MNI US OPEN - Appeals Court Keeps Trump's Tariffs in Play

EXECUTIVE SUMMARY

• TRUMP'S TEAM PLOTS PLAN B FOR IMPOSING TARIFFS, WSJ REPORT
• BESSENT SAYS US-CHINA TALKS ‘STALLED,’ PUSHES FOR TRUMP-XI CALL
• BOJ TO WATCH JGB MOVES, REVIEW TAPERING, UEDA SAYS
• MNI PROJECTS 2.0-2.1% Y/Y GERMAN NATIONAL CPI, CORE 2.8%

Figure 1: Eurozone lending growth to private sector accelerated in April, setting fresh highs since mid-2023

NEWS

BOJ (MNI): BOJ to Watch JGB Moves, Review Tapering - Ueda

The Bank of Japan is closely monitoring developments in the JGB market, including its overall functioning, amid growing concerns over worsening supply-demand dynamics, Governor Kazuo Ueda told lawmakers Friday. The BOJ will conduct an interim assessment of its JGB tapering program at the June 16-17 policy meeting based on feedback from financial institutions and recent market conditions, he said. JGBs have risen recently, reflecting concerns over deteriorating bond supply-demand conditions. Market participants have pointed to a decline in demand from major life insurers, typically buyers of longer-dated JGBs, who are now holding back due to heightened worries over unrealised losses.

RBNZ (MNI INTERVIEW): RBNZ's Uncertainty to Persist - Chief Economist

MNI discusses the RBNZ's next moves. On MNI Policy MainWire now, for more details please contact sales@marketnews.com

DATA

GERMANY DATA (MNI): MNI Projects 2.0-2.1% Y/Y German National CPI, Core 2.8%

From state-level data that equates to 89.1% weighting of the national May flash German CPI print (due at 13:00 GMT / 14:00 CET), MNI estimates that national CPI (non-HICP print) printed around 0.0-0.1% M/M and rose 2.0-2.1% Y/Y (April 2.1%). See the tables below for full calculations. Analyst consensus stands at 2.1% Y/Y and 0.1% M/M, so there might be some slight downside risks to headline inflation. We had initially seen some marginal upside risks, but since then Rhineland-Palatinate, Berlin and
Saarland data all came in softer than the 2.1% Y/Y consensus figure. Either way, the magnitude of risks vs consensus appears contained this month. Current tracking of Core CPI (ex-energy and food, based on 50% of the national index) implies around 2.8% (2.9% in April) and 0.1-0.2% M/M.

EUROZONE DATA (MNI): Lending Growth Accelerates Again, Impulse Maintained

Eurozone lending growth to the private sector accelerated a touch further in April, setting fresh highs since mid-2023 at 2.7% Y/Y or 2.2% Y/Y when adjusting for sales & securitization. Germany continues to lag in credit impulse metrics, not helping by a continuation of what has been a particularly tepid trend in lending to non-financial corporates. Sticking to a sales & securitization adjusted basis, lending to non-financial corporates (NFCs) increased 2.6% Y/Y in April after an upward revised 2.4% (initial 2.3) for a fresh high since Jun 2023. Lending to households meanwhile increased 1.9% Y/Y in April after 1.7% for its fastest since May 2023. It's an eight consecutive monthly acceleration for the Y/Y.

SPAIN DATA (MNI): HICP Softer Than Expected, Lower Leisure/Culture, Transport

• SPAIN MAY FLASH HICP -0.1% M/M, +1.9% Y/Y
• SPAIN MAY FLASH CPI +0% M/M, +1.9% Y/Y
• SPAIN MAY FLASH CORE CPI +2.1% Y/Y

Spain's May preliminary HICP came in a tenth lower than expected on the yearly rate at 1.9% Y/Y (vs 2.0% cons; 2.2% prior) and the sequential reading at -0.1% M/M (vs 0.0% cons; 0.6% prior). The national CPI also came in 2 tenths below expectations on the yearly rate at 1.9% Y/Y (vs 2.1% cons; 2.2% prior) and a tenth below on the sequential comparison at 0.0% M/M (vs 0.1% cons; 0.6% prior). Core CPI (not HICP) came in below expectations, also, at 2.1% Y/Y (vs 2.2% cons; 2.4% prior). The headline rate was driven lower by leisure and culture prices, as well as transportation costs (to a lesser extent), INE adds. Electricity also contributed negatively to the Y/Y rate in May.

ITALY DATA (MNI): Q1 GDP at 0.3% Q/Q; Superbonus Expiry Headwind Shows Signs of Fading 

Italian Q1 GDP confirmed flash estimates at 0.3% Q/Q (0.26% unrounded), above Q4's downwardly revised 0.2% reading. Although growth is still subdued compared to Southern European peers such as Spain, the Q1 reading is nonetheless a little stronger than might have been implied by the Bank of Italy's Ita-coin nowcast and EC sentiment data. Consumption growth was 0.2% Q/Q, adding 0.1pp to the quarterly print, Meanwhile government consumption fell 0.3% Q/Q, subtracting 0.1pp.

SWEDEN DATA (MNI): Investment Drags Heavily on Q1 GDP

• SWEDEN FLASH Q1 GDP +0.9% Y/Y

Gross fixed capital investment was the largest drag on Swedish Q1 GDP, falling 3.8% Q/Q (vs 0.7% prior) and pulling quarterly GDP down 1.0pp. All sub-components of GFCF saw negative sequential quarterly readings, but most notably buildings and construction at -7.5% Q/Q (vs 1.8% prior). Consumption fell 0.2% Q/Q (vs 0.6% prior), pulling quarterly GDP down 0.1pp. That's despite the monthly household consumption indicator rising 0.7% 3m/3m as of March. Goods consumption fell 0.3% Q/Q (vs +0.1% prior) while services fell -0.1% Q/Q (vs +0.9% prior).

SWITZERLAND DATA (MNI): KOF Indicator Should Not Be a Surprise to SNB

• SWISS KOF MAY ECONOMIC BAROMETER 98.5

The Swiss KOF Economic Barometer recovered in May, to 98.5 (vs consensus of 98.4) but was not able to make up for April's drop from 103.3 to 97.1 following the deterioration in global trade conditions. "The indicator bundle for manufacturing included in the Barometer shows particularly positive developments. The demand-side indicator bundles for foreign demand and private consumption, however, are under pressure." Note that SNB Chairman Schlegel mentioned on May 19 that Swiss growth is
likely to be lower than thought "a few weeks ago" - the SNB March 2025 growth forecast was for 1.0-1.5%, while Q1 growth was strong, at 0.7% Q/Q.

JAPAN DATA (MNI): Japan May Tokyo Core CPI Rises 3.6% vs. April 3.4%

• JAPAN MAY TOKYO CORE CPI +3.6% Y/Y; APRIL +3.4%
• JAPAN MAY TOKYO CORE-CORE CPI +3.3% Y/Y; APRIL +3.1%
• JAPAN MAY SERVICES PRICES +2.2% Y/Y; APRIL +2.0%

Tokyo’s year-on-year core inflation rate accelerated to 3.6% in May from 3.4% in April, remaining above the Bank of Japan’s 2% target for the seventh consecutive month, data from the Ministry of Internal Affairs and Communications showed on Friday. The May figure marked the highest level since January 2023, when inflation hit 4.3%, driven largely by a 6.9% rise in food prices excluding perishables, up from 6.4% in April. This was despite a slightly smaller increase in energy prices, which rose 8.7% compared to 9.4% the previous month. Core-core CPI, which strips out fresh food and energy and is closely watched by the BOJ as a gauge of underlying inflation, rose 3.3% year-on-year in May, accelerating from 3.1% in April and staying above 2% for the third straight month.

JAPAN DATA (MNI): Japan April Factor Output Posts 1st Drop in 3 Mths

• JAPAN APRIL FACTORY OUTPUT -0.9% M/M; MARCH +0.2%

Japan’s industrial production declined 0.9% month-on-month in April, marking the first drop in three months following a modest 0.2% gain in March, data from the Ministry of Economy, Trade and Industry (METI) showed Friday. A 1.1% fall in automobile production, which contracted for a second straight month after a 5.9% drop in March, led the decline. The weakness reflected the impact of U.S. tariffs on Japanese auto exports. In contrast, production of electronic parts and devices posted a modest rise. Bank of Japan economists closely monitor industrial output as a key indicator of domestic and external demand.

AUSTRALIA DATA (MNI): Retail Sales Surprise Lower, Weather May Have Influenced

• AUSTRALIA APR RETAIL SALES -0.1% M/M

Australian April retail sales were weaker than forecast, falling 0.1% m/m, against a +0.3% forecast, which was also the March outcome. Data on building approvals was also weaker than forecast, down 5.7% m/m, against a 3.0% forecast rise. The prior month was -7.1% m/m, slightly better than originally reported. Private sector home approvals were better at +3.1% m/m (versus -1.9% m/m in March). Private sector credit was +0.7% m/m, better than the 0.5% forecast. For retail sales, the industry break down saw food off 0.3% m/m, while apparel and department stores were both down 2.5% in the month. This follows falls for these segments in March as well.

