Reserve economist widely viewed by markets as more hawkish than his predecessor Shin Sung Hwan.

• “Inflation appears to have more room to rise, so the likelihood of the Bank of Korea taking action in July looks fairly high,” said Cho Yong-gu, a fixed-income strategist at Shinyoung Securities.

BBG - The US, Japan, India and Australia on Tuesday launched a maritime surveillance initiative for the Indo-Pacific region, among other measures, as the countries’ foreign ministers gathered in New Delhi for a high-profile summit aimed at countering growing threats to commerce.

• The four nations also announced plans to partner with Fiji on port infrastructure, in what US Secretary of State Marco Rubio called an “exciting” initiative.

Some international corporate highlights:

• European defense stocks rallied on Thursday after Ukraine’s parliament ratified a 90-billion-euro ($104.6 billion) loan agreement with the EU. Ukrainian President Volodymyr Zelenskyy is currently in Sweden. Citing an anonymous source, Reuters reported on Thursday that Zelenskyy and Swedish Prime Minister Ulf Kristersson will jointly announce an agreement to provide Ukraine with Gripen fighter jets. German tank parts maker Renk surged 8.3%, while France’s Exail Technologies and Germany’s Rheinmetall popped 6.6% and 4.5%, respectively.

• Elsewhere, shares of Spain’s eDreams jumped 10% in early trade after the online travel agent posted a 52.2 million euro profit ($60.6 million) for its fiscal fourth quarter.

• Polish energy giant Orlen reported a 22.8% jump in first-quarter adjusted core profit, with earnings before interest, taxes, depreciation and amortization (EBITDA) beating analyst expectations. Shares were last seen trading 1.2% higher.

• Chinese electric car company Nio is trying to raise the bar for premium vehicles in a fiercely competitive market. Shares of Chinese electric carmaker Nio jumped as much as 10.45% in Hong Kong trading on Thursday after the company officially launched its ES9 SUV a day earlier, before paring gains to close 6.28% higher. Its U.S.-listed stock closed 9.3% higher overnight, extending gains for 2026. The ES9 starts at 390,000 yuan ($57,470) under Nio’s battery subscription model, which separates the cost of the vehicle from monthly battery payments.

• Shares of LG Energy Solution closed 15.25% higher Thursday after its U.S. unit secured a deal to supply battery cells for DTE Energy’s storage projects in Michigan. The eight projects will deliver 1.5 gigawatts of battery storage, or 6 gigawatt-hours, allowing electricity to be stored when excess power is generated and distributed to customers as needed, the company’s unit, LG Energy Solution Vertech, said in a press release. The deal is worth $1.6 billion, according to a Yonhap report. Its shares rose as much as 16.56% earlier in the session.

Europe/Asia economic highlights from Briefing.com:

• Eurozone's May Business and Consumer Survey 93.5 (expected 92.8; last 93.2)

• France's April PPI -2.1% m/m (last 1.9%); 2.1% yr/yr (last 0.0%)

• Italy's May Business Confidence 87.9 (expected 87.5; last 87.9) and Consumer Confidence 93.4 (expected 90.1; last 90.8). April PPI 0.3% m/m (last 4.4%); 6.8% yr/yr (last 4.2%)

• Spain's April Retail Sales 0.8% yr/yr (last 4.1%)

• Hong Kong's April trade deficit HKD29.5 bln (last deficit of HKD89.1 bln). April Imports 44.4% m/m (last 41.2%) and Exports 42.9% m/m (last 35.8%)

• Australia's Q1 Building Capital Expenditure -3.8% qtr/qtr (last 2.5%), Q1 Private New Capital Expenditure 6.5% qtr/qtr (expected 1.2%; last 0.7%, and Q1 Plant/Machinery Capital Expenditure 18.1% qtr/qtr (last -1.3%)

• New Zealand's January Budget deficit NZD9.31 bln (last deficit of NZD14.80 bln)

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• US equity indices would start Wednesday’s session like Tuesday higher as bond yields continued their decline for a fifth straight session, joined today by a renewed drop in oil prices, but unlike Tuesday indices opened well off the premarket highs with little in terms of tangible progress towards a US-Iran peace deal as discussed in the morning update.

• The Mid-East impasse would continue throughout the session keeping equity indices pinned to the unchanged mark despite another push higher from memory stocks as other tech names saw some profit taking. For the first time in a week it wouldn’t be the small cap Russell 2000 (RUT) that would lead but instead the Dow Jones Industrial Average with a modest +0.4% gain. The RUT, S&P 500 and Nasdaq would all finish little changed.

• The White House denied reports from Iranian state media suggesting the two sides are close to finalizing a memorandum of understanding that would restore traffic through the Strait of Hormuz as a “complete fabrication”, though Secretary of State Marco Rubio said during a cabinet meeting that some progress has been made toward a peace agreement.

• President Trump also said Iran was miscalculating if it thought he would soften his position to avoid a prolonged standoff. “They thought they were going to outwait me,” Trump said Wednesday at the start of a cabinet meeting at the White House. “He’s got the midterms [they thought]. I don’t care about the midterms. Look, what happened last night,” referring to Ken Paxton’s victory in the Republican-only primary runoff in Texas in which he defeated incumbent Sen. John Cornyn with the president’s endorsement. Trump also downplayed the potential unfreezing of Iranian funds as a bargaining chip. “We’re not talking about any easing of sanctions, no giving money,” Trump said. “When they behave properly…we’ll let them have their money.” He also asserted that no one nation would control the waterway, although it would be “overseen” by the US, highlighting a key sticking point in resolving the nearly three-month conflict.

• No economic reports today other than the ADP weekly hiring estimates noted in the morning update showing job growth for the four weeks ending May 9th coming in at +143k, easing a touch from the prior week but still a very strong number.

• Elsewhere, US natural gas futures would close up while crude, gold, and bitcoin futures would fall back. The dollar was little changed (all covered in the subscriber section).

• The market-cap weighted S&P 500 (SPX) was UNCH, the equal weighted S&P 500 index (SPXEW) UNCH, Nasdaq Composite +0.1% (and the top 100 Nasdaq stocks NDX) -0.1%, the SOX semiconductor index -1.4%, and the Russell 2000 (RUT) UNCH.

