Newsquawk Daily Asia-Pac Opening News - 27th June 2025

26/06/2025 21:58

Market Analysis

• US stocks were bid on Thursday to see SPX hover around record highs while NDX pushed above record highs.
• The Dollar was weaker and Treasuries were firmer on WSJ reports that US President Trump may reportedly speed up naming a successor to Fed Chair Powell, either this summer, September or October.
• T-notes steepen on reports that President Trump may pick Fed Chair Powell's successor earlier than usual. 
• European Commission President von der Leyen told EU leaders that the EU executive received the latest counterproposal from the Trump administration today.
• Looking ahead, highlights include Fed's Kashkari, Japanese Tokyo CPI, Japanese Retail Sales, Chinese Industrial Profits

SNAPSHOT

• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were bid on Thursday to see SPX hover around record highs while NDX pushed above record highs.
• SPX +0.85% at 6,144, NDX +0.94% at 22,447, DJI +0.94% at 43,387, RUT +1.60% at 2,170
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Collins said July is probably too early for a rate cut; the baseline outlook is to resume cutting later this year. The Fed has time to carefully evaluate incoming information, according to Reuters.
• Fed Governor Barr said monetary policy is well positioned to wait and see how economic conditions unfold, stressing the importance of bringing inflation back to target as low-income households are most vulnerable to price increases. He warned that tariffs will exert upward pressure on inflation with some persistence, while potentially slowing the economy and increasing unemployment. Barr noted that low-income workers are often the hardest hit during job market downturns and that there remains considerable uncertainty regarding tariff policies and their effects.
• Bloomberg article highlighted the majority of Fed officials are leaning against a July interest rate cut - citing recent commentary.
• US President Trump to appear on Fox News on Sunday morning.
• US Treasury Secretary Bessent said they have asked the Senate and House to remove the Section 899 protective measure from consideration in the "One, Big, Beautiful Bill". Bessent also said that following dialogue with other countries on the OECD global tax deal, the US will announce a joint understanding among G7 countries that defends American interests. He added that OECD Pillar 2 taxes will not apply to US companies, according to Reuters.
• US Senate Parliamentarians have struck a "massive blow" to Republican Medicaid cuts, via Punchbowl's Weiss citing Senate Budget Democrats; ruled that it is not compliant with the Byrd Rule.
• US Senate Republicans are reportedly going to attempt to rework the "provider" tax to retain it within the Reconciliation bill, via Politico's Carney citing sources; Republicans state that a vote on Friday remains a possibility.

DATA RECAP

• US GDP Final (Q1) -0.5% vs. Exp. -0.2% (Prev. -0.2%)
• US GDP Sales Final (Q1) -3.1% (Prev. -2.9%)
• US GDP Cons Spending Final (Q1) 0.5% (Prev. 1.2%)
• US GDP Deflator Final (Q1) 3.8% vs. Exp. 3.7% (Prev. 3.7%)
• US Core PCE Prices Final (Q1) 3.5% vs. Exp. 3.4% (Prev. 3.4%)
• US PCE Prices Final (Q1) 3.7% (Prev. 3.6%)
• US Initial Jobless Claims 236.0k vs. Exp. 245.0k (Prev. 245.0k, Rev. 246k)
• US Continued Jobless Claims 1.974M vs. Exp. 1.95M (Prev. 1.945M, Rev. 1.937M)
• US Durable Goods (May) 16.4% vs. Exp. 8.5% (Prev. -6.3%, Rev. -6.6%)
• US Durables Ex-Transport (May) 0.5% (Prev. 0.2%)
• US Durables Ex-Defense MM (May) 15.5% (Prev. -7.5%, Rev. