• US President Trump said he will double US steel and aluminium tariffs from 25% to 50%, effective June 4th.
• US Treasury Secretary Bessent said China is holding back products essential to the industrial supply chain and he believes President Trump will talk to Chinese President Xi very soon, according to a CBS interview.
• OPEC+ members that voluntarily restricted output agreed to a 411k BPD oil production increase in July, as expected, which could be paused or reversed subject to market conditions.
• Chinese Official PMI data over the weekend was mixed, with manufacturing improving as expected but non-manufacturing surprisingly easing, albeit slightly.
• Meeting between Russian and Ukrainian delegates in Istanbul is expected to take place at 11:00BST/06:00EDT in Ciragan Palace on Monday, according to a Turkish Foreign Ministry source.
• APAC stocks were mostly in the red, European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 0.3% after the cash market closed with losses of 0.1% on Friday.
• Looking ahead, highlights include EZ, UK, Canadian & US Manufacturing PMI Finals, Swiss GDP, ISM Manufacturing, Speakers including BoE’s Mann, ECB President Lagarde, Fed’s Logan, Goolsbee & Powell, Supply from the EU.

SNAPSHOT

• Click for the Newsquawk Week Ahead.

US TRADE

EQUITIES

• US stocks were choppy on Friday as they headed into month-end with a focus on US President Trump's commentary and US data. The major indices ultimately finished the day little changed, although the Russell underperformed, while bonds settled rather flat but with a steeper curve. In the morning, Trump took aim at China in which he noted how they are violating their agreement with the US after Trump dialled back the tariffs on China goods.
• Meanwhile, the US data also hit bonds and stocks as the April PCE printed broadly in line with expectations but eased from the prior and Personal Income surged but Consumer Spending saw minimal growth, suggesting there is some sense of caution in the consumer.
• SPX -0.14% at 5,903, NDX -0.11% at 21,340, DJI +0.13% at 42,270, RUT -0.46% at 2,065.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said he will double US steel and aluminium tariffs from 25% to 50%, effective June 4th.
• US President Trump is finalising an executive order for new restrictions that could effectively end Chinese drone sales to the US, according to the Washington Post.
• US Treasury Secretary Bessent said China is holding back products essential to the industrial supply chain and he believes President Trump will talk to Chinese President Xi very soon, according to a CBS interview. Bessent stated the US will never default on its debt, and they are on the warning track and will never hit the wall.
• China's Mofcom said China has taken seriously, strictly implemented and actively upheld the consensus reached at the talks with the US in Geneva, while it is firm in safeguarding its rights and interests, and it is honest in implementing the consensus. Mofcom added the US has successively introduced a number of ‘discriminatory restrictive measures’ against China after talks in Geneva and that these practices by the US seriously violate the consensus reached by both sides. It also stated that if the US insists on going its own way and continues to undermine China's interests, China will continue to resolutely take forceful measures to safeguard its legitimate rights and interests. Furthermore, it urged the US to immediately correct the relevant ‘wrong practices’ and said the US has made ‘groundless accusations’ against China for violating the consensus with China resolutely rejecting these ‘unreasonable accusations’.
• Japan's tariff negotiator Akazawa plans to visit the US for tariff talks for four days from Thursday, according to Jiji News.

NOTABLE HEADLINES

• Fed's Waller (voter) said ‘good news’ that rate cuts remain possible later this year and the rate cut view rests on easing inflation, as well as noted that tariffs are on the lower end of the range and a strong economy through April gives the Fed time to see how trade shakes out with tariffs likely to create a one-time price increase Fed can look through. Waller also stated that none of what drove the pandemic inflation surge is in place now and he doesn't see how tariffs would create persistent inflation, while he added the policy should look at the real side of the economy if inflation is close to the target and noted that the Fed is close to reaching inflation target.
• Fed’s Daly (2027 voter) said April PCE is a good relief but is incomplete as a picture and wants to ensure inflation stays sustainably at 2%. Daly said she sees incoming information as very positive and noted that monetary policy is in a good place, while she is comfortable with the projection for two rate cuts this year.
• White House sent a ‘partial’ FY26 budget proposal to Congress, leaving out standard projections.