Some market commentary:

• “When you’re witnessing a move like this, it’s easy to think that a pullback is inevitable,” Bret Kenwell, U.S. investment analyst at eToro told MarketWatch. “But sometimes these moves can go a lot farther and a lot longer than you expect.”

• “Given the capex plans of the AI hyperscalers, there’s no reason to think that the rally is about to end,” said Fares Hendi, a portfolio manager at Societe de Gestion Prevoir in Paris. “If there’s a breakthrough between the US and Iran, the trend could accelerate, with investors buying back their shorts.”

• “We are in the midst of something very structural and huge — the AI CapEx theme — and it’d be very dangerous to stand against it,” said Lilian Chovin, head of asset allocation at Coutts.

• “The transformative impact of AI in the coming years and decades cannot be overstated, but the current valuations associated with many of the semiconductor stocks that are providing the compute infrastructure to make it all happen have gotten extremely frothy and way ahead of themselves,” said Eric Parnell, chief market strategist at Great Valley Advisor Group.

• There’s hope for broader participation in this bull market, but investors have largely been “holding their nose” and buying more AI, memory and chip favorites driving the frenzy, said Robert Pavlik, senior portfolio manager at Dakota Wealth Management, in a phone interview.

• “The stock market has enough confidence that a resolution with Iran will eventually come to light, even if it’s not immediate,” said Alexander Guiliano at Resonate Wealth Partners. “While it may seem like stocks have moved too fast, we saw a garden variety correction only two months ago, which helped to reset sentiment and pave the way for this most recent rally.”

• “The rally has been stellar, but maybe the bulls are a bit tired,” said José Torres, senior economist at Interactive Brokers. Investors may be realizing that some of the good news about a potential U.S.-Iran deal has already been priced in, Torres said in a phone interview.

• Drew Pettit, U.S. equity strategist at Citi, doesn’t see much more room for stocks to run from here. “You got yields higher, like 4.50% on the [U.S. 10-year Treasury], and you have inflation expectations higher in a curve that’s actually gotten flatter throughout the year. All of that doesn’t set you up for a higher sustainable multiple at this point,” he said on CNBC’s “Power Lunch” on Tuesday afternoon. Pettit’s 7,700 year-end target for the S&P 500 implies a modest increase of just 2% for the index.

Now let’s take a deeper dive into today and what to watch for tomorrow.

Read more

Technology shares were in the lead again Wednesday with Micron Technologies adding another 7% in premarket trading after surging 19% on Tuesday to top $1 trillion in market capitalization for the first time. Micron is up over 200% this year.

Earlier this morning we got the ADP weekly hiring report showing job growth for the four weeks ending May 9th came in at +143k, easing a touch from the prior week but continuing to indicate robust job growth.

In terms of Fed speakers we heard earlier from regional Fed Presidents Logan and Kashkari, and we’ll hear later from President Goolsbee along with Governors Cook and Jefferson. We’ll also get a 5-year Treasury auction in the afternoon.

Elsewhere, joining bond yields and crude prices, the dollar and gold, copper, and bitcoin futures are lower while US natural gas futures are trading higher (charts below).
SPX +0.1%; NDX +0.5%, RUT +0.3%.

[Note the International Update is below the US update]

SPX futures (/ES) - record high territory

10yr Yield - down for fifth session

DXY US dollar index

US WTI crude - would be 5-week closing low

Gold futures (/GC) - almost down to 200-DMA (brown line)

US copper futures (/HG)

US natural gas futures (/NG)

Bitcoin futures

CNBC:

BBG:

Some pre-market company news from CNBC, BBG, MarketWatch.

International Update:

Europe’s benchmark STOXX 600 as of 8.00 am ET was up +0.3% recovering some of Tuesday’s decline from the highest levels since its all-time high Feb 27th.

Major European indices also trade trade in the green.

Germany's DAX: +0.3%, U.K.'s FTSE 100: +0.1%, France's CAC 40: +0.8%, Italy's FTSE MIB: -0.1%, Spain's IBEX 35: +0.2%.

The MSCI Asia All-Country index was +0.7% to an all-time high continuing to be powered by South Korean chipmakers as Nvidia announced plans to spend $150 billion a year in the region.

Major equity indices in the Asia-Pacific region had a mixed showing on Wednesday with South Korea's Kospi (+2.3%) continuing its record run with SK Hynix seeing its market cap grow past $1 trillion.

Japan's Nikkei: UNCH, Hong Kong's Hang Seng: -1.1%, China's Shanghai Composite: -1.3%, India's Sensex: -0.2%, South Korea's Kospi: +2.3%, Australia's ASX All Ordinaries: +0.7%

Some ex-US highlights:

BBG - Israel stepped up attacks on Lebanon and said its ground forces would move further into the country, potentially complicating US-Iran talks on an interim peace deal.

• Israeli forces, who are fighting Iran-backed Hezbollah militants, will move beyond a strip of land roughly 10 kilometers (6.2 miles) into the south of Lebanon, the military said. Israel has stepped up strikes elsewhere in the country and killed the new head of the military wing of Hamas, another group allied with Tehran, in Gaza on Tuesday.

• Iran insists the ceasefire will cover “all fronts,” including Lebanon. Israel, which started the wider war when it bombed Iran in late February alongside the US, is reluctant to accept any restrictions on its operations in its northern neighbor. It says its actions are necessary to protect its communities and counter Hezbollah’s rockets and drones.

• WSJ - Israel killed Mohammed Odeh Hamas’s new military chief with a strike in Gaza less than two weeks after killing his predecessor, as it works to cripple the militant group as a military or governing force.

CNBC - Nvidia is expanding heavily in Taiwan with a new campus and a tenfold increase in annual spending, CEO Jensen Huang announced Wednesday, as the chipmaker plans for artificial intelligence-powered growth.

• “Now we’re spending $100 [billion], going to $150 billion in Taiwan each year,” Huang said in Taipei, noting that’s up from $10 billion to $15 billion annually just four or five years ago.

• By the end of the year, Nvidia will begin building a new office complex called Constellation, which can accommodate 4,000 employees in northern Taipei when it opens in 2030, he said. That would be four times the company’s existing headcount in Taiwan.

BBG - Economic advisers to German Chancellor Friedrich Merz almost halved their forecast for growth this year as the war in the Middle East and US trade policy weigh on activity.

• Wednesday’s updated projections from the Council of Economic Experts predict gross domestic product will rise 0.5% in 2026. That’s down from November’s 0.9% prediction and matches the government’s latest view. Expansion in 2027 is seen at 0.8%.

• Downside risks “stem in particular from the possibility that the war in Iran could last longer and have more severe consequences than expected,” the report said. An alternative scenario of higher-for-longer oil has 0.2% growth this year and 0.5% next.

• Inflation, meanwhile, is seen averaging 3% in 2026 and 2.8% in 2027, a lot higher than before. In the more negative outcome, it could even remain above 3% next year.

BBG - The surge in China industrial profits continued in April continuing to reflect global trends with a small subset of AI-related companies driving gains while other sectors struggled.

• Profits were up 24.7% in April from a year ago, a level exceeded only once since 2021 (Nov 2023) and YTD are up 18.2% y/y, the best since 2021, on the back of a 108% jump in the IT/communications industry, contributing nearly half of the overall expansion in industrial profit.

• Processing of metals such as aluminum and copper were up 118%, the chemicals sector (boosted by higher prices) up 70% and mining (oil and coal extraction) 26% in the first four months this year.

• In contrast clothing/apparel was -13.5% and furniture -54%. Carmakers’ profits declined -17%, as sales contracted at the worst pace since mid-2022 in April.

• Economists surveyed by Bloomberg earlier this month upgraded their forecasts of full-year export growth to 6.4%, from 4.9% in April. Expectations for imports were also raised, to 8% from 5% previously.

• Years of weak demand and excessive supply resulted in intense price competition among Chinese industrial firms, driving their profit margin to 5.3% at the end of last year, the lowest in data dating back to 2014.

• “Despite the strong headline figure, the recovery is still narrow and sector‑driven, not broad‑based,” Lynn Song, chief economist for Greater China at ING Bank NV. “Yet after three straight years of negative profit growth, the strength of the data so far this year is welcome news.”

• “Outside of material and tech-related sectors, the recovery in corporate profits lacks durable domestic support. April’s deterioration in consumption and investment were a stark reminder that demand remains anemic. — BBG's Eric Zhu

BBG - European car sales climbed for the third consecutive month in April as consumers continued to snap up more electric and hybrid models.

• New-vehicle registrations rose 7% to 1.15 million last month, the European Automobile Manufacturers’ Association said Wednesday. Sales expanded in major markets including Germany and the UK, with EV deliveries jumping 38%.

• Deliveries of hybrid cars also rose in the region last month, while sales of petrol and diesel vehicles fell, pointing to a continued structural shift of the market toward cars with a battery.

• Chinese brands continue to make inroads in Europe, providing relief from a brutal price war back home, with Geely and BYD among the top sellers from the country. Chery Automobile Co. was among the fast-growing with a 322% rise.

BBG - The number of births in England and Wales last year fell to the lowest level since 1977 as the country edges closer to a demographic tipping point where the non-immigrant population starts to shrink.

• The number of live births in 2025 dropped by 1.6% to 585,396, according to the Office for National Statistics, just 14,408 more than the number of people who died in England and Wales. In 2024, births outnumbered deaths by 26,064.

• The figures underscore the significant issues at stake for the UK’s ongoing debate about migration and the wider economy. According to the Resolution Foundation think tank, the UK is on track for a shortfall in native births compared with deaths as soon as this year, raising questions about the country’s potential growth trajectory and the costs of supporting an ageing population.

• Immigration has long ensured the UK population continues to expand. Of total live births last year, 40.2% were born to parents where one or both were born outside the UK, the ONS said. That was an increase from 39.5% in 2024.

• But migrant numbers have started to fall from the record highs of 944,000 in the year to March 2023. The Labour government has toughened up visa rules to bring migration down from record highs in a bid to reverse the rise of Nigel Farage’s anti-immigration Reform UK in opinion polls.

BBG - French consumer confidence fell more than expected in May, underscoring risks to the euro area’s second-largest economy as the effects of the Iran war spread.

• The monthly indicator from statistics agency Insee dropped two points to 82, its lowest level since early 2023. The reading was below the median estimate of 83 in a Bloomberg survey.

• The confidence indicator also showed a decline in consumers’ assessment of living standards, their financial situation and their capacity to make significant purchases.

Goldman - “what explains Asia’s resilience of activity so far in an overwhelmingly energy-importing region, despite the largest energy supply shock in decades?” Att least four factors – two structural forces and two temporary buffers – appear to have played a role.

• First, the intensity of oil usage has fallen in most Asian economies and the cost of adjustment appears to be lower (the price elasticity of demand higher) than in the past – reflecting factors such as greater capacity to work remotely, better urban transportation systems, and a larger stock of electric vehicles/charging infrastructure (particularly in China, where EV charging was up about 60% yoy in early May).

• Second, the AI investment boom has generated substantial positive growth spillovers for several Asian economies irrespective of the energy shock.

• Third, Asian policymakers have deployed substantial fiscal stimulus to cushion consumers and critical sectors (see Exhibit 2). However, the capacity to do this is being tested as the duration of the shock extends.

• Fourth, oil and refined product inventories are falling in most countries. Consuming inventory is a rational policy response when a disruption is expected to be short. But as time goes on, demand will be required to adjust further if there is no improvement in supply. Ultimately, the current pace of fiscal stimulus and inventory drawdown is unsustainable in some economies – and implies higher prices and weaker demand if the shock continues, as our commodity strategists have emphasized.

BBG - Bank of Japan Governor Kazuo Ueda indicated the need for vigilance over the impact of oil price spikes on the underlying inflation trend without dropping a clear hint on how that dynamic might influence the outcome at next month’s policy meeting.

• “Japan’s experience shows that oil price shocks are never just oil price shocks. They are tests of the entire inflation regime,” Ueda said Wednesday in a speech to open a two-day international banking conference in Tokyo. The governor traced the impact of oil shocks dating back to the 1970s and noted, “we are actually facing a fifth oil price shock.”

• In keeping with standard protocol for remarks at this annual conference, the governor refrained from sending any overt signals about the policy path. Still, as a reflection of concerns about the effects of high oil prices, Ueda’s remarks will likely support broad speculation in the market over the prospects for an interest rate increase when authorities next set policy on June 16.

