Daily Market Roundup

North America News

NASDAQ Ends Lower After Meta Pullback; Dow and S&P Push Higher

Major US equity indexes closed mixed on Thursday, as a sharp reversal in Meta stock dragged down the NASDAQ, even while the Dow Jones and S&P 500 continued to climb.

Meta’s stock fell sharply to $643.88, down $15.48 or -2.35%, after news broke that the company would delay its flagship Llama 4 AI model. Earlier in the session, the stock had traded up by nearly $3.89 before the negative report surfaced.

As Meta tumbled, the NASDAQ Composite lost steam and finished down 34.49 points (-0.18%) at 19,112.32. It had been up as much as 60.41 points intraday before the selloff.

Meanwhile:

• The Dow Jones Industrial Average rose +271.69 points (0.65%), closing at 42,322.75.
• The S&P 500 Index gained 24.35 points (0.41%) to end at 5,916.92.

Weekly Performance (so far):

• Dow: +2.60%
• S&P 500: +4.54%
• NASDAQ: +6.60%

Investors will now look ahead to Friday’s close to gauge weekly strength across the board, with tech volatility likely to stay elevated as more firms report AI developments and earnings.

Atlanta Fed GDPNow Tracker Ticks Higher for Q2

The Atlanta Fed’s GDPNow model revised its Q2 2025 growth estimate to 2.5%, up from the previous 2.3%. The upward adjustment reflects firmer economic data and moderate resilience in both business activity and consumer spending, despite ongoing trade uncertainty and monetary tightening.

In their own words:

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 2.5 percent on May 15, up from 2.3 percent on May 8. After recent releases from the US Census Bureau, the US Bureau of Labor Statistics, and the Federal Reserve Board of Governors, the nowcasts of second-quarter real personal consumption expenditures growth and second-quarter real gross private domestic investment growth increased from 3.3 percent and 1.2 percent, respectively, to 3.7 percent and 1.5 percent.

US Producer Prices Post Surprise Drop in April

April PPI came in +2.4% y/y, just below the +2.5% consensus. But the month-on-month figures showed a shock drop of -0.5%, far weaker than the +0.2% expectation.

Core details:

• Ex-food and energy: +3.1% y/y, exactly as forecast
• Monthly core: -0.4%, missing the expected +0.3%
• Ex food, energy, and trade: +2.9% y/y, down from 3.4%
• Monthly core (ex-all): -0.1%

Notably:

• Final demand services down -0.7% m/m, worst in over a decade
• Inputs for intermediate goods fell -2.0%
• Construction prices dropped -0.4%

This sharp pullback suggests pipeline inflation pressures are easing—at least for now.

US Retail Sales Advance in April

April’s retail sales rose by +0.1%, beating the flat consensus. The prior month saw a strong +1.5% gain.

Details:

• Ex-autos: +0.1% (vs +0.3% expected)
• Control group: -0.2% (vs +0.3% forecast)
• Ex-autos and gas: +0.2% (prior +0.9%)

Category movers:

• Food services: +0.8%
• Clothing: +0.9% (possible tariff front-loading)
• Home furnishings: +1.4%
• Vehicles: +0.9%
• Grocery: +0.1%

While the headline surprised slightly on the upside, the control group decline suggests core consumption is losing momentum.

U.S. Jobless Claims Stable at 229K

Initial jobless claims in the U.S. matched expectations at 229,000 for the latest week. The prior reading was revised up to match at 229,000.

• 4-week average for initial claims: 230.5K (up from 227.25K)
• Continuing claims: 1.881M, slightly below the 1.890M forecast
• 4-week average for continuing claims: 1.874M

This data shows labor market conditions remain tight but are beginning to normalize from ultra-low levels seen earlier this year.

30-Year Mortgage Rates Tick Higher as New Builds Gain Appeal

Freddie Mac’s 30-year mortgage rate rose to 6.81%, up slightly from 6.76% the previous week. Rates have held in a narrow range between 6.7% and 6.9% for months, maintaining elevated borrowing costs.

Housing market snapshot:

• New home sales surged in March to 724,000 SAAR (+7.4% m/m)
• Median new home price: $403,600 (-7.5% y/y)
• Existing home sales fell -5.9% m/m to 4.02 million units
• Median existing home price: $403,700 (+2.7% y/y)

Despite high rates, builders are gaining traction by cutting prices and offering incentives, while tight inventory in the resale market continues to prop up home values.

US Homebuilder Sentiment Drops Sharply in May

The NAHB housing market index for May dropped to 34, well below the expected 40 and down from 40 in April. Sentiment among US homebuilders is deteriorating as higher borrowing costs and affordability challenges weigh on new demand.

Details:

• Single-family sales index: 37 (vs. 45 prior)
• Prospective buyer traffic: 23 (vs. 25 prior)
• Sales expectations for next six months: 42 (vs. 43 prior)

This marks the latest sign that persistent mortgage rate pressure is souring the outlook in the residential construction sector.

US Business Inventories Lag Forecasts in March

Business inventories rose just 0.1% in March, slightly below the 0.2% forecast and a slowdown from February’s +0.2% pace. Data from the US Census Bureau provided further insights into inventory and sales activity.

Key data:

• Retail inventories ex-autos: +0.4% (up from +0.1% last month)
• Total sales: $1.9199 trillion (+0.7% m/m, +4.5% y/y)
• Total inventories: $2.5781 trillion (+0.1% m/m, +2.5% y/y)
• Inventory-to-sales ratio: 1.34 (down from 1.37 a year ago)

Retail inventory gains signal businesses are rebuilding stock despite flat overall inventory growth.

Philadelphia Fed Business Index Rises But Activity Mixed

The Philly Fed manufacturing index improved to -4.0 in May, far stronger than the expected -11.0, and up sharply from April’s dismal -26.4.

Highlights:

• New orders: +7.5 (vs -34.2 prior)
• Employment: +16.5 (vs +0.2 prior)
• Prices paid: +59.8 (vs +51.0)
• Prices received: +43.6 (vs +30.7)
• Shipments dropped to -13.0
• Delivery times worsened to -9.2

Six-month expectations surged:

• Business outlook rose to 47.2 (from 6.9)
• New orders outlook jumped to 49.7 (from 6.6)

This suggests a possible demand boom is coming—potentially resembling the post-COVID rebound dynamic.

New York Manufacturing Declines Again, But Orders Rebound

The Empire State Manufacturing Index fell for the third month in a row, hitting -9.2 in May, slightly better than the -10.0 expected. Key takeaways:

• New Orders rebounded to +7.0 from -8.8
• Shipments returned to positive territory at +3.5
• Prices Paid jumped to 59.0, the fifth monthly rise
• Employment worsened to -5.1
• Average Work Week was up slightly but still negative at -3.4

Six-month outlooks showed improved optimism:

• Future General Business Conditions: -2.0 (up from -7.4)
• Number of Employees: +11.6
• Capital Expenditures turned negative at -6.7

The data paints a mixed picture: current conditions remain soft, but forward-looking indicators suggest a possible rebound.

U.S. Industrial Output Flatlines in April

Industrial production in the United States stalled in April, posting 0.0% growth versus expectations for a +0.2% increase. March data was revised higher from +0.3% to +0.4%.

Manufacturing output contracted by -0.4%, underperforming both forecasts and the prior month’s gain. These figures suggest that the industrial sector may be cooling after earlier signs of recovery.

Markets Eye April PCE After Tame CPI Print

Expectations are building for a mild April reading on Core PCE, the Fed’s preferred inflation metric. WSJ’s Nick Timiraos noted that forecasts are trending lower following this week’s CPI release, although upcoming PPI and import price data may shift the outlook.

While inflation indicators are moving in the right direction, many warn that these are lagging metrics. Markets are pricing in stronger growth due to easing trade tensions, which has driven Treasury yields higher. The implication: inflation could resurface, complicating the Fed’s path to rate cuts.

Meta Delays Launch of “Behemoth” Llama 4 Model Amid Internal Struggles

Meta Platforms has postponed the release of its highly anticipated Llama 4 large language model, known internally as “Behemoth,” due to ongoing internal concerns about its effectiveness and readiness, according to a report from The Wall Street Journal.

Originally slated for an April 2025 debut, the AI model is now not expected until fall or later. Engineers familiar with the project have raised flags about underwhelming performance gains versus previous iterations, prompting top executives to rethink the structure of the AI division responsible for the model.

Despite public claims that Behemoth would outperform its rivals, insiders say Meta tailored earlier Llama models for benchmark tests and overstated real-world performance. Two Llama versions released in April ranked high on leaderboards but were later admitted to have been optimized solely for those environments.

The turmoil has contributed to staff turnover, with 11 of the 14 researchers who developed the original Llama model having since exited the company. Some in the company’s leadership are said to be increasingly frustrated with the AI team’s trajectory.

Meta is still pouring money into AI—up to $72 billion in capital expenditures this year, a large portion of which is earmarked for its artificial intelligence initiatives. However, this latest delay reflects a broader industry trend: both OpenAI and Anthropic have also fallen behind on timelines for new model rollouts.

Following the report, Meta stock fell $14.12 (-2.16%) to close at $645.15, reversing earlier gains of $3.89 earlier in the session.

Fed’s Barr says economy is on a solid footing, trade clouds the outlook

• Comment from Barr

• Trade shock could be particularly hard on small businesses and trigger price increases if supply chains are affected or firms fail

CIBC: Consumer Spending Faces Major Headwinds

CIBC analysts are warning that the US consumer may be heading into a tougher stretch. Following a tepid retail sales report and weakening ‘control group’ spending, the bank believes that consumer momentum is likely to slow.

In a note, CIBC wrote:

“The outlook for the US consumer is dimming. Many firms have absorbed tariff costs so far, but rising input prices and inventory depletion mean the burden is shifting to consumers.”