APAC TRADE

EQUITIES

• APAC stocks were mostly in the red, albeit to varying degrees, at the start of a new trading month and ahead of this week's risk events, while trade uncertainty lingered after President Trump announced to double steel and aluminium tariffs to 50% from this Wednesday.
• ASX 200 was rangebound with the index constrained by weakness in miners and the commodity-related sectors amid trade uncertainty following US President Trump's latest tariff offensive but with the downside cushioned given the actual boost to underlying commodity prices.
• Nikkei 225 slumped at the open with headwinds from recent currency strength and after US and Japanese officials met on Friday for trade talks, while Economic Minister Akazawa said the latest round of discussions have them on track towards a deal as early as this month but stated that nothing is agreed until everything is agreed and there was no change in the US stance on tariffs, including those on auto parts, which was regrettable.
• Hang Seng underperformed amid the closure in the mainland and Stock Connect trade, while participants also reacted to mixed PMI data and recent criticisms between the US and China including from US President Trump who stated that China has violated the deal with the US.
• US equity futures were on the back foot after Trump's latest tariff salvo and amid cautiousness ahead of key events.
• European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 0.3% after the cash market closed with losses of 0.1% on Friday.

FX

• DXY traded marginally softer following US President Trump's tariff announcement late on Friday to double the tariffs on steel and aluminium imports from 25% to 50% effective this Wednesday, while the latest Fed rhetoric had little impact as Fed’s Daly noted that April PCE is a good relief but is incomplete as a picture and wants to ensure inflation stays sustainably at 2%.
• EUR/USD eked mild gains but with the upside capped by quiet newsflow from the bloc and as EZ final PMIs loom.
• GBP/USD advanced and briefly reclaimed the 1.3500 status, although further upside was capped and there were also recent comments by BoE's Breeden who highlighted a weakening labour market, slow economic growth and stated that "waves of disinflation are continuing".
• USD/JPY mildly retreated further beneath the 144.00 handle amid the softer dollar and risk-off mood.
• Antipodeans gained amid strength in commodity prices and were unfazed by the downbeat risk tone and New Zealand holiday closure.
• The Polish Zloty initially strengthened on the second round exit poll, which showed Trzaskowski the victor with 50.3% of the vote, following this, he claimed victory in the Presidential election. However, the full vote count showed right-wing Nawrocki was the victor and new Polish President. A result that has hit the PLN.

FIXED INCOME

• 10yr UST futures traded rangebound amid a lack of pertinent catalysts and ahead of this week's key data.
• Bund futures lacked direction in the absence of notable drivers to spur a bid although there were reports that US President Trump is to meet with German Chancellor Merz on Friday and that Finance Minister Klingbeil is planning a number of corporate tax breaks aimed at spurring investment.
• 10yr JGB futures trickled lower amid the uninspired mood in counterparts and mild upside in short-term JGB yields.

COMMODITIES

• Crude futures rallied to start the week amid geopolitical uncertainty and in a likely "sell the rumour, buy the news" situation following the 8 OPEC+ members meeting on Saturday where they agreed to a 411k bpd oil production increase in July.
• OPEC+ members that voluntarily restricted output agreed to a 411k BPD oil production increase in July, as expected, which could be paused or reversed subject to market conditions.
• Spot gold gained at the open and reclaimed the USD 3,300/oz status amid a softer dollar and a cautious start to a relatively event-packed week culminating with the latest US Non-Farm Payrolls report on Friday.
• Copper futures rallied despite the absence of its largest buyer and the mostly downbeat risk sentiment in the Asia-Pac region, with prices lifted after US President Trump announced late on Friday to double US steel and aluminium prices, with the tailwinds in copper due to potential stockpiling and supply-side concerns.

CRYPTO

• Bitcoin steadily declined and briefly dipped beneath the USD 105k level before slightly rebounding off lows.

NOTABLE ASIA-PAC HEADLINES

• BoJ set aside maximum provisions for losses on bond transactions for fiscal 2024 which was increased to 100% for the first time with the provisions raised by JPY 427.7bln.
• Taiwan's Central Bank warned exporters against currency speculation.

DATA RECAP

• Chinese NBS Manufacturing PMI (May) 49.5 vs. Exp. 49.5 (Prev. 49.0)
• Chinese Non-Manufacturing PMI (May) 50.3 vs Exp. 50.6 (Prev. 50.4)
• Chinese Composite PMI (May) 50.4 v (Prev. 50.2)

GEOPOLITICS

MIDDLE EAST

• It was reported that an Israeli strike on an aid distribution point operated by a US-based Gaza aid group killed at least 26 in Rafah. However, the Israeli military said initial findings indicated that the army did not fire at Palestinian civilians near or within the humanitarian aid distribution site, while it added that drone footage showed armed and masked individuals opened fire at Gazan civilians attempting to collect looted humanitarian aid in southern Khan Younis.
• Israeli PM Netanyahu said Hamas is continuing its refusal of US envoy Witkoff’s proposal for a Gaza ceasefire, and Israel will continue its action in Gaza for the return of hostages and defeat of Hamas.
• US envoy Witkoff said Hamas’s response to the US proposal is totally unacceptable and only takes us backwards.
• Hamas said it submitted a response regarding US envoy Witkoff’s proposal to mediators and it expressed to immediately start a round of indirect negotiations on points of contention in a Gaza ceasefire deal, while a spokesperson said they have considered US envoy Witkoff’s proposal acceptable for negotiations and that Israel’s response was ‘incompatible’. Furthermore, they have not rejected Witkoff’s ceasefire proposal but stated that Witkoff’s position towards Hamas was unfair and shows complete bias toward Israel.
• White House Press Secretary Leavitt said envoy Witkoff sent a “detailed and acceptable” nuclear deal proposal to Iran and it is in their interests to accept it.
• Iran’s Foreign Minister said his Omani counterpart visited Tehran on Saturday to present the elements of the US proposal for a nuclear deal. In relevant news, Iran said the UN nuclear watchdog is politically motivated and repeats baseless accusations.
• The IAEA report on Iran released over the weekend expressed "serious concern" over the estimated 409kg uranium enriched to 60% as of May 17, marking an increase of over 130kg since the prior report in February. IAEA also noted of Iran's "lack of cooperation".

RUSSIA-UKRAINE

• A bridge collapsed in Russia’s Kursk as a freight train passed, according to the regional governor, while a senior Russian senator said the blowing up of the bridge and derailment of the train in Bryansk indicate that Ukraine has turned into a terrorist enclave. Furthermore, it was reported that Russia's security service thwarted Ukraine-ordered railway sabotage in the Far East region of Primorye, according to RIA.
• Russian Defence Ministry said Ukraine carried out a terrorist attack using drones against airfields in Murmansk, Ikutsk, Ivanovo, Ryazan and Amur regions, while it stated that all attacks on airfields have been repelled although several aircraft caught fire, according to RIA and Interfax. Furthermore, Ukrainian President Zelensky said the attack on Russian bases was a brilliant operation and their longest-range operation, while he stated that 117 drones were used in the operation and there were very tangible Russian losses.
• Russian Foreign Minister Lavrov discussed the Ukraine settlement and talks with US Secretary of State Rubio, while Rubio expressed condolences to Lavrov over the death in the Russian rail bridge incident.
• Russian Defence Ministry said Russian forces captured Oleksiivka in Ukraine’s Sumy region, while it was separately reported that Ukraine experienced one of the longest barrages from Russian missiles and drones early on Sunday, in which air sirens sounded for more than 9 hours, according to Bloomberg.
• Ukrainian negotiators at peace talks in Istanbul are to propose a roadmap for peace which includes a 30-day ceasefire, release of all POWs, negotiations involving the US and Europe, as well as a meeting between Putin and Zelensky. Furthermore, Ukraine wants reparations, no curbs on its military, no international recognition for territory taken by Russia and with the current front lines to be the starting point for talks, while the framework for Ukrainian terms for peace are largely unchanged from Kyiv’s previous position.
• Meeting between Russian and Ukrainian delegates in Istanbul is expected to take place at 11:00BST/06:00EDT in Ciragan Palace on Monday, according to a Turkish Foreign Ministry source.

OTHER

• US Secretary of Defense Hegseth said the US does not seek conflict with China, but Beijing wants to control and dominate the Indo-Pacific, while he added that Beijing is credibly preparing to use force to alter the balance of power in the region and that the threat from China is real and could be imminent.
• China’s Defence Ministry spokesperson said the US is accustomed to using the Shangri-La Dialogue to create disputes, sow discord and seek selfish interests, which China strongly deplores and resolutely opposes. Furthermore, the spokesperson said the US has no right to make irresponsible remarks about the Taiwan issue, let alone use it as a bargaining chip to contain China, while it stated regarding the South China Sea issue that the US is the biggest threat to regional peace and stability.

EU/UK

NOTABLE HEADLINES

• BoE Deputy Governor Breeden highlighted a weakening labour market and slow economic growth, while she stated that "waves of disinflation are continuing" and noted the BoE's narrative about continuing interest rate cuts was "not a million miles away from where the market is".
• UK is to build a billion-pound weapons works as UK PM Starmer calls for war readiness.
• US President Trump is to meet with German Chancellor Merz on Friday.
• German Finance Minister Klingbeil is planning a number of corporate tax breaks aimed at spurring investment and lifting the economy out of stagflation, according to DPA.
• Official results showed Polish nationalist candidate Nawrocki won 50.89% of the vote vs 49.11% for pro-EU candidate Trzaskowski.