• “The boundary between temporary and persistent inflation is not mechanical,” Ueda said. “A temporary shock can become persistent if it changes wages, expectations and price-setting behavior.”

• Pricing in the overnight swaps market indicates that traders are seeing a roughly 75% chance of a quarter-point hike next month.
  

BBG - New Zealand’s central bank held interest rates for a third straight meeting, opting to wait longer to assess how the global energy shock is impacting domestic spending and medium-term inflation.

• The Reserve Bank’s Monetary Policy Committee kept the Official Cash Rate at 2.25% on Wednesday in Wellington, as expected by all 23 economists surveyed by Bloomberg. The RBNZ’s new forecasts indicate the chance of at least two 25 basis point hikes before the end of this year.

• “On balance, the OCR will most likely need to increase sooner and by more than envisaged in the February Monetary Policy Statement,” the RBNZ said in its post-meeting statement. “The pace of OCR increases will depend on the relative influence of persistent wage- and price-setting behavior versus weaker economic activity on medium-term inflation pressures.”

BBG - Australia’s core inflation remained above the top of the Reserve Bank’s target in April, reinforcing expectations policymakers will maintain a hawkish tone following rapid fire interest-rate hikes this year.

• The closely-watched trimmed mean gauge of annual consumer-price growth, which shaves off volatile items, rose 3.4%, matching economists’ estimate, data from the Australian Bureau of Statistics showed Wednesday. The RBA aims for inflation at the midpoint of its 2-3% target band.

• On a monthly basis, the underlying measure rose 0.3% from March, also matching estimates.

• Economists expect risks to the inflation outlook will remain tilted to the upside, led by new housing costs as higher diesel, freight and petrochemical prices feed through supply chains.

• The Australian dollar declined after the data came in line with expectations, easing concerns the RBA will deliver another rate rise next month. Swaps priced an even chance of the next hike in August, down from a 64% probability prior to the print. The RBA’s policy board next meets on June 15-16 and is widely expected to keep the cash rate unchanged at 4.35% after hiking at each of its three previous meetings this year.

Some international corporate highlights:

• AkzoNobel shares soared almost 21% after the Dutch paint and specialist coating manufacturer, whose brands include Dulux, rejected a joint cash takeover offer from Nippon Paint and Sherwin-Williams worth 73 euros ($85) per share. In a statement, Akznobel said its boards “unanimously” continue to recommend a planned merger with Axalta instead.

• Elsewhere, Europe’s autos sector were 2.6% in afternoon trade, boosted by a 5.1% year-on-year rise in new car registrations in the European Union, according to ACEA data. Renault jumped almost 4%, with Stellantis rising 2.8%, as Volkswagen advanced 2.3%. Mercedes-Benz gained 2.8% and BMW added 2.1%.

• China has been slow-walking approval of Airbus SE plane deliveries to signal impatience with how long European regulators are taking to certify Chinese-made aircraft, according to people familiar with the matter.

• ByteDance Ltd., the developer of TikTok and a leading force in artificial intelligence, is planning to sharply increase its capital spending this year and next in a bid to lead the Chinese AI market and challenge the top US players abroad.

• Shares of Samsung Electronics rose 2.68% after unionized workers at the company in South Korea approved a provisional wage agreement, averting a potential strike that could have disrupted global semiconductor supply chains.

Europe/Asia economic highlights from Briefing.com:

• France's May Consumer Confidence 82 (expected 83; last 84)

• Italy's March Industrial Sales 2.0% m/m (last 0.5%); 4.4% yr/yr (last 0.5%)

• Swiss May ZEW Expectations -11.1 (last -30.3)

• China's April Industrial Profit 18.2% YTD (last 15.5%)

• Japan's April Corporate Services Price Index 3.0% yr/yr (expected 3.3%; last 3.3%)

• Australia's April MI Leading Index 0.0% m/m (last -0.1%). Q1 Construction Work Done 3.4% qtr/qtr (expected 0.8%; last 0.2%) and April CPI Indicator 4.2% yr/yr (expected 4.4%; last 4.6%)

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• US equity indices would start the holiday-shortened week solidly higher as bond yields continue their decline for a fourth straight session as hopes remained high for a US-Iran peace deal as discussed in the Week Ahead and further in the morning update.

• There would be little indication of progress during the day on that front, but that lack of progress (and the uptick in oil prices after falling back sharply Monday) was shrugged off by equity indices on the back of another surge in memory chip names with Micron Technologies adding another 19% to a nearly 800% rally over the past year which took it over the $1 trillion market capitalization mark.

• And while the Nasdaq would finish +1.2%, it would be the small cap Russell 2000 that would lead for a fourth straight session +1.8% helped by a fourth day of declining bond yields. The S&P 500 would finish +0.6% while the equal-weight version would end +0.5%. All of these indices would end at all-time highs. In contrast the Dow Jones Industrial Average, heavier in energy and consumer products companies would end -0.2%.

• In economic reports, the Chicago Fed National Activity Index (a good GDP proxy) rebounded above the trend level with the diffusion index (breadth of indicators) the strongest since Sept 2022. Meanwhile, consumer sentiment from the Conference Board edged back from the highs of the year on a drop in the present situation index with consumers indicating they were cutting back on expensive purchases but future expectations rose. Expectations for higher stock prices moved to the highest since 2024 even as the share of consumers who said a US recession over the next 12 months is ‘very likely’ and ‘somewhat likely’ rose.

• Elsewhere, the dollar would edge higher and copper and bitcoin futures would also gain while gold and US natural gas would fall back (all covered in the subscriber section).

• The market-cap weighted S&P 500 (SPX) was +0.6%, the equal weighted S&P 500 index (SPXEW) +0.5%, Nasdaq Composite +1.2% (and the top 100 Nasdaq stocks NDX) +1.8%, the SOX semiconductor index +5.5% (to a new all-time high), and the Russell 2000 (RUT) +1.8%.

Some market commentary:

• The main driver of the mood music is the story in Iran,” Mizuho Bank Ltd. strategist Jordan Rochester said. Despite the strikes and belligerent rhetoric from Iran, “both sides are closer than they have been to date to getting something over the line. The US has made it clear it does not want the kinetic action to re-start,” he said.

• “Doubts about the deal and its detail, especially relating to uranium enrichment and the tolling of the Strait of Hormuz, persist,” said Kyle Rodda at Capital.com. “However, market participants are placing their bets on peace and subsequently buying into very strong equity fundamentals.”

• “The consensus view still assumes there will be some type of a détente formally reached within the next few days between Washington and Tehran, which means the real question is how much of this is already priced in?,” wrote Adam Crisafulli of Vital Knowledge.

• “Don’t expect an agreement to immediately send the S&P 500 running to 8,000, but while the near-term reaction may be a mild disappointment, the reality is that removing distractions and allowing investors to focus on strong earnings and stable growth will increase the rally potential for this market,” Tom Essaye at The Sevens Report said.

• “Market participants are placing their bets on peace and subsequently buying into very strong equity fundamentals,” said Kyle Rodda at Capital.com.

• “There is no doubt that fundamentals are at least partially responsible for the market rally,” wrote Adam Parker, founder of Trivariate Research. “With earnings projected to grow 23% this year, and 16% next year, there’s a credible argument to make that despite the increasing projections for earnings, and strong earnings growth, the price-to-forward earnings has been modestly contracting.”

• “Net net, optimism is still elevated that an agreement can be made to end the war,” said Jim Reid, strategist at Deutsche Bank. He also noted that the other main driver of bonds this week will likely be the U.S. personal consumption expenditure price index data, due for release on Friday. “Our economists expect core PCE inflation at around +0.3% month-on-month, unchanged from March, with the year-on-year rate edging higher. This release matters not just for the inflation print itself, but for how it fits with the broader narrative of sticky services inflation and resilient demand,” said Reid.

• “You’ve got investors that are, I think, pathologically optimistic here that the war is going to end soon and that things are going to resume back to the way they were prior to the war,” said Ron Albahary, LNW chief investment officer.

  There’s a “tug of war going on” in the market, Albahary added. Investors are “believing in this tsunami of capex that has been driving markets higher,” he said, while the base of the U.S. economy is “still relatively fragile,” with inflation “likely becoming systemic.”

• “While we’d like to share the optimism, there have been enough setbacks in the process of crafting an agreement between Washington and Tehran that we’ll remain cautious until there is more tangible progress,” said Ian Lyngen at BMO Capital Markets.

• “I’m not a buyer that there’s some deep structural shift that’s going to make the economy more inflationary,” says Nathan Sheets, global chief economist at Citigroup Inc. He says that’s largely because AI is likely to be an enormous positive supply shock. “I don’t think we’re going to see it today or tomorrow, but over a several-year period it is likely to bring a reduction in inflationary pressures, as the economy’s capacity to produce inevitably expands.”

Now let’s take a deeper dive into today and what to watch for tomorrow.

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Executive Summary:

• The Conference Board’s Consumer Confidence index edged down -0.7pts in May (after a +1.0pt revision to Apr, to 93.8 which was the highest read this year) to 93.1, still above the 92.0 expected. The cutoff for responses was May 19th.

• The pullback was entirely in the Present Situation Index which fell -3.2pts to 121.2 on falling perceptions of present business and labor market conditions.

• In contrast, the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—rose +1.0pt to 74.4, the high of the year, on improvements in expectations for business and labor market conditions. That said, the reading remains below the threshold of 80 that the Conference Board has said in the past signals a potential recession.

• Expectations for higher stock prices moved to the highest since 2024 even as the share of consumers who said a US recession over the next 12 months is ‘very likely’ and ‘somewhat likely’ rose.

• The May release also included special questions finding that two-thirds of consumers cited cutting back on spending overall due to rising prices, with most buying fewer items and delaying expensive purchases.

• “Consumers’ write-in responses on factors affecting the economy continued to skew towards pessimism in May. References to prices and oil and gas increased in frequency for a second consecutive month, while mentions of war, geopolitics, and conflict remained elevated—likely signaling consumers’ underlying concerns about the inflationary impacts of the war in the Middle East on their wallets.”

Now let’s take a deeper look with more details, charts, and Goldman’s initial takeaways.

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In terms of reading its signals: “Following a period of economic expansion, an increasing likelihood of a recession has historically been associated with a CFNAI-MA3 value below –0.70. Conversely, following a period of economic contraction, an increasing likelihood of an expansion has historically been associated with a CFNAI-MA3 value above –0.70 and a significant likelihood of an expansion has historically been associated with a CFNAI-MA3 value above +0.20.” 0 is a reading of “trend growth”.

US Chicago Fed National Activity Index Apr: 0.14 (est -0.03; prev -0.20; prev R -0.15)

Executive Summary:

• After flagging the miss on Q1 GDP last month, the April CFNAI returned to positive territory at +0.14. “Trend growth” is 0.0

• The 3-month average (this report’s key economic indicator which flagged the Q1 GDP reading) edged up to +0.03 in April from an upwardly-revised +0.02 in March (originally –0.03), indicating slightly above-trend growth, below its “expansion level” of +0.20 but also well above its recession signal threshold (below -0.70).

• The Diffusion Index (also a 3-mth avg and “captures the degree to which a change in the monthly index is spread out among its 85 indicators”) also was positive at +0.06 in April, and the best reading since Sept 2022, from an upwardly-revised +0.03 in March (originally –0.04) indicating more broad-based gains across the indicators (”periods of economic expansion have historically been associated with values of the Diffusion Index above –0.35”).

Now let’s take a deeper look with more details, charts and takeaways.

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US Housing Starts Apr: 1465K (est 1410K; prev 1502K; prev R 1507K)
- Housing Starts (M/M): -2.8% (est -5.3%; prev 10.8%; prev R 12.0%)

US Building Permits: 1442K (est 1348K; prev 1363K)
- Building Permits (M/M): 5.8% (est 2.5%; prev -11.4%)

Executive Summary:

• Housing starts slipped -2.8% m/m in April but remained +4.6% y/y, as a surge in MF starts to the highest pace since May 2023 partially offset the largest SF decline since March 2025.

• Building permits rebounded +5.8% to 1.442mn similarly on MF strength, while SF permits fell to the second lowest pace since March 2023.

• Completions rose, again due to MF, while units under construction was flat for a fourth month.

Now let’s take a deeper look with more details including lots of charts and regional analysis.

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After a sharp drop Monday (when US markets were closed), oil prices edged higher following “self defense” strikes by the US in southern Iran early Tuesday (Iran time) after the Islamic Revolutionary Guard Corps fired at a US F-35 fighter jet. Targets included missile launch sites as well as Iranian boats attempting to place mines, U.S. Central Command spokesman Tim Hawkins said. He added that the U.S. used “restraint during the ongoing ceasefire” between the two countries. Israel also threatened to intensify strikes against Hezbollah in Lebanon.

Iran said the strikes represented a “gross violation” of the current ceasefire, while U.S. Secretary of ​State Marco Rubio said that negotiating a deal to halt the conflict could “take a few days”.

Later this morning we’ll get the March repeat home price indices, April Chicago Fed National Activities Index (which has a high correlation to GDP) and May consumer confidence from the Conference Board. We’ll also get a 2-year Treasury auction in the afternoon.

Elsewhere, the dollar, bitcoin, and US natural gas futures are trading higher, gold futures are modestly lower, while US copper futures are little changed (charts below).
SPX +0.7%; NDX +1.2%, RUT +1.1%.

[Note the International Update is below the US update]

SPX futures (/ES) - record high territory

10yr Yield - down for fourth session

DXY US dollar index

US WTI crude - small rebound from 1-month closing low

Gold futures (/GC)

US copper futures (/HG)

US natural gas futures (/NG)

Bitcoin futures

CNBC:

BBG:

Some pre-market company news from CNBC, BBG, MarketWatch.

International Update:

Europe’s benchmark STOXX 600 as of 8.00 am ET was easing back -0.2% after having risen for a sixth session Monday to the highest levels since its all-time high Feb 27th.

Major European indices also trade on a mostly lower note while the U.K.'s FTSE (+0.4%) outperforms after being closed for Spring Bank Holiday yesterday.

Germany's DAX: -0.6%, U.K.'s FTSE 100: +0.4%, France's CAC 40: -0.8%, Italy's FTSE MIB: -0.2%, Spain's IBEX 35: +0.1%.

Italy’s benchmark equity index eased off slightly after rising Monday past its all-time closing high set in 2000, with a recent rally in energy and chip stocks adding to strong gains from its banks pushing it to record levels.

The MSCI Asia All-Country index was +0.2% to close fractionally under an all-time closing high after trading in record high territory earlier in the session.

Major equity indices in the Asia-Pacific region were mixed after their strong showing on Monday, which followed news that the U.S. and Iran reportedly made significant progress on a deal. South Korea's Kospi (+2.6%) though rose to a fresh record high after being closed Monday. Taiwan's equity market overtook India's as the fifth largest in the world.

Japan's Nikkei: -0.3%, Hong Kong's Hang Seng: UNCH, China's Shanghai Composite: -0.2%, India's Sensex: -0.6%, South Korea's Kospi: +2.6%, Australia's ASX All Ordinaries: -0.4%.

Some ex-US highlights:

BBG - Ebola may have killed more than 200 people so far in the Democratic Republic of Congo and African officials warned the outbreak is turning into a regional security threat as it spills over to neighboring countries.

• Ebola is spreading faster in Democratic Republic of Congo than responders can contain it, the World Health Organization warned, as suspected deaths climbed above 220 and treatment centers came under attack in the country’s conflict-hit east.

• “When an outbreak threatens cross-border spread, it becomes a regional concern,” Khaled Abdel Ghaffar, Egypt’s health minister, said Monday at a virtual briefing of state officials. “When it tests preparedness across member states, it becomes a continental responsibility.”

• The Ebola response is taking place in one of the world’s most unstable regions, where armed groups control territory, health systems are fragile and attacks on treatment centers have disrupted containment efforts. Health workers were able to follow up with only about 20% of identified contacts in a single day, according to ministry data.

BBG - Russian Foreign Minister Sergei Lavrov called US State Secretary Marco Rubio to advise him to evacuate US citizens and diplomats from Kyiv, as the Kremlin plans to continue heavy strikes on the Ukrainian capital, according to a statement published by the Russian Foreign Ministry Monday.

• Lavrov called his US counterpart at the request of President Vladimir Putin to tell him that Russia is launching systematic and consistent strikes against facilities in Kyiv as well as against the relevant “decision-making centers,” according to the statement.

• This Sunday, Ukraine came under a massive Russian drone and missile barrage that included an Oreshnik ballistic missile. Moscow framed the attack as retaliation for the recent Ukrainian drone attack on a college in the Russia-occupied Luhansk region that killed 21 students.

WSJ - Pope Leo XIV warned that artificial intelligence “threatens to normalize an anti-human vision” and said that the concentration of immense digital power in the hands of a few private actors must be countered.

• The pontiff’s encyclical letter—a text that is poised to define Leo’s papacy—reads like a sharp warning to Silicon Valley executives and humanity more broadly about the future of civilization as new technologies rapidly advance.

• The risk, he said, is that humans will be reduced “to mere cogs in a system driven toward ever greater efficiency.” Leo used two biblical images to describe the choice humanity faces.

• “The primary choice is not between a ‘yes’ or ‘no’ to technology, but rather between constructing Babel or rebuilding Jerusalem,” he wrote In the Bible, the Tower of Babel symbolizes a top-down, grandiose project where decisions are driven by pride, profit and a push for homogenization, the pope suggested in his text. In the rebuilding of Jerusalem, diverse people worked together to rebuild the ruined walls and established a fraternal coexistence within them, he added.

• “Leo sees the challenge of AI as a choice about its design, and about who gets to make those choices,” said Vincent Miller, a professor of theology at the University of Dayton, Ohio.

BBG - The conflict in the Middle East has choked a fifth of global LNG supply, but that hasn’t resulted in extreme price spikes seen during previous energy crises. That’s mainly down to weaker Chinese imports in March and April, but signs of a rebound in the country’s purchases are raising the prospect of fiercer global competition at a time when Europe will need to replenish inventories ahead of winter.

• “The full impact of the Strait of Hormuz closure has not yet been felt because we have been in the soft shoulder season for demand,” said Saul Kavonic, an energy analyst at MST Marquee. “LNG prices could rise a further 50% through August if the Strait remains largely closed.”

• LNG deliveries to Europe are down more than 10% from a year ago, according to a 30-day moving average of ship-tracking data. And in the last two weeks, a few US shipments headed to Europe have diverted to Asia.

• One critical factor will be whether China has adequate hydropower output this summer, as that would reduce the need for gas. Southern and eastern China are predicted to see near-normal to wetter conditions, which would generally support hydropower output, while the north may face pockets of dryness, James Caron, director of US and Asia meteorological operations at Atmospheric G2 said.

• Japan, the world’s second-largest LNG buyer, is facing a blistering summer, according to local forecasts, which could force it to buy more shipments of the power-plant fuel. The nation’s spot electricity prices have jumped over the last few months, and are near the highest level since 2022.

RTRS - Huawei Technologies said on Monday its high-end chips will have transistor density equivalent to 1.4-nanometre processes by 2031 which would put them close to what is expected to be the global frontier at the end of the decade. Currently China’s most advanced proven chipmaking capability is widely seen at around 7 nanometres.

• Huawei says the industry can no longer rely on shrinking transistors for computing breakthroughs, a pattern known as Moore’s Law, as they ⁠have become so small that their dimensions are measured in only a few atoms.

• Instead they plan to reply on The Tau Scaling Law, as the principle is called, which instead focuses on cutting the time it takes signals and data to move through chips ​and computing systems, Huawei said.

• “Rather than depending solely on smaller transistors, the company is focusing on shortening interconnect, lowering latency and improving data movement inside the chip, which is a credible way ​to extract more performance when leading-edge lithography is constrained,” said He Hui, director of semiconductor research at Omdia.

• “In the short term, China ⁠may narrow the ​gap with global leaders, but a technology gap with the most advanced nodes will still remain,” said Brady Wang, associate director at Counterpoint Research.

BoA: Earnings at constituents of Japan’s TOPIX index that end their fiscal years in February or March (FY2/26 and FY3/26 = FY25 in this report) were strong, with sales up 3.4% YoY, operating profit (OP) up 1.4%, recurring profit up 12.3%, and net profit up 10.0%, all new record highs (Exhibit 1).

In 4Q alone, recurring profit was up 33.7% YoY.

BBG - China is restricting overseas travel for top AI professionals in private firms such as Alibaba Group Holding Ltd. and DeepSeek, suggesting an escalation in measures intended to safeguard its technology and catch up to the US in a pivotal sphere.

• Government agencies have begun imposing restrictions on individuals involved in advanced AI work and considered strategically important to the country, people familiar with the matter said. That means they need approval from relevant authorities before embarking on overseas travel, the people said, asking for anonymity to discuss a sensitive issue.

BBG - Chinese investors are rushing to find alternative ways to buy and sell overseas equities after Beijing launched its most forceful crackdown on illicit cross-border stock trading to stem capital outflows.

• The surprise triggered swift reactions on Friday, with the Nasdaq Golden Dragon China Index slumping 2.2%. An estimated $1 trillion of so-called hot money flowed out of the country last year, according to an index compiled by Bloomberg Intelligence — the biggest annual outflow since data began in 2006.

• The China Securities Regulatory Commission, the nation’s top securities watchdog, on Friday slapped more than $330 million of combined fines on Futu Holdings Ltd, Up Fintech Holding Ltd.’s Tiger Brokers and Longbridge Securities for operating on the mainland without a license. More than a quarter of Futu’s market value was wiped out Friday. While Chinese authorities allowed online brokers to continue servicing existing clients in 2022, they on Friday ordered all “illegal” existing accounts to be liquidated within two years.

• Banks are already picking up the slack. Allen Wang, a Shanghai-based partner at Jincheng Tongda & Neal Law Firm, said some clients have started shifting their trading of offshore stocks to firms such as Bank of China’s Hong Kong branch or HSBC Holdings Plc, where cross-border trading is still allowed.

• The campaign also coincides with an intensifying drive over the past few years to tax residents on overseas income, including gains from offshore stocks trading. China’s been trying to beef up its fiscal coffers as land sales revenue dried up and local governments are debt laden due to excessive borrowing.

• “While I was planning to move the funds back to the official channels some day in future, it’s a different story when you’re forced into that decision in a rush,” he said, asking not to be named for fear of reprisal. “But there’s no other way, one can’t go against the state’s will.”

Some international corporate highlights:

• BP Plc’s board removed Chairman Albert Manifold from his role with immediate effect due to serious concerns about governance standards, oversight and conduct.

  His sudden and unexpected departure prolongs a period of severe leadership turmoil at BP, coming at a moment when the company was supposed to be turning itself around from years of poor performance. Manifold played a key role in the removal of former Chief Executive Officer Murray Auchincloss and the appointment of his replacement Meg O’Neill. Shares of the company fell 6.4% to 516.0 pence as of 12:55 p.m. in London.

• Ferrari NV shares fell after the Luce, its first fully electric vehicle, received disappointing reviews.

• Kingfisher, which owns U.K. home improvement retailers B&Q and Screwfix, rose to the top of the Stoxx 600 after updating investors on its first-quarter earnings. The company, which also owns Brico Dépôt and Castorama in France, said it was confident of meeting full-year guidance despite a 0.7% fall in like-for-like sales. Kingfisher shares were up about 4.6% in morning trade.

• Melrose shares fell as much as 7.3%, most since Feb. 27, after authorities ordered precautionary evacuations around the company’s GKN Aerospace facility in California following a thermal issue with a storage tank.

• BioMar’s IPO is likely to price at DKK108 per share, according to terms seen by Bloomberg, with books covered multiple times at that level.

• Asia-exposed semiconductor companies rallied in premarket trading on optimism over a potential breakthrough in technology by China’s Huawei. Chinese semiconductor stocks rose in Hong Kong.

• Xiaomi Corp.’s quarterly profit tanked more than anticipated after sharp increases in memory prices exacted a heavy toll on the Chinese firm’s smartphone business.

Europe/Asia economic highlights from Briefing.com:

• U.K.’s May CBI Distributive Trades Survey -46 (expected -52; last -68)

• Spain’s April PPI 8.3% yr/yr (last 3.4%)

• Japan's March BoJ Core CPI 2.8% yr/yr (expected 1.7%; last 2.5%). March Leading Index 114.0 (expected 114.5; last 113.2) and Coincident Indicator 0.2% m/m (expected 0.3%; last -1.7%)

• Singapore's April Industrial Production 5.8% m/m (expected 1.5%; last 3.5%); 17.6% yr/yr (expected 12.0%; last 9.2%)

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The Week Ahead

US economic data in the upcoming week is not especially heavy, but we’ll get one of our top tier reports in the April personal income and spending report, which contains PCE prices (the Fed’s preferred inflation metric). In addition, we’ll get April durable goods, new home sales, inventories, Chicago Fed National Activity Index, and goods trade balance, May consumer confidence from the Conference Board, March repeat home price indices, the second estimate of 1Q GDP, and the normal weekly reports (ADP, unemployment claims, etc.).

In terms of Fed speakers more than half the Fed will have appearances (perhaps trying to jam them in before new Chair Warsh puts the kibosh on all the Fedspeak), with Governors Cook, Jefferson, and Bowman, and regional Fed Presidents Logan, Goolsbee, Williams, Musalem, Daly, Schmid, and Paulson. With the Waller hawkish pivot on Friday, you may very well be seeing more following (in addition to the many that were already there) in looking to drop the easing bias, and saying a hike is the next step if inflation does not fall back towards 2%.

In terms of non-Bill (>1yr in duration) US Treasury auctions we’ll get 2, 5, and 7-yr auctions Tues, Wed, and Thurs respectively.

Q1 earnings season will continue to wind down with 12 SPX components reporting of which three are >$100bn in market cap in COST, DELL, CRM.

In terms of the Iran war, as I have been saying for a while, “it continues to drag on with no end in sight.” As I have also said “It seems that both sides feel they have the upper hand, and both need a conclusion which allows them to claim ‘victory’. Not a setup conducive to a quick conclusion.” But as I also said last week “it is clear that President Trump’s patience is starting to wear thin.”

Recent events appear to indicate Trump is very much between a rock and a hard place. While it seems he wants to come to an agreement with Iran, Iran knows that and also that with each passing day pressure builds from the coming mid-term elections. And Trump is now getting counter-pressure to “finish the job” from hard-line Republicans who came out with some blistering criticism Saturday after Trump said that a deal was imminent.

While reports are that the sides are “inching towards a deal,” and Iran’s semi-official Tasnim news agency reported there are “one or two provisions” that need to be ironed out, Iran’s Foreign Ministry Spokesman said “no one can claim that the signing of an agreement is imminent,” while Trump posted this morning that “Negotiations with the Islamic Republic of Iran are proceeding nicely! It will only be a Great Deal for all or, no Deal at all — Back to the Battlefront and shooting, but bigger and stronger than ever before — And nobody wants that!”

As a side note, Trump also injected a new item onto the agenda mandating that a long list of regional countries “sign onto the Abraham Accords” (US‑brokered agreements that normalized diplomatic relations between Israel and several Arab/Muslim‑majority countries starting in 2020) in order to benefit from any deal, which the President says would create “a Document respected like no other that has ever been signed,” and “if Iran signs its Agreement with me, as President of the United States of America, it would be an Honor to have them also be part of this unparalleled World Coalition. The Middle East would be United, Powerful, and Economically Strong, like perhaps no other area, anywhere in the World!”

FWIW Polymarket currently sees a 60% chance of a permanent US-Iran peace deal by June 30th, down from nearly 80% Saturday night, but up from around 35% a week ago.

Ex-US highlights from DB:

In Europe, the focus will be on the May flash inflation prints across the Eurozone, with Germany, France, Italy and Spain amongst those reporting on Friday and the Eurozone-wide measure due the following Tuesday. Our European economists expect inflation at 2.82% YoY in Germany, 2.83% in France and 3.42% in Italy and 3.59% YoY in Spain. Another highlight in Europe will be the ECB’s account of their April meeting due Thursday, and the central bank will also release its Financial Stability Review on Wednesday.

Over in Asia, the focus will be on Japan, where the Tokyo CPI on Friday will provide an early read on national inflation trends. Economic activity data is also due Friday, featuring the April industrial production and retail sales indicators. In terms of forecasts, our Chief Japan economist sees core CPI ex. fresh food speeding up to 1.6% YoY (1.5% in April) and core-core ex. fresh food and energy to 2.0% (+1.9%). For industrial production, he expects a +0.2% MoM increase. Finally, he mentions that the Ministry of Finance will announce the results of its forex market interventions conducted from 28 April to 27 May on Friday.

Elsewhere in the region, notable releases include industrial profits in China, Australia’s April CPI and the RBNZ policy decision all due Wednesday. Our economists look for a 0.3% MoM headline print for Australia inflation report and expect RBNZ to keep the cash rate unchanged at 2.25%.

Here’s their one-pager:

And BoA’s cheat sheets:

Executive Summary

• US equity indices last week would hit their lows on Tuesday morning under pressure from rising oil prices and bond yields, but those would start to ease off mid-day Tuesday and continue through the end of the week, allowing equities to move higher on hopes for a US-Iran deal despite a tepid reaction to Nvidia earnings.

• Economic reports were light. In reports covered this week contract signings for existing homes rose for a third straight month in April, while housing starts and permits came in solidly above expectations, May preliminary purchasing manager indices (PMIs) came in unchanged in May at the headline level which, though, masked a continued widening between a resurgent manufacturing sector and “sluggish” services sector while prices rose the most since 2022, and consumer sentiment index from the University of Michigan would come in at a record low (as did both index components) with long-run inflation expectations jumping to a 7-month high.

• Companies continued to put the finishing touches on a Q1 earnings season which as noted in previous weeks has been exceptionally strong, especially for a quarter not coming out of an earnings trough. That has kept valuations stable at moderate levels even as equities lifted higher.

• Positioning and sentiment were mixed, mostly easing back last week after getting to levels where even the more bullish have been indicating limited near-term upside. While downside risks have grown, few are expecting more than a modest consolidation, if that. Corporates have also exited their buyback blackouts providing their support to markets, and breadth saw a modest expansion last week, all as detailed in the subscriber section.

• The Fed would turn less supportive though with the minutes from the April FOMC meeting which confirmed a committee becoming increasingly hawkish with a majority in favor of rate hikes if inflation “continues to run persistently above 2 percent.”

Now let’s take a closer look at the economy, earnings, positioning, breadth, sentiment, seasonality, Fed, and other factors that will play out in the week ahead.

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