The firm expects consumption growth to ease to 1–1.5% in H2 2025. They also echoed Walmart’s comments about pricing pressures, with CFO John David Rainey calling the current speed of price changes “unprecedented.”

While sentiment could improve with fiscal support, high interest rates and ongoing trade tension continue to cloud the picture.

Powell Signals Reassessment of Fed Policy Communication

Federal Reserve Chair Jerome Powell spoke about the central bank’s ongoing review of its monetary policy framework. He noted that the April PCE inflation print is expected to land near 2.2% year-on-year.

Powell also said there’s a consensus among policymakers that the Fed’s messaging—particularly around employment shortfalls and inflation averaging—needs refinement. Revisions to how the Fed communicates with markets are being actively considered to ensure the framework is both robust and transparent.

Qatar Pledges $500 Billion in US Investments Over a Decade

Qatar’s sovereign wealth fund has committed to investing $500 billion in the United States over the next 10 years, according to Bloomberg. The move builds on a wave of Gulf capital flowing into US assets.

Earlier this week, Saudi Arabia made its own historic pledge, promising $600 billion in long-term US investments. Saudi Aramco also signed 34 preliminary deals with American firms worth up to $90 billion, spanning energy, defense, tech, and infrastructure.

The announcements highlight the Gulf’s intent to solidify economic alliances with the US amid evolving global trade dynamics.

Walmart Warns of Price Increases Due to Trump Tariffs

Walmart CEO Doug McMillon issued a clear warning during the company’s earnings call: the retail giant is preparing to hike prices on select goods due to the impact of U.S. tariffs, even with the recent easing in tensions between Washington and Beijing.

McMillon said, “We’re committed to keeping prices low, but the reality is that we can’t absorb all the cost pressures. Even with the reduced tariffs announced this week, retail operates on thin margins.”

Walmart’s CFO John David Rainey added that consumers should expect to see prices begin to rise toward the end of May and even more so in June. These developments reinforce the Federal Reserve’s decision to stay patient and monitor evolving conditions.

Deutsche Bank Sees Continued U.S. Equity Strength—For Now

Deutsche Bank believes that U.S. stocks are set to continue their recent streak of outperformance, helped along by the current pause in the U.S.-China tariff fight.

From Wednesday’s note:
“We expect the S&P 500’s recent relative strength to continue in the short term, as U.S. firms benefit more directly from the tariff reductions.”

That said, the bank warns the advantage might not last. Analysts believe the longer-term burden of tariffs will weigh more heavily on American companies than their European counterparts—unless a more comprehensive rollback is implemented.

UBS Sticks with Bullish Tech View, Flags Four Caution Areas

UBS remains bullish on the global tech sector, seeing further upside for AI-driven stocks and other high-quality names. In a Wednesday update, analysts wrote that valuations are still attractive and that “the risk-reward remains favorable” despite policy noise.

They continue to recommend exposure to global tech, particularly in AI, but caution that several risks could limit gains:

1. The fragile nature of the 90-day U.S.-China trade truce
2. The threat of new semiconductor tariffs
3. Rising costs linked to supply chain relocation
4. Uncertainty around Trump’s plan to revise Biden-era AI rules

UBS maintains that the tech rally has room to run, but navigating it will require active risk management as macro variables evolve.

Fed’s Daly: Business is cautious amidst the economic uncertainty, but not “stalling out”

• Federal Reserve’s Daly:

• Monetary policy well-positioned, moderately restrictive
• Businesses are cautious amid uncertainty, but not stalling out
• Solid growth, solid labor market, declining inflation, that’s where we want to be
• Fed policy can respond to whatever comes in the economy
• Patience is the word of the day
• Loan demand solid, credits are good
• Any guidance on policy would be speculative and wrong, given uncertainty

Bank of Mexico Cuts Rate to 8.50%, Signals More Easing Ahead

The Bank of Mexico lowered its benchmark interest rate by 50 basis points to 8.50%, a move backed by a unanimous board vote.

Key points from the policy statement:

• Further gradual rate reductions are likely if inflation trends remain favorable.
• Q4 2025 headline inflation forecast: 3.3% (unchanged)
• Q4 2025 core inflation forecast: 3.4% (vs 3.3% prior)
• Q4 2026 headline inflation forecast: 3.3%
• Q4 2026 core inflation forecast: 3.0%

While the inflation outlook has slightly improved, trade uncertainty and weak domestic growth remain risks. The board noted that US trade policy changes are adding a layer of complexity to its forward guidance.

Canada’s Wholesale Trade Rises Modestly in March

Canadian wholesale trade edged up +0.2% in March, exceeding the forecast for a -0.3% decline. February’s result was revised up to +0.3%.

Three out of seven major subsectors saw gains. Leading the increase was the motor vehicle and parts category, which surged +4.5% to $15.1 billion, followed closely by the miscellaneous subsector, up +4.1% to $11.0 billion. Year-over-year, wholesale trade was 5.7% higher.

However, manufacturing sales dropped -1.4%, slightly better than the -1.9% forecast, and down from a revised +0.2% the previous month.

Commodities News

Gold Recovers as Dollar Softens and Yields Slide

Gold prices bounced back on Thursday, rallying from a weekly low of $3,120 to trade near $3,228, gaining more than 1.4% on the day. The rebound followed a combination of weaker-than-expected US economic data and renewed geopolitical tensions that boosted demand for safe-haven assets.

The latest Producer Price Index (PPI) data for April showed a surprise decline of -0.5% MoM, well below the expected +0.2% rise. Core PPI also fell -0.4%, versus forecasts of +0.3%. Retail Sales disappointed too, coming in at +0.1% MoM, down sharply from March’s upwardly revised +1.7%. Initial jobless claims for the week ending May 10 held steady at 229,000, matching estimates.

These data points pushed US Treasury yields lower and weakened the US Dollar Index (DXY), giving gold the momentum to stage a comeback.

Traders are now fully pricing in two rate cuts from the Federal Reserve in 2025, with the first expected in September. Markets responded swiftly to the economic signals, reinforcing gold’s short-term bullish case.

Geopolitical risk also helped boost gold’s appeal. Russian President Vladimir Putin reportedly rejected an invitation to peace talks with Ukraine’s Volodymyr Zelenskyy in Turkey, adding a geopolitical premium to gold’s valuation.

Despite earlier losses tied to optimism around the US-China trade truce, which pushed gold lower by more than $120 earlier in the week, the metal has since stabilized. Investors now await upcoming US housing data and the University of Michigan consumer sentiment report for fresh macro signals.

Silver Climbs After Defending Key Technical Support

Silver rebounded from earlier losses on Thursday, rallying 0.90% to trade near $32.53, after briefly dipping below its 100-day Simple Moving Average (SMA) at $31.90.

The bounce follows a strong defense at technical support levels:

• The current candlestick forms a long lower wick, a sign of rejected downside.
• RSI at 47.68 signals neutral momentum, leaving room for further swings.

Silver remains range-bound, with key resistance at the 50-day SMA ($32.76) and psychological resistance at $33.00. Immediate support lies at $32.00, which corresponds to the 61.8% Fibonacci retracement of the March–April rally. The move suggests buyers are not giving up control, though a confirmed daily close is needed to shift sentiment more decisively.

Oil Drops to $61.62 as Supply Outlook Outweighs Demand Hopes

Crude oil ended Thursday at $61.62 per barrel, down $1.53 or 2.42%, as the market absorbed a wave of bearish catalysts.

Bearish Drivers:

• Possible US–Iran nuclear agreement could unleash sanctioned Iranian oil into global supply.
• OPEC+ scheduled to add 411K bpd as part of production rollbacks.
• IEA lowered demand growth forecast to +650K bpd for the remainder of 2025 (vs. +990K bpd in Q1).
• IEA raised supply growth projection to 1.6M bpd, up from 1.2M.

Technical Picture:

• Price tested and briefly broke below the 200-hour moving average ($60.41) before bouncing.
• Oil remains beneath both the 100-hour ($62.12) and 200-hour MAs, suggesting that bears hold the edge for now.

Macro factors—particularly trade disputes and economic headwinds—continue to weigh heavily on oil sentiment.

Gold Holds Ground Despite China ETF Outflows – TD Securities

Gold prices are stabilizing, even in the face of noticeable outflows from Chinese gold ETFs. According to TD Securities’ Senior Commodity Strategist Daniel Ghali, Chinese ETFs shed approximately 64,000 ounces in the latest session, more than offsetting 27,000 ounces of inflows from ETFs outside China.

Despite the outflows, Ghali notes that the broader picture remains firm:

• Macro funds are mostly neutral on gold.
• CTAs are unlikely to liquidate long positions without a deeper price drop.
• Shanghai-based institutional buyers added nearly 685,000 ounces post-holiday.

The strategist argues that gold’s refusal to drop in the face of bearish headlines reflects an asymmetric setup, possibly tied to the dollar’s fading appeal as a store of value—even if it retains its reserve currency role.

IEA Sees Oil Market Flooded With More Supply as Demand Weakens

The International Energy Agency (IEA) projects global oil supply to expand by 1.6 million barrels per day in 2025, an upward revision of 380,000 bpd. This rise is largely attributed to expected production increases by Saudi Arabia and other OPEC+ members.

In contrast, demand growth is projected to slow:

• Q1 2025 demand growth was +990k bpd
• Remaining 2025 demand growth is forecast at just +650k bpd
• Full-year 2025 average raised slightly to +740k bpd (from +720k)
• 2026 demand growth revised up to +760k bpd (from +690k)

The IEA cited slowing global economies and rising electric vehicle sales as major factors reducing oil demand expansion.

Palladium and Platinum Slip as Precious Metals Open Lower in Europe

At the start of Thursday’s European trading session, Platinum Group Metals (PGMs) were under pressure. Palladium (XPD) was last quoted at $950.05 per troy ounce, easing back from the previous close of $955.70.

Platinum (XPT) also declined, currently trading at $981.59, a drop from the prior session’s close of $984.30. Both metals are showing a subdued tone as traders digest macroeconomic signals and currency movements early in the day.

Trump: We’re getting close to doing a deal with Iran

• Comments from Trump weighing on oil prices

• We’re getting close to doing a deal with Iran.
• Iran has agreed to terms; we want them to succeed.
• We were losing Middle East due to past administration.

Iran Says It’s Ready to Sign Nuclear Deal in Exchange for Sanctions Relief

Iran is signaling a willingness to sign a nuclear agreement that would result in the immediate lifting of all economic sanctions, according to NBC News, citing a senior Iranian official.

Ali Shamkhani, a key advisor to Iran’s Supreme Leader, said Tehran is ready to:

• Commit to never developing nuclear weapons
• Eliminate its stockpiles of highly-enriched uranium
• Allow international inspections

When asked if Iran would sign an agreement under those conditions today, Shamkhani replied, “Yes.” The statement has drawn attention in energy markets, contributing to lower oil prices as traders price in potential supply normalization.

Citi Raises Near-Term Brent Oil Forecast to $60/Barrel

Citi has nudged its short-term Brent crude forecast slightly higher, now projecting $60 per barrel for the next 0–3 months. The bank is maintaining its Q2 and Q3 average targets at $62 and $63 per barrel, respectively.

The adjustment reflects recent market resilience and expectations for tighter balances in the short term, despite ongoing volatility in inventories and geopolitical factors.

Europe News

European Stocks Rise, German DAX Closes at Record High

Major European indices ended higher, with multiple markets posting multi-year or all-time highs.

Index closes:

• Germany DAX: +0.65% to 23,680.03 (record high)
• Spain IBEX 35: +0.65% (highest since April 2008)
• Italy FTSE MIB: +0.15% (highest since 2007)
• UK FTSE 100: +0.57%
• France CAC 40: +0.21%
• Euro Stoxx 50: +0.12%

Bullish sentiment remains firm in Europe, particularly as energy markets stabilize and financials benefit from stronger economic data.

Eurozone Industrial Production Surges in March

Eurostat reported that industrial production in the eurozone rose +2.6% month-on-month in March, beating the +1.8% forecast and significantly above February’s +1.1% gain.

Driving the rise:

• Capital goods: +3.2%
• Durable consumer goods: +3.1%
• Intermediate goods: +0.6%

Energy output, however, declined -0.5% on the month. This solid gain in production signals resilient activity, particularly in the manufacturing supply chain.

Eurozone Q1 GDP Slightly Revised Down But Still Strong

The second estimate for euro area GDP in Q1 2025 came in at +0.3% q/q, a tick below the initial +0.4% print. While it’s a modest downward revision, it still confirms decent growth momentum at the start of the year.

However, these figures predate the latest tariff moves, meaning the full impact of U.S.-China trade developments is not yet reflected in this data.

Germany’s Wholesale Prices Dip Slightly But Stay Elevated

Germany’s wholesale price index for April recorded a -0.1% monthly decline, following March’s -0.2% fall. While the monthly data indicates mild deflation, the index is still up +0.8% year-on-year, showing sustained pricing strength over a 12-month horizon.

France’s April CPI Confirms Steady Annual Inflation

France’s final CPI reading for April held steady at +0.8% year-on-year, consistent with the preliminary estimate. The harmonised index (HICP) was revised slightly higher to +0.9% y/y, up from the earlier +0.8% estimate.

Core inflation remains unchanged at +1.3%, the same rate recorded in both March and February, pointing to subdued underlying price pressures.

UK Monthly GDP for March Beats Forecasts on Services Surge

March GDP in the UK came in at +0.2% month-on-month, outpacing the forecast of 0.0%. While it marks a slowdown from February’s +0.5% reading, revised up from +0.4%, the positive momentum carried into Q1.

Sector breakdown:

• Services: +0.4% vs expected +0.1% (prior +0.3%)
• Industrial output: -0.7% (vs expected -0.5%)
• Manufacturing: -0.8% (vs expected -0.5%)
• Construction: +0.5% (vs expected +0.1%)

Despite dips in industrial sectors, services strength continues to drive the overall expansion narrative.

UK Economy Expands More Than Forecast in Q1

The UK’s preliminary GDP data for Q1 2025 showed the economy grew +0.7% quarter-on-quarter, beating expectations for a +0.6% increase. The previous quarter posted a modest +0.1% gain.

The services sector led the charge, also growing +0.7% in the quarter, reinforcing the sector’s dominant role in Britain’s economic rebound.

Swiss Producer and Import Prices Edge Up Slightly in April

Data from Switzerland’s Federal Statistics Office showed a +0.1% monthly increase in April for the combined Producer and Import Price Index, matching March’s rise.

Producer prices individually rose +0.2%, while import prices remained unchanged. On a year-over-year basis, the overall index declined -0.5%, primarily driven by a -1.8% annual fall in import prices.

ECB’s de Guindos: Trade tensions add to sources of financial market volatility

• de Guindos speaks about financial stability in the euro area

• Recent months have been rather eventful on global financial markets
• The most immediate concern is that ongoing trade tensions could escalate into a trade war
• That has potentially significant negative consequences for global growth, inflation and asset prices
• But the elevated level of uncertainty has not been limited to trade
• We also continue to see strong geographical and sectoral market concentrations
• Negative surprises in a volatile, uncertain environment could lead to abrupt shifts in investor sentiment
• But financial stability in the euro area has remained sound throughout the market turbulence
• Although the likelihood of tail events remains high

EU must respond to US tariffs with unity and determination, says German finance minister

• Remarks by German finance minister, Lars Klingbeil

• We expect that the negotiations will lead to a good result
• But would like to make it clear that we are prepared to act if talks do not succeed

Asia-Pacific & World News

APEC Flags Surging Trade Policy Turbulence, Slashes Export Forecasts

APEC has warned that trade policy uncertainty surged to levels nine times higher in April than the average recorded from 2015 to 2024. This spike in volatility is largely tied to renewed U.S. tariff measures, particularly under the Trump administration.

As ministers meet this week to discuss WTO reform and regional cooperation, the data isn’t encouraging. APEC cut its 2025 GDP forecast to 2.6%, down from 3.3%, and slashed export growth expectations to 0.4%, sharply lower than the 5.7% growth seen in 2024.

Member states are increasingly concerned that erratic trade policies are becoming the primary drag on growth, especially for export-heavy economies. Tariffs may be the most visible culprit, but the broader policy whiplash is doing just as much damage.

US and China Hold Private Trade Talks During APEC

South Korea’s trade minister Cheong In-kyo confirmed that the United States and China conducted a side meeting during the APEC conference. The talks involved U.S. trade representative Jamieson Greer and China’s envoy Li Chenggang. While no specifics have emerged, the encounter suggests both sides are pursuing dialogue even amid broader geopolitical tensions.

China Signals Willingness to Handle Trade Issues Privately

China’s Ministry of Commerce reiterated that it remains open to resolving trade and economic disputes with the U.S. through offline, bilateral discussions. The ministry added that more details regarding the mechanism for this dialogue would be shared in due course, highlighting ongoing diplomatic backchannel efforts despite tariff escalations.

US Bessent: We are going into a series of negotiations with China

• Comments from the US Treasury Secretary, Scott Bessent

• We are going into a series of negotiations with China to prevent escalation again.
• We now have a mechanism with China counterparts.

Analysts See More Room for RRR Cuts in China—Up to 200 Basis Points

Chinese financial media is once again reporting that further reductions in the country’s Reserve Requirement Ratio (RRR) are very much on the table this year. Analysts cited in China Securities Journal suggest there is space for another 100 to 200 basis point cut before year-end.

This follows the 50bp cut implemented by the People’s Bank of China on May 7. These adjustments are being viewed as part of broader efforts to support liquidity amid persistent economic softness and trade policy headwinds.

How China Plans to Absorb Taiwan Without Firing a Single Shot

Forget the missiles and amphibious landings—China’s most likely route to reclaim Taiwan may involve no war at all. Instead of military confrontation, Beijing appears focused on wearing Taiwan down from within: undermining its political stability, compromising its economic autonomy, and weakening public confidence. The ultimate goal isn’t to persuade Taiwan that reunification is just—it’s to convince the island that it’s inevitable.

This subtle pressure campaign avoids triggering a Western military response. And the erosion is already underway. Through economic integration, disinformation, diplomatic isolation, and targeted influence campaigns, China is steadily reshaping the reality around Taiwan’s long-term options. The battlefield here is psychological, not physical.

Here is the link for more:

• The Beiping model: How China could absorb Taiwan without a war

PBOC sets USD/ CNY reference rate for today at 7.1963 (vs. estimate at 7.2217)

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

PBOC injected 64.5bn yuan via 7-day reverse repos at 1.40%

• 158.6bn yuan mature today
• net drains 94.1bn yuan

Australia’s Job Market Beats Forecasts, Pressures RBA to Delay Cut

Australia’s April labor report came in far hotter than expected, raising questions over whether the Reserve Bank of Australia will hold off on its anticipated rate cut next week. Employment jumped by 89,000, blowing past the forecast of +20K and dwarfing March’s +32.2K gain.

Breaking it down:

• Full-time jobs surged +59.5K
• Part-time jobs rose +29.5K
• Unemployment rate held steady at 4.1%
• Participation rate reached a new record at 67.1% (vs. 66.8% expected)

This sharp increase in hiring, particularly in full-time positions, complicates the RBA’s rate-cut narrative—especially as global trade tensions start to cool. The RBA’s May 20 meeting is now very much in play.

Australian Consumer Inflation Expectations Ease Slightly in May

According to the latest monthly survey from the Melbourne Institute, Australian consumers now expect inflation to run at 4.1% in May 2025, a modest drop from 4.2% in April.

Though the shift is small, the easing in inflation expectations could offer the Reserve Bank some breathing room—assuming the red-hot labor market doesn’t override it.

New Zealand Food Prices Continue to Climb in April

Food prices in New Zealand accelerated in April, rising 0.8% month-on-month, according to the latest Food Price Index. That’s up from a +0.5% m/m increase in March.

On a yearly basis, food costs are now up 3.7% y/y, compared to 3.5% the month before. The steady rise continues to weigh on households and complicate inflation management, particularly as the Reserve Bank of New Zealand navigates its policy path.

US Mulls Changes to Japan Trade Pact Amid Tariff Talks

According to Jiji News, the U.S. is considering revisions to its trade agreement with Japan as part of ongoing tariff discussions. However, Japanese negotiators are not anticipating changes and remain firm on prior terms—particularly regarding agriculture.

U.S. officials are reportedly seeking additional concessions on livestock and farming products, a sensitive area Japan is unwilling to renegotiate. This fundamental disagreement may cause talks to stall, raising the possibility of a deadlock.

BOJ expected to pause rate hikes through September amid tariffs uncertainty – poll

• The findings from Reuters’ latest poll on economists from 7 to 13 May

• 59 of 62 economists (95%) see no change to interest rates in June meeting
• 39 of 58 economists (67%) see interest rates staying unchanged in Q3 (previously 36%)
• 30 of 58 economists (52%) see at least one more rate hike by year-end
• The median prediction for end-September rate is now 0.50% (previously 0.75%)
• The median prediction for year-end rate is 0.75% (unchanged)
• 16 of 29 economists (55%) either strongly or somewhat approve of the Japanese government’s approach to tariff negotiations with the US

Crypto Market Pulse

Crypto: XRP, Solana, and Cardano Fall Behind as BTC Holds Steady Above $100K

The total crypto market cap shrank 4% on Thursday, with Bitcoin (BTC) holding steady while altcoins such as XRP, Solana (SOL), and Cardano (ADA) extended losses.

Bitcoin Overview:

• BTC price: $102,500, trading in a narrow $101,769–$103,810 range.
• BTC ETF holdings: $41.3 billion, with BlackRock’s IBIT managing $15 billion, close to a 40% market share.
• Institutional demand remains solid as recession fears fade following the US-China trade truce.

Altcoin Recap:

• XRP: -2.5% to $2.47, breaking below $2.50 support.
• SOL: -1.5% to $171.61, slipping under $175 support.
• ADA: -2.3% to $0.7723, close to losing the $0.77 level.
• BNB: Up 0.3%, trading above $650, the only top-10 coin in positive territory.

Trading volumes surged to $116 billion, signaling heavy repositioning across portfolios.

Coinbase to Expand Post-Deribit Deal as Multichain Liquidation Approved

After acquiring crypto derivatives platform Deribit for $2.9 billion, Coinbase CEO Brian Armstrong says the exchange is exploring additional acquisitions, focusing on international growth.

Deribit acquisition breakdown:

• $700 million cash + 11 million Coinbase shares
• Largest acquisition in Coinbase history
• Strengthens foothold in BTC and ETH options markets

Armstrong also commented on potential interest in stablecoin issuer Circle, though clarified that no deals are pending. Coinbase shares gained 2.5% after the company’s upcoming S&P 500 inclusion was confirmed.

Meanwhile in Singapore:

• The High Court approved Sonic Labs’ petition to liquidate Multichain Foundation, following a $210 million hack in July 2023.
• KPMG Singapore will lead recovery efforts.
• Legal action was triggered by Multichain’s failure to account for the breach and the arrest of its CEO, Zhaojun He, prior to the exploit.

Coinbase Offers $20 Million Bounty After Customer Support Breach

Coinbase has launched a $20 million bounty to identify attackers who breached its customer support systems and used social engineering tactics to defraud users.

• Attackers posed as Coinbase support after bribing staff for user data.
• No accounts were hacked directly, but victims were tricked into sending funds.
• Less than 1% of users were affected.

The company disclosed the incident to the SEC, estimating $180–$400 million in costs, including customer refunds and security upgrades.

Coinbase declined to pay a $20 million ransom to the attackers and has begun legal action. The company is also tracking wallets holding stolen crypto and pledges to fully reimburse affected users.

Dogecoin, Cardano, Solana Drop After Crypto Rally Cools

Dogecoin (DOGE), Cardano (ADA), and Solana (SOL) each fell over 5% in the past 24 hours as traders booked profits following a week-long surge across digital assets.

