Daily Market Roundup

North America News

Stocks Dip After Early Optimism Fizzles, Tesla and Tech Drag Markets Lower

Dow -108.00 to 42,319.74 | Nasdaq -162.04 to 19,298.43 | S&P 500 -31.51 to 5,939.30

Wall Street spent much of the session flirting with key technical levels before succumbing to selling pressure. The S&P 500 briefly touched 5,999.70 but couldn’t break above 6,000. A sharp move lower followed, driven by losses in Tesla (-14.3%), Costco (-3.9%), Brown-Forman (-17.9%), and Palantir (-7.8%).

The day began with optimism after President Trump and China’s President Xi held a “positive” trade call. Traders took the news as a sign of cooling tensions, but the upbeat sentiment faded.

Elon Musk ignited political drama, calling for lawmakers to “kill the bill” on social media, prompting Trump to fire back by threatening to slash Musk’s government contracts.

The ECB’s expected 25 basis point rate cut did little to move markets, and the euro firmed slightly against the dollar. Meanwhile, economic data in the U.S. painted a murky picture:

• Q1 productivity revised down to -1.5%
• Unit labor costs revised sharply higher to +6.6%
• Initial jobless claims rose to 247K
• Trade deficit shrank to $61.6B as imports collapsed

Circle Internet Group (CRCL) became the day’s breakout star, soaring 168.5% in its IPO debut.

Despite the swirl of headlines, breadth was mixed. At the NYSE, advancers and decliners were nearly even, while decliners outpaced gainers at the Nasdaq.

Only one sector finished green—communication services eked out a 0.06% gain. Consumer discretionary was the hardest hit, thanks to Tesla’s plunge. Consumer staples also sank as Costco disappointed on same-store sales and Brown-Forman offered weak guidance.

Year-to-date performance:

• S&P 500: +1.0%
• Nasdaq: -0.1%
• Dow: -0.5%
• S&P 400: -3.2%
• Russell 2000: -6.0%

Atlanta Fed GDPNow Tracker Falls to 3.8% From 4.6%

The Atlanta Fed’s GDPNow forecast for Q2 growth was revised down to 3.8% from 4.6% previously. The cut reflects updated economic inputs but comes early in the quarterly cycle, where volatility in the model is common.

Expectations could shift dramatically in the coming weeks as fresh data rolls in, but for now, this marks a notable softening in projected growth momentum.

In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 3.8 percent on June 5, down from 4.6 percent on June 2. After recent releases from the US Census Bureau, the US Bureau of Economic Analysis, and the Institute for Supply Management, the nowcasts of second-quarter real personal consumption expenditures growth and real gross private domestic investment growth decreased from 4.0 percent and 0.5 percent, respectively, to 2.6 percent and -2.2 percent, while the nowcast of the contribution of net exports to annualized second-quarter real GDP growth increased from 1.36 percentage points to 2.01 percentage points.

US Jobless Claims Rise to 247K, Continuing Claims Edge Lower

Initial jobless claims for the week ending May 31 climbed to 247,000, higher than the 235,000 expected and up from the prior 240,000. Continuing claims dipped slightly to 1.904 million from 1.919 million.

The uptick in filings suggests mild softening in the labor market, although continuing claims indicate that laid-off workers are still finding new employment at a relatively steady pace.

US Unit Labor Costs Jump to 6.6% in Q1, Productivity Falls More Than Expected

First-quarter unit labor costs were revised up to +6.6%, above the initial +5.7% print and far exceeding expectations. This follows Q4’s +2.0% figure.

Meanwhile, productivity fell 1.5%, deeper than the preliminary -0.8% reading. These metrics suggest labor-related inflationary pressure, though economists note that the data is highly volatile and lags broader economic trends.

US Trade Deficit Shrinks to -$61.6B in April on Plunging Imports

The U.S. trade balance improved significantly in April, narrowing to a $61.6 billion deficit from $138.3 billion in March (revised). The change was driven by a sharp 16.3% drop in imports, following a record front-loading of shipments ahead of Liberation Day tariffs.

Goods imports fell by nearly $69 billion, with consumer products—especially pharmaceuticals—seeing the largest declines. Exports rose 3.0% in the same period, led by a recovery in capital goods.

Despite the rebound, the trade balance is only back to late-2023 levels, and further volatility is expected in the months ahead.

US May Layoffs Fall to 93.8K, Still Up Sharply From a Year Ago

According to Challenger, Gray & Christmas, U.S.-based employers announced 93,816 job cuts in May—down 12% from April’s 105,441 figure. However, layoffs were still 47% higher than May 2024, when 63,816 cuts were reported.

Challenger attributed the continued job pressure to “tariffs, funding cuts, consumer spending, and overall economic pessimism.” Despite the month-over-month improvement, the labor market remains under strain as companies grapple with policy uncertainty and tighter margins.

NY Fed Survey: Businesses Passed Tariff Costs to Consumers Quickly

A recent New York Fed survey revealed that most U.S. firms passed along tariff-related cost increases to their customers—many within days. Roughly one-third of manufacturers and nearly 45% of service firms fully passed on the cost increases.

The survey, conducted from May 2–9, came before the U.S. slashed tariff rates on Chinese goods from 145% to 30%. It also found some companies raised prices on untariffed goods and services to offset rising labor and insurance costs—or to capitalize on an inflationary environment.

These dynamics suggest that tariff shocks may lead to more persistent price pressures, complicating the Fed’s path back to its 2% inflation target.

Trump and Carney in Quiet Talks on Trade and Security Deal

According to U.S. Ambassador to Canada Peter Hoekstra, Trump and Mark Carney are engaged in quiet but frequent discussions about a comprehensive U.S.-Canada trade and security framework.

The talks, described as highly confidential, reportedly include potential agreements on:

• Increased U.S. content in Canadian auto manufacturing
• Expanded U.S. access to Canadian critical minerals
• Greater Canadian defense spending and Arctic security cooperation
• Measures to combat fentanyl trafficking
• Revisions to steel and aluminum trade policies

Hoekstra said both sides recognize the urgency and are working toward a mutually beneficial agreement outside of NAFTA frameworks.

Trump: Call With Xi ‘Very Positive,’ Trade Teams to Meet Soon

In a post on Truth Social, former President Donald Trump said he had a “very good” phone call with Xi Jinping, describing it as a productive 90-minute conversation focused entirely on trade.

Trump noted that the two leaders agreed on key elements of a new trade deal, including clarity around rare earths. U.S. representation in follow-up talks will include Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Trade Representative Jamieson Greer.

Trump confirmed that a face-to-face meeting is in the works, with mutual invitations exchanged.

Fed’s Kugler: I continue to support maintaining rate if upside inflation risks remain

• Comments from Kugler

• Front-loading of imports makes judging economic activity difficult
• Expects reversal of import surge in the coming months to signal larger price increases
• Non-traditional data says might be seeing some moderation in growth but not a significant slowdown
• Core services inflation still above pre-pandemic rate, progress on core goods has reversed
• Warn notices of layoffs have ticked up since the start of the year, as have layoff mentions in Beige Book
• Inflation will be the first order effect, the other effects will be down the road
• Haven’t seen the full extent of impact of tariffs on prices

RBC Flags U.S. Dollar as Overvalued, Sees Further Decline Ahead

RBC Global Asset Management believes the U.S. dollar remains significantly overvalued, even after a 10% decline in the Dollar Index since January. The firm argues that the move signals a broader investor shift away from U.S. assets.

In a note to clients, RBC cited growing skepticism around the U.S.’s “safe-haven” status amid ongoing global uncertainty. A weaker dollar has already impacted the relative performance of U.S. equities and fixed income when measured against international markets.

RBC expects more downside ahead for the greenback, with implications for portfolio allocations and hedging strategies.

White House Brushes Off Musk Opposition on Key Bill

A senior White House official downplayed Elon Musk’s opposition to a pending legislative package, describing it as “one disagreement” in an otherwise smooth relationship.

The administration clarified that it won’t consult Musk on every policy issue and reaffirmed Trump’s commitment to pushing the bill forward. Despite tensions, Trump reportedly values Musk’s continued support and financial backing.

Amazon Reportedly Developing Humanoid Robots for Global Deliveries

Amazon is working on software that would enable humanoid robots to handle package delivery tasks, according to a source speaking to The Information.

The company aims to eventually deploy these robots globally, automating one of the most labor-intensive aspects of its logistics chain. The report suggests this could replace human delivery roles at scale over time, with the technology still in early development stages. Amazon has not issued an official statement on the project.

Fed’s Kashkari says the labour market is showing some signs of slowing down

• Federal Reserve Bank of Minneapolis President Neel Kashkari

• labour market is showing some signs of slowing down
• inflation rate still not back to 2% target
• there is persistent uncertainty over the economy
• Fed must stay in wait and see mode to assess how economy responds to the uncertainty
• the bond and equity markets are sending conflicting signals

Canada Trade Deficit Widens Sharply to $7.14 Billion in April

Canada’s trade balance deteriorated in April, with a deficit of $7.14 billion, far worse than the $1.50 billion expected. Exports dropped to $60.44 billion, down sharply from a revised $67.76 billion in March. Imports also fell, but less dramatically, landing at $67.58 billion.

The widening gap highlights the impact of softening global demand and domestic supply-side challenges, particularly in energy and automotive shipments.

Commodities News

Gold Drops Below $3,350 as Trump-Xi Call Lifts Market Mood

Gold fell 0.72% to $3,350 on Thursday as markets shifted into a risk-on mode following President Trump’s upbeat remarks on a trade call with Chinese President Xi. The U.S. leader described the discussion as “positive” and confirmed follow-up meetings were being scheduled.

Gold retreated even as U.S. data showed rising jobless claims (247K), sharply higher unit labor costs (+6.6%), and lower productivity (-1.5%). The U.S. trade deficit also narrowed more than 50%, falling to $61.6 billion, as imports collapsed post-tariff front-loading.

Rising Treasury yields further pressured the metal. The 10-year yield climbed 4.5 basis points to 4.377%, while real yields ticked up to 2.065%. These levels add friction for non-yielding assets like gold.

Still, investors are eyeing Friday’s Nonfarm Payrolls report. A weak print could revive gold’s uptrend by boosting Fed rate cut expectations. Markets are currently pricing in roughly 54.5 basis points of easing before year-end.

Despite today’s drop, gold remains up around 29% in 2025 and continues to benefit from central bank demand. According to Metals Focus, global central banks are expected to purchase another 1,000 metric tons this year—marking a fourth consecutive year of massive gold buying.

Silver Explodes Higher, Breaks $36 Barrier for First Time Since 2012

Silver soared nearly 3.5% intraday on Thursday, smashing through the $35.00 technical ceiling and reaching levels last seen in February 2012. The rally comes amid surging investor interest in precious metals and increased safe-haven flows tied to macro uncertainty.

With the U.S. Dollar softening and expectations rising for Fed rate cuts, silver caught a bid alongside gold. The metal’s breakout was also driven by renewed tariff fears and lingering economic unease.

The Relative Strength Index (RSI) on the daily chart pushed past 69—flashing strong upside momentum, but also flagging potential overbought conditions in the near term.

Investors are now watching to see if silver can sustain its momentum or if a short-term pullback emerges following the breakout. With central bank demand steady and inflation fears not yet fading, the metal continues to attract institutional and retail buyers alike.

Oil Market Shrugs Off Saudi Push for Faster OPEC+ Output Increases

Saudi Arabia’s efforts to ramp up OPEC+ production—aiming to reclaim market share—are being largely dismissed by crude traders. Despite reports that the Kingdom wants to add another 411,000 bpd in both August and September, prices remained range-bound.

Crude continues to trade between $60.00 and $64.00 on the 4-hour chart, while a smaller range of $62.18–$64.00 has developed on the hourly. Market participants are largely ignoring the supply-side noise and are focused instead on future demand trends.

Traders expect the range to hold until a breakout, with upside potential targeting the $72.00 level. A renewed trade war remains a key risk that could shift this outlook.

Saudi Arabia Pushes OPEC+ to Accelerate Production Increases

Saudi Arabia is urging OPEC+ to keep ramping up oil output in the coming months, favoring market share over price stability, according to sources cited by Bloomberg.

The Kingdom wants at least 411,000 barrels per day added in both August and September. This marks a shift away from earlier strategies focused on output cuts to prop up prices.

Not all OPEC+ members are on board—countries like Russia and Algeria have expressed hesitation. But Saudi officials argue that seasonal demand justifies the increases.

US and Ukraine Set Timeline for Joint Minerals Fund

The United States and Ukraine are preparing to launch a joint mineral investment fund by the end of 2025, according to Ukraine’s First Deputy Prime Minister Yulia Svyrydenko.

The first board meeting is scheduled for July. The fund stems from an April bilateral minerals development agreement, backed by Trump and later ratified by Ukraine’s parliament. Meetings in Washington with Treasury Secretary Scott Bessent and the U.S. Development Finance Corporation focused on determining seed capital and an investment roadmap.

The agreement is also seen as a reset moment in U.S.-Ukraine relations following earlier disagreements on war policy.

Aramco Cuts July Crude Prices for Asia, Raises Them for Europe

Saudi Aramco has reduced July official selling prices for Arab Light crude to Asia to $1.20 above the Oman/Dubai benchmark, down from $1.40 in June. Cuts were also made to other light and medium grades, while Arab Heavy was unchanged.

In contrast, prices for Europe rose by $1.80 per barrel, reflecting tighter regional supply conditions. U.S. buyers saw only minor adjustments—Arab Extra Light and Light were up $0.10, while other grades remained unchanged.

The move follows OPEC+’s weekend decision to accelerate production hikes for a third straight month.

Europe News

ECB Delivers 25bps Rate Cut, Inflation Seen Hovering Near Target

The European Central Bank lowered its key rates by 25 basis points in its June policy decision, as expected. The deposit facility rate now sits at 2.00%, while the main refinancing rate is at 2.15% and the marginal lending rate at 2.50%.

Inflation is forecast to average:

• 2.0% in 2025
• 1.6% in 2026
• 2.0% in 2027

Core inflation is expected to settle at:

• 2.4% in 2025
• 1.9% in 2026 and 2027

GDP growth is projected at 0.9% in 2025, rising to 1.1% in 2026 and 1.3% in 2027. The ECB emphasized a data-driven, meeting-by-meeting approach and avoided committing to a specific policy path.

Eurozone April PPI Slumps 2.2%, Energy Prices Drive Decline

Euro area producer prices fell 2.2% month-over-month in April, more than the expected 1.8% drop, according to Eurostat.

The bulk of the decline came from a sharp 7.7% drop in energy prices. Stripping out energy, PPI rose 0.1%—with increases in both durable (+0.1%) and non-durable consumer goods (+0.3%). Intermediate goods fell slightly (-0.1%), while capital goods were flat.

This continues a trend of softening upstream price pressures, particularly in energy-heavy sectors.

German Construction Activity Slows, But Outlook Turns Positive

Germany’s construction PMI slipped to 44.4 in May, down from 45.1 in April, indicating a deeper contraction in the sector.

Residential and commercial building activity remained subdued, while civil engineering showed signs of recovery. Notably, firms’ expectations for future output turned positive for the first time since early 2022—marking a shift in sentiment despite current weakness.

HCOB notes that:

“Civil engineering is starting to shake off the slump. While we are not seeing actual growth just yet, the fact that the index has ticked up for two straight months is a good sign. The big infrastructure package from the federal government is still in the pipeline, but there is already more momentum behind ongoing projects. That is more than can be said for residential and commercial construction, which took another hit in May. With civil engineering making up about 14% of the sector’s value added, it is in a good spot to help pull things up, though it will not be able to do all the heavy lifting on its own.

“The upward trend in long-term German government bond yields since December last year is likely to have contributed to the sharper downturn in both residential and commercial construction in May. The interest rate cuts by the European Central Bank are primarily relevant for short-term financing and have therefore only helped the sector to a limited extent. In residential construction in particular, the sector has taken two steps forward and then one step back in recent months, which suggests that the outlook is for only a slow improvement. In commercial construction, no clear direction can be derived from developments over the past six months. The sharp decline in new orders indicates that an economic turnaround is not imminent in overall construction. This is also supported by the fact that input prices have increased for the third month in a row, increasing pressure on the profitability of construction firms.

“The mood has definitely improved. Not too long ago, things were looking pretty bleak, with the future activity index just a few points above the 2008 low. Fast forward to today, with a new federal government and an infrastructure plan in the works, and confidence is back to early 2022 levels. It will still take a bit before that optimism turns into real action on the ground. But if all goes well, 2026 could be the year when growth really kicks in, spreading from civil engineering into residential and commercial construction.”

German Industrial Orders Rise in April, Beating Expectations

Germany posted a 0.6% increase in industrial orders for April, outperforming expectations for a 1.0% decline, according to Destatis.

Capital goods orders jumped 4.1% month-over-month, providing the bulk of the support. However, intermediate goods fell 3.4%, and consumer goods slipped 5.9%.

While the headline beat is modest, the details point to continued strength in business investment, even as other segments of demand waver.

Italy Retail Sales Bounce Back in April

Retail sales in Italy rose 0.7% month-over-month in April, beating expectations for a 0.2% gain. Year-over-year, sales jumped 3.7% after a 2.8% decline the previous month.

Data from ISTAT also shows that in the three months through April, sales increased 0.1% in value terms but were down 0.4% in volume, indicating inflation continues to erode purchasing power despite stronger nominal figures.

UK Construction PMI Improves Slightly But Jobs Continue to Suffer

The UK’s construction PMI rose to 47.9 in May from 46.6 in April, slightly beating the 47.2 consensus.

The decline in new orders and overall output slowed, but employment figures worsened. Job cuts accelerated at their fastest pace since August 2020, suggesting firms are still under pressure despite stabilization in demand.

S&P Global notes that:

“The construction sector continued to adjust to weaker order books in May, which led to sustained reductions in output, staff hiring and purchasing. However, the worst phase of spending cutbacks may have passed as total new work fell at a much slower pace than the near five-year record in February.

“Housing activity was the weakest-performing segment in May as demand remained constrained by elevated borrowing costs and subdued confidence. Commercial work was close to stabilisation after a marked decline in April, suggesting that fears about domestic economic prospects have abated after the initial shock of US tariff announcements.

“Output growth expectations across the UK construction sector recovered to the highest so far in 2025. Survey respondents mostly cited a general improvement in sales projections as well as a potential tailwind from falling interest rates over the year ahead.

“On the inflation front, stubbornly high input price pressures were recorded in May, although the overall rise in purchasing costs was the least marked for four months. Many firms noted that suppliers continued to pass through greater payroll costs.

“Rising wages, squeezed margins and subdued demand weighed on construction employment, despite a brighter outlook for business activity. Job shedding was the steepest since August 2020, while subcontractor usage decreased to the greatest extent for five years.”

Swiss Unemployment Edges Up to 2.9% in May

Switzerland’s seasonally adjusted unemployment rate rose to 2.9% in May, up from 2.8% previously and marking the highest level since August 2021.

The uptick reflects ongoing softness in the labor market, with job creation showing signs of fatigue following last year’s tight conditions. Analysts see the slow climb as a sign that hiring momentum has cooled significantly heading into mid-year.

Lagarde Flags Services Sector Slowdown, Defends ECB Flexibility

ECB President Christine Lagarde acknowledged weakness in the services sector, saying survey data signals slowing momentum in the near term. She pointed to elevated tariffs and a stronger euro as headwinds to exports.

Lagarde also highlighted the inflationary implications of increased defense and infrastructure spending. While she confirmed the ECB is nearing the end of its easing cycle, she avoided declaring a formal pause, reiterating the bank’s meeting-by-meeting stance.

One official dissented in the latest rate decision, and the topic of the neutral rate was not discussed.

ECB Officials Favor July Hold, Market Prices In One More Cut This Cycle

Bloomberg reports that most ECB officials support pausing rate cuts in July, aligning with the market’s current pricing of just one more move this cycle. A “visible majority” at the June meeting leaned toward a July hold, and some advocated for a longer pause.

Goldman Sachs has shifted its own forecast accordingly, now expecting the next cut in September rather than July. Markets are aligned with an October or December move as the likely endpoint of the cycle.

BOE Survey: Most UK Firms Unfazed by US Trade Policy Changes

A survey by the Bank of England shows that 70% of UK firms expect no material impact from changes in U.S. trade policy, even though the topic remains a top-three concern overall.

Only 12% of respondents cited U.S. policy as a major uncertainty driver—down from 22% earlier. Year-ahead inflation expectations held steady at 3.2%, while wage growth forecasts ticked down slightly to 3.7%.

The results suggest that while geopolitical trade tensions remain on the radar, their perceived business impact has diminished.

Deutsche Bank Holds ECB Terminal Rate Call, Flags Shift Risk

Deutsche Bank is sticking to its forecast for a 1.50% terminal rate in the ECB’s current easing cycle but warns that upside risks are mounting due to structural spending shifts and defense policy changes.

The bank revised its 2025 eurozone GDP forecast upward to 0.8%, citing economic resilience despite headwinds. Inflation is still expected to fall below 2% next year, but the case for a deeper easing cycle is weakening.

Looking ahead, Deutsche sees the ECB possibly resuming hikes in late 2026 and raised its 2027 terminal rate projection to 2.50%, citing geopolitical spending and a potential rise in the neutral rate.

Czech Central Banker Leans Against Rate Cuts in June

Czech National Bank board member Jakub Seidler said in an interview that he favors holding interest rates steady at the June policy meeting, pointing to lingering inflation risks.

Seidler highlighted persistent price pressures in services, labor markets, and agriculture. His remarks came ahead of May inflation data, which later confirmed stronger-than-expected price growth.

While the Czech Republic is an EU member, it is not part of the eurozone and sets its own monetary policy using the Czech koruna.

Asia-Pacific & World News

Xi Confirms Restart of Trade Talks With US, Urges Cooperation

Chinese President Xi Jinping announced that China and the U.S. have agreed to resume trade negotiations. In televised comments on CCTV, Xi stressed the importance of mutual understanding and respect, calling for both sides to honor past agreements.

He reiterated China’s stance against “Taiwan independence separatists” and emphasized that the U.S. should avoid being drawn into conflict by a minority group. Xi also extended an invitation for Trump to visit China, as both sides aim to stabilize relations.

China’s Vice President Warns US-China Ties at a ‘Critical Juncture’

Chinese Vice President Han Zheng met with a U.S. delegation in informal Track II talks, calling the bilateral relationship “at a critical juncture.”

Han emphasized the need for mutual respect and peaceful coexistence, saying improved ties would benefit global development. The talks aimed to identify common ground across a wide range of issues, though no specific topics were disclosed.

There’s still no update on a potential phone call between Trump and Xi Jinping, but markets remain alert for any movement on that front before week’s end.

China’s Caixin Services PMI Rises in May, But Composite Slips Below 50

China’s Caixin/S&P Global Services PMI for May came in at 51.1, slightly beating expectations of 51.0 and up from April’s 50.7. Demand and business confidence strengthened overall, and the job market showed mild growth after two months of contraction. The employment sub-index hit a six-month high.

However, foreign demand contracted for the first time in 2025, with new export business dipping marginally. Input costs rose at the fastest pace in seven months due to higher labor and purchasing expenses, but prices charged to customers fell for the fourth consecutive month.

The Composite PMI fell to 49.6, dragged down by weak manufacturing figures. This is the lowest level since December 2022, signaling that broader growth momentum remains fragile.

Suzuki Halts Swift Production Amid China’s Rare Earth Clampdown

Suzuki has suspended production of its Swift model vehicles effective May 26, citing China’s export restrictions on rare earth elements. This marks the first instance of a Japanese carmaker directly halting operations due to supply constraints tied to Beijing’s controls.

The move underscores China’s enduring dominance over the rare earth supply chain—despite Japan’s efforts over the past decade to diversify sources. Japan has reduced its dependency from over 90% to roughly 60% as of 2023, but the latest disruption shows the grip is far from broken.

The issue dates back to 2010, when China imposed an embargo on rare earth exports to Japan during a territorial dispute, weaponizing its monopoly in the sector. Despite diversification efforts, this latest halt illustrates that Japan—and by extension, global manufacturers—remain vulnerable to Chinese leverage in critical material supply.

U.S. Auto Industry Calls for Urgent Action on Chinese Rare Earth Restrictions

A major U.S. auto supplier group is sounding the alarm over China’s tightening grip on rare earth exports, warning of imminent threats to vehicle production and supply chains.

The Motor & Equipment Manufacturers Association (MEMA) issued a statement urging immediate intervention, stating that parts makers face “serious, real-time risks” to sourcing critical materials used in EV motors, batteries, and electronics.

With China dominating the global supply of rare earths, MEMA stressed that without rapid diversification or domestic alternatives, the U.S. auto sector could face widespread disruptions, cost spikes, and delivery delays.

PBOC May Cut Reserve Requirement to Sustain Liquidity in H2 2025

China’s central bank may deploy additional policy tools in the second half of the year, including a potential cut to the reserve requirement ratio (RRR), according to a report by the state-run China Securities Journal.

The move would aim to inject more long-term liquidity into the financial system, supporting economic stability and creating a favorable monetary environment as recovery efforts continue. The People’s Bank of China has not confirmed any timeline, but the discussion aligns with efforts to maintain “reasonably ample” liquidity as policy focus shifts toward boosting internal demand and financing conditions.

PBOC sets USD/ CNY mid-point today at 7.1865 (vs. estimate at 7.1762)

• PBOC CNY reference rate setting for the trading session ahead.

PBOC injected 126.5bn yuan via 7-day reverse repos at 1.40%

• 266bn yuan mature today
• net drain is 139.5bn yuan

Australia’s Exports Decline in April, Trade Surplus Misses Expectations

Australia posted a goods trade surplus of AUD 5.413 billion in April, missing forecasts for a AUD 6 billion figure. The prior month’s surplus stood at AUD 6.9 billion.

Exports fell 2.4% month-over-month after surging 7.6% in March, while imports rose 1.1%, reversing a 2.2% drop previously. The data reflects a partial unwinding of March’s strong trade performance.

Household spending in April, however, offered a slight positive: it rose 3.7% year-over-year (vs. 3.6% expected) and 0.1% month-over-month, recovering from March’s -0.1%.

TD Forecasts Two RBA Rate Cuts in 2025, Sees Potential for July Move

TD Securities now expects the Reserve Bank of Australia to cut rates twice in 2025—once in August and again in November—bringing the cash rate to 3.35%.

The firm also left the door open for a July “insurance cut” if conditions deteriorate further. Sluggish GDP growth in Q1, along with contracting per capita income, weak consumption, and global headwinds, have prompted economists to lower growth expectations.

TD’s revised outlook is in line with broader market pricing, though the RBA remains data-dependent.

Japan Proposes Rare Earth Alliance Package in US Tariff Talks

Japan plans to put forward a rare earth supply chain cooperation package as part of ongoing trade negotiations with the United States, according to Nikkei.

The proposal is designed as a strategic counter to China’s export restrictions on seven rare earth elements destined for the U.S. Tokyo aims to secure reciprocal tariff relief from Washington in exchange for closer coordination on critical materials.

The U.S. reportedly is showing flexibility in reducing some of the additional tariffs imposed on Japanese goods. The 90-day tariff pause between the two countries ends July 8, making this proposal a timely pivot in the talks.

Click here for the full article

Japan Real Wages Fall for Fourth Straight Month in April

Inflation-adjusted wages in Japan declined 1.8% year-over-year in April—the fourth consecutive monthly drop. That matches March’s pace and follows a 1.5% decline in February.

Nominal wages, however, showed strength: base pay rose 2.2%, the fastest in four months, while overtime pay increased 0.8%. Overall average cash earnings were up 2.3% for the second month in a row.

Despite better nominal figures, high inflation continues to erode real income, raising concerns about consumer spending power.

Japan’s 30-Year Bond Auction Draws Weakest Demand Since 2023

Japan’s Ministry of Finance auctioned 30-year government bonds with a bid-to-cover ratio of 2.92, a clear drop from the previous sale’s 3.07 and well below the 12-month average of 3.39. This marks the weakest demand since December 2023, when the ratio dipped to 2.615.

The average yield settled at 2.904%, with the lowest accepted yield at 2.938%. The auction’s tail widened to 0.49 yen, up from 0.30 yen previously—another sign of weak appetite. Post-auction, yields on long-dated JGBs pared earlier declines, with the 20-year yield last at 2.39% (-3.5 bps) and the 30-year yield at 2.92% (-2.5 bps).

The lackluster demand reflects market concerns over rising global yields, not just domestic pressures.

Crypto Market Pulse

XRP Under Pressure as Traders Exit, Derivatives Market Weakens

XRP slid to $2.18, down 4% on the day, as crypto sentiment soured and traders continued pulling capital out of XRP futures markets. CoinGlass data showed a 3% drop in open interest to $3.91 billion and a steep 14% decline in trading volume to $3.53 billion over the past 24 hours.

This sharp decline in both OI and volume signals reduced interest in speculative positions, reinforcing bearish pressure on XRP’s near-term outlook. Despite a SuperTrend indicator flashing a potential buy signal, bulls have yet to regain control.

Long liquidations dominate the board, highlighting the struggle to hold support as traders stay on the sidelines ahead of key macroeconomic data.

Circle Skyrockets Over 230% on NYSE Debut as Stablecoin Demand Heats Up

Circle, the company behind USDC, launched its public trading debut under ticker CRCL and instantly became one of the day’s most explosive movers. Priced at $31 per share, the stock opened at $69 and hit a peak of $103.75 before settling around $83 by session close—an astonishing +235% gain from IPO price.

Circle raised $1.1 billion via the IPO, giving it a pre-market valuation of $6.9 billion. The offering was led by JPMorgan, Citigroup, and Goldman Sachs.

Founded in 2013, Circle operates both USDC and Euro Coin, offering transparent, fully backed stablecoins. It also recently became the first stablecoin issuer to obtain a MiCA license in the EU, positioning it to expand its regulatory footprint globally.

USDC currently holds the #2 stablecoin spot by market cap at $61 billion, with $8.16 billion in daily volume. Momentum for regulatory clarity in the U.S. also adds fuel to Circle’s rise. The GENIUS Act—a bill to regulate stablecoin payments—is inching closer to a Senate vote. If passed, it would mark the first federal law targeting digital asset payments.

Bitcoin Pulls Back as Market Awaits Key US Data

Bitcoin’s rally paused as traders await critical U.S. economic data, including the Nonfarm Payrolls report, CPI inflation print, and the upcoming FOMC decision.

BTC broke below a key trendline on the 4-hour chart, sliding toward support around $102,127. The coin is now consolidating below resistance at $106,800.

On the 1-hour chart, BTC is trading between converging trendlines. Bulls are expected to buy dips along the upward trendline, while bears may add pressure on any downside break. The broader trend remains bullish, but sentiment hinges on the upcoming macro data.

The Day’s Takeaway

United States

• Stocks Finish Lower After Failing to Break 6,000
  The S&P 500 briefly tested the 6,000 mark before falling back, closing down 31.51 points to 5,939.30. The Nasdaq dropped 162.04 points, while the Dow shed 108. Tesla (-14.3%) and other mega-caps dragged heavily on the indices. Only the communication services sector posted gains (+0.06%), while consumer discretionary was hit hardest.
• Trump, Xi Call Eases Tensions
  Trump said his phone conversation with Xi was “very positive,” focused on trade. Teams will meet again soon. Rare earth issues were discussed but not Russia, Ukraine, or Iran. Xi welcomed Trump to visit China.
• Initial Jobless Claims Tick Higher
  Jobless claims rose to 247K, exceeding expectations (235K). The 4-week average reached its highest point since November 2021.
• Unit Labor Costs Soar, Productivity Falls
  Q1 unit labor costs were revised up to +6.6%, while productivity fell 1.5%. This combination raised concerns about embedded inflation.
• Trade Deficit Contracts Sharply
  The U.S. trade deficit narrowed to $61.6B in April, down from $138.3B in March, as imports plunged post-tariff front-running.
• GDPNow Tracker Lowered
  The Atlanta Fed GDPNow estimate for Q2 was revised down to 3.8% from 4.6%, reflecting early-cycle volatility.
• May Layoffs Decline Slightly, Still High YoY
  U.S. employers announced 93,816 job cuts in May, down 12% from April but up 47% year-on-year, according to Challenger.
• NY Fed: Most Firms Passed on Tariff Costs
  A majority of firms passed at least some tariffs on to customers. Many used the opportunity to hike unrelated prices, potentially entrenching inflation further.