RATINGS: S&P on France Set to Headline After Close

Potential sovereign rating reviews of note scheduled for after hours on Friday include:

• Moody’s on Hungary (current rating: Baa2; Outlook Negative)
• S&P on France (current rating: AA-; Outlook Negative), Latvia (current rating: A; Outlook Stable) & Lithuania (current rating: A; Outlook Stable)
• Morningstar DBRS on Germany (current rating: AAA, Stable Trend) & Spain (current rating: A (high), Stable Trend)
• Scope Ratings on Greece (current rating: BBB; Outlook Stable) & Turkey (current rating: BB-; Outlook Stable)

Please use this link to access the indicative sovereign rating review schedule covering the five most notable rating agencies for 2025. Note that this schedule is indicative only and ratings can be reviewed on an ad-hoc basis. Rating agencies may also adjust their schedules during the year.

FOREX: Greenback Retraces Small Part of Thursday Weakness

• The greenback is retracing a small part of the acute weakness posted on Thursday, dragging EUR/USD off the overnight high of 1.1390. Newsflow and headlines have been few and far between, with the temporary reinstatement of Trump's tariff regime containing uncertainty through the appeals process and putting markets on a steadier footing into the final session of the week.
• JPY is firmer against all others. USD/JPY has traded either side of the Y144.00 handle, with markets conscious of the printing of a shooting star candle on the daily chart Thursday. This could signal a bearish short-term reversal for the pair, highlighting the Y142.12 level as key on the downside. A break below here would resume the bear trend posted off the May high, and the March/January highs further out.
• The EUR is more mixed. Having outperformed on tariff uncertainty yesterday (most notably against GBP), the single currency has faded slightly, but the case for EUR as a haven currency through trade volatility remains in place. Equity futures in the US are modestly lower, but well within range of the Thursday close, leaving today's run of data as the key input.  
• The German national CPI print is up next, with MNI projecting 2.0-2.1% for the Y/Y rate after this morning's mixed regional inflation prints. Canadian Q1 GDP is also due, seen slowing to 1.7% from 2.6% prior, while US PCE price index data, the final University of Michigan print and the MNI Chicago PMI are set for release. 

EGBS: Little Impact From Regional Data; Equities and Crude Apply Pressure

• Bund futures have traded in a modest 37 tick range, currently -12 at 131.08, just off session lows of 131.02. Somewhat weaker-than-expected country-level flash inflation data has not shifted sentiment materially, with confidence in the Eurozone inflation outlook already baked into market prices.
• Instead, firmer equity and crude oil prices appear to have applied pressure to EGBs. First support in Bunds lies at 130.39, the May 29 low.         
• We’ve seen some early roll activity in futures this morning, ahead of next week’s June 6 expiry.                                   
• German yields are 1.5-2.5bps higher on the session.
• 10-year EGB spreads to Bunds are up to 0.5bps tighter. Institutional books for the 7-year BTP Italia are open, and will close at 1100BST.
• Despite the ECB being in its pre-meeting quiet period, Bank of Italy Governor Panetta still commented on the need for a pragmatic and flexible approach on rates.
• Spanish May flash HICP was slightly below consensus at 1.9% Y/Y, the same annual rate as Italy which was in line with forecasts. MNI estimates that there may be some slight downside risks to the German national CPI consensus of 2.1% Y/Y and 0.1% M/M, following state-level data this morning.
• Eurozone lending growth to the private sector accelerated a touch further in April, setting fresh highs since mid-2023. Italian GDP confirmed flash estimates at 0.3% Q/Q.
• Global focus turns to the US April PCE report at 1330BST. 

GILTS: Away From Early Highs as Equities & Crude Tick Higher

Gilts trade away from early session highs, with a bounce in crude oil and European equities countering the early bid that seemed to centre on a U.S. federal appeals court allowing the White House to temporarily suspend the lower court's order that ruled most of President Trump’s tariffs illegal.

• Futures traded as high as 91.79 but have faded back to 91.60 last.
• Resistance at the May 20 high (91.87) remains untouched, with our technical analyst suggesting that recent gains in the contract only appear corrective.
• Yields now 0.5-2.0bp higher across the curve, 5s under the most pressure.
• 2s10s hovers around 64bp (little changed) vs. cycle closing highs of 78.5bp.
• 5s30s trades at ~125bp (-1.5bp on the day) vs. cycle closing highs of 138.6bp.
• Note that the DMO’s FQ2 (July to Sep) issuance plan broadly met our expectations, details available in an earlier string of bullets.
• Month-end projections for gilt benchmarks point to mild reductions of index duration.
• SONIA futures -1.0 to +2.5, light twist flattening on the strip.
• BoE-dated OIS little changed vs. opening levels, showing ~38bp of cuts through year-end.
• Late Thursday/overnight comments from BoE’s Bailey & Taylor were not market moving.
• There is little of note on the UK calendar for the remainder of today, which will leave focus on cross-market and macro/tariff cues.

EQUITIES: Recent Pullback for Eurostoxx 50 Futures Appears Corrective

The trend cycle in Eurostoxx 50 futures is unchanged, it remains bullish and the recent pullback appears corrective. Moving average studies are in a bull-mode position, highlighting a clear dominant uptrend. Sights are on 5516.00, the Mar 3 high and the key bull trigger. A break of this level would strengthen a bull theme. Key support to watch lies at 5249.44, the 50-day EMA. Clearance of this average would signal a possible reversal. A bullish trend condition in S&P E-Minis remains intact. Thursday’s initial gains delivered a print above 5993.50, the May 20 high and a bull trigger. The break highlights a resumption of the uptrend and maintains a price sequence of higher highs and higher lows. 6000.00 has been pierced, an extension would open 6057.00 next, the Mar 3 high. Key support lies at 5742.22, the 50-day EMA. A clear break of this average is required to highlight a reversal.

• Japan's NIKKEI closed lower by 467.88 pts or -1.22% at 37965.1 and the TOPIX ended 10.45 pts lower or -0.37% at 2801.57.
• Elsewhere, in China the SHANGHAI closed lower by 15.959 pts or -0.47% at 3347.487 and the HANG SENG ended 283.61 pts lower or -1.2% at 23289.77.
• Across Europe, Germany's DAX trades higher by 176.07 pts or +0.74% at 24108.97, FTSE 100 higher by 45.01 pts or +0.52% at 8761.43, CAC 40 up 12.19 pts or +0.16% at 7791.91 and Euro Stoxx 50 up 15.06 pts or +0.28% at 5386.16.
• Dow Jones mini down 50 pts or -0.12% at 42217, S&P 500 mini down 10.25 pts or -0.17% at 5912.5, NASDAQ mini down 44.5 pts or -0.21% at 21363.75.

Time: 09:55 BST

COMMODITIES: Medium-Term Trend Signals for Gold Remain Bullish

WTI futures traded to a fresh short-term cycle high on May 21 before finding resistance. A bear threat remains intact and the recovery since Apr 9, appears corrective. Key resistance to watch is $62.54, the 50-day EMA. A clear break of it would highlight a stronger reversal and open $65.82, the Apr 4 high. For bears a reversal lower would refocus attention on $54.33, the Apr 9 low and bear trigger. A bullish theme in Gold remains intact and recent gains signal the end of the corrective phase between Apr 22 - May 15. Medium-term trend signals are bullish too - moving average studies are in a bull-mode position, highlighting a dominant uptrend. A resumption of gains would open $3435.6 next, the May 7 high. Key support and the bear trigger has been defined at $3121.0, the May 15 low.

• WTI Crude up $0.19 or +0.31% at $61.17
• Natural Gas up $0.03 or +0.71% at $3.551
• Gold spot down $21.42 or -0.65% at $3297.02
• Copper up $1.55 or +0.33% at $468.95
• Silver down $0.14 or -0.42% at $33.184
• Platinum down $7.27 or -0.67% at $1078.83

Time: 09:55 BST

Date	GMT/Local	Impact	Country	Event
30/05/2025	1000/1200	**	IT	PPI
30/05/2025	1200/1400	***	DE	HICP (p)
30/05/2025	1230/0830	**	US	WASDE Weekly Import/Export
30/05/2025	1230/0830	***	US	Personal Income and Consumption
30/05/2025	1230/0830	**	US	Advance Trade, Advance Business Inventories
30/05/2025	1230/0830	***	CA	GDP - Canadian Economic Accounts
30/05/2025	1230/0830	***	CA	Gross Domestic Product by Industry
30/05/2025	1230/0830	***	CA	CA GDP by Industry and GDP Canadian Economic Accounts Combined
30/05/2025	1342/0942	***	US	MNI Chicago PMI
30/05/2025	1400/1000	***	US	U. Mich. Survey of Consumers
30/05/2025	1400/1000	**	US	University of Michigan Surveys of Consumers Inflation Expectation
30/05/2025	1500/1100		CA	Finance Dept monthly Fiscal Monitor (expected)
30/05/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
30/05/2025	1700/1300	**	US	Baker Hughes Rig Count Overview - Weekly
30/05/2025	2045/1645		US	San Francisco Fed's Mary Daly
30/05/2025	2330/1930		US	Chicago Fed's Austan Goolsbee
31/05/2025	0130/0930	***	CN	CFLP Manufacturing PMI
31/05/2025	0130/0930	**	CN	CFLP Non-Manufacturing PMI