Market dynamics:

• Bitcoin continues to hover near $104,000, pausing at major resistance
• Ether pulled back to $2,615, failing to hold above its 200-day moving average
• Crypto Fear & Greed Index hit 73, a level often associated with overheating

Despite the cooldown, institutional interest remains firm. Santiment data shows wallets with 10–10,000 BTC added 83,000 BTC in the past month.

With Coinbase joining the S&P 500 on May 19, some analysts see room for further upside, as passive inflows could drive additional gains in select tokens.

US Senate May Vote on Stablecoin Bill by Memorial Day, Brazil Eyes Tighter Rules

Senators Kirsten Gillibrand and Cynthia Lummis say they expect a Senate vote on the GENIUS Act, a revised stablecoin regulation bill, by Memorial Day. The bill emphasizes 1:1 asset backing, stronger bankruptcy safeguards, and consumer protections.

Although it passed the Senate Banking Committee in March (18–6 vote), the bill hit a roadblock on May 8 with a failed procedural vote (49–48). Critics want tougher AML rules and clearer restrictions on foreign stablecoin issuers.

Gillibrand clarified that recent revisions exclude any direct references to President Trump’s crypto dealings, removing a key Democratic objection. She stated that ethics provisions in the bill are “robust” and that any illegal behavior is already covered by existing law.

Meanwhile, Brazil’s central bank is drafting strict rules under its new crypto law, which may include bans on stablecoin transfers to wallets controlled by foreign entities.

Bitcoin Rally Pauses, but Bullish Trend Remains Intact

Bitcoin’s impressive rally since Trump’s tariff pause on April 9 has hit a speed bump as markets start recalibrating rate cut expectations. Initially, markets priced in 120 basis points of easing for 2025, but that’s now down to just 50 basis points.

This hawkish shift stems from improving growth forecasts and fading recession concerns. A surge in activity could reignite inflation pressures and limit the Fed’s flexibility—posing a risk to both crypto and equities in the short run.

Technical outlook:
Bitcoin remains in an uptrend, supported by an upward-sloping daily trendline. Bulls are defending this line while eyeing new highs. Bears, however, are targeting a potential break to push prices down toward the $93,000 region.

The Day’s Takeaway

United States

• Major indices ended mixed:
  • Dow: +0.65%
  • S&P 500: +0.41%
  • NASDAQ: -0.18% (dragged lower by Meta reversal)
• Markets are now fully pricing in two Fed rate cuts for 2025, with the first expected in September.
• Meta Platforms fell -2.35% after reports that it delayed its Llama 4 AI model due to internal concerns over weak performance gains.

Canada

• No major new Canada-specific economic releases for the session, but earlier-in-the-week wholesale trade beat expectations at +0.2% for March.
• Canadian markets remain stable amid US dollar softness and commodity sensitivity.

Mexico

• Bank of Mexico cut its benchmark rate to 8.5% from 9.0%, marking another step in its gradual easing cycle.
• The central bank expects inflation to return to target by Q3 2026, though trade uncertainty and weak growth remain key risks.
• Forecasts for Q4 2025–2026 inflation were held or slightly revised higher.

Commodities

• Gold rebounded sharply on falling yields and dollar weakness, ending near $3,228 after hitting a weekly low of $3,120.
• Silver bounced from support at $31.90, climbing back above $32.50.
• Palladium and Platinum opened weaker in Europe, trading at $950.05 and $981.59, respectively.
• Crude oil dropped $1.53 (-2.42%) to $61.62 on headlines of:
  • Potential US–Iran nuclear deal
  • OPEC+ supply increase
  • IEA trimming global demand forecasts
  • Recession fears still lingering from trade uncertainty

Europe

• European equities closed higher:
  • Germany DAX: new record at 23,680
  • Spain IBEX: highest since April 2008
  • Italy FTSE MIB: highest since 2007
• Broad-based optimism remains tied to a weaker euro, global easing cycle expectations, and softening energy prices.

Asia

• No new top-tier data published in this session.
• Gold strength may spill over into Asian demand, particularly from China, where ETF outflows (-64koz) were noted but countered by aggressive institutional dip-buying.
• Asian equities remain sensitive to ongoing US-China trade truce signals.

Rest of the World

• Qatar’s sovereign wealth fund confirmed a plan to invest $500 billion in the US over the next decade, expanding on the Gulf’s aggressive capital deployment in energy and infrastructure.
• Singapore High Court approved the liquidation of Multichain Foundation, following a $210M exploit. KPMG appointed to manage restitution.

Crypto

• Global crypto market cap dropped 4% but Bitcoin held above $102,500, its 8th day above $100K.
• Altcoins sold off:
  • XRP: -2.5% to $2.47
  • Solana: -1.5% to $171.61
  • Cardano: -2.3% to $0.7723
• BNB defied the trend, rising 0.3% and staying above the $650 support level.
• Coinbase confirmed it is open to more acquisitions after its $2.9B Deribit deal.
• The upcoming Coinbase S&P 500 inclusion on May 19 remains a key driver for sentiment.