Canada

• Trade Deficit Widens Significantly
  Canada posted a $7.14B trade deficit in April as exports dropped from $67.76B to $60.44B. Imports fell modestly.
• Carney-Trump Holding Secret Trade Talks
  U.S. Ambassador Hoekstra confirmed talks between Carney and Trump focused on autos, rare earths, Arctic defense, and cross-border security.

Commodities

• Gold Drops as Risk Appetite Improves
  Gold fell to $3,350 as risk-on sentiment followed Trump-Xi trade optimism. Despite weak U.S. data, Treasury yields rose, weighing on bullion. Central banks are still forecast to buy 1,000 metric tons of gold in 2025.
• Silver Breaks Through $36
  Silver surged nearly 3.5% intraday, breaking $36 for the first time since 2012. Safe-haven demand, inflation concerns, and a softer dollar drove gains.
• Oil Shrugs Off Saudi Push for Output Hikes
  Crude held steady despite reports that Saudi Arabia wants OPEC+ to increase output again in August and September. Traders remain focused on demand signals, not supply noise.
• Saudi Aramco Cuts Asia Prices, Hikes Europe
  Aramco lowered July Arab Light prices to Asia while raising prices for Northwest Europe. U.S. prices saw minimal change.

Europe

• ECB Cuts Rates by 25bps, Signals Data-Driven Path Ahead
  Deposit rate lowered to 2.00%. Core inflation expected to ease, but Lagarde wouldn’t confirm if this marks a pause. Growth projections remain modest, with GDP seen at 0.9% in 2025.
• Lagarde Flags Slowing Services Sector
  ECB chief cited weaker services data and warned of inflation from defense and infrastructure spending. She reaffirmed commitment to finishing her term.
• ECB Likely to Pause in July
  Bloomberg reports that a majority of ECB officials want to hold in July. Goldman Sachs moved its next cut call to September.
• Germany Factory Orders Beat Forecasts
  Orders rose 0.6% in April, driven by capital goods (+4.1%). Intermediate and consumer goods declined.
• German Construction PMI Falls, But Outlook Improves
  May PMI dropped to 44.4, yet expectations turned positive for the first time since early 2022.
• Italy Retail Sales Jump
  April sales rose 0.7% m/m and 3.7% y/y, rebounding from the prior month’s declines.
• Eurozone PPI Sinks on Energy
  Producer prices dropped 2.2% in April, mostly from a 7.7% fall in energy costs.
• UK Construction PMI Improves
  PMI rose to 47.9 in May, with new orders and output declining at a slower pace. Employment, however, saw its sharpest drop since 2020.
• BOE Survey: Most UK Firms Not Affected by US Trade Policy
  Only 12% of firms see U.S. trade policy as a top uncertainty, down from 22%. Inflation and wage expectations remained steady.
• Swiss Jobless Rate Rises to 2.9%
  Switzerland’s unemployment rate reached its highest level since August 2021.
• Czech Central Bank Board Member Prefers Hold
  Jakub Seidler expressed concern over inflation in services and wages, opposing a cut at the upcoming June meeting.

Asia

• Japan’s 30-Year Bond Auction Draws Weakest Demand Since 2023
  The bid-to-cover ratio dropped to 2.92 vs a 12-month average of 3.39. Yields at the low end of accepted bids hit 2.938%.
• Japan April Real Wages Drop Again
  Real wages fell 1.8% y/y in April, marking the fourth straight decline. Base pay rose 2.2%, overtime edged up 0.8%.
• Japan’s Swift Production Halted by Rare Earth Shortage
  Suzuki became the first Japanese automaker to stop production due to China’s rare earth export curbs.
• Japan Readies Rare Earth Supply Pact With US
  Tokyo will offer a joint package in upcoming U.S. tariff talks to secure rare earth supply chains.
• China’s PBOC May Cut RRR in H2 to Boost Liquidity
  State media suggests the central bank could act to ease long-term funding conditions in the second half of 2025.
• China’s Services PMI Rises to 51.1
  Business confidence and employment picked up, but export demand shrank for the first time since December. Composite PMI fell to 49.6 due to weak manufacturing.
• China’s Han Zheng: US Relations at ‘Critical Juncture’
  At informal talks with U.S. delegates, Han called for mutual respect and reaffirmed peaceful coexistence goals.

Crypto

• XRP Struggles as Traders Exit, Volume and OI Decline
  XRP dropped to $2.18 as open interest fell to $3.91B and volume dipped 14% to $3.53B. Long liquidations continue as momentum stalls.
• Circle Surges 235% in NYSE Debut
  The USDC issuer opened at $69 and briefly traded over $103 before closing near $83. The IPO raised $1.1B and signals rising institutional appetite for regulated stablecoins.
• Bitcoin Consolidates Below $106K
  BTC pulled back as traders await NFP and CPI reports. Exchange reserves hit a 7-year low, and spot ETH ETFs continue to draw large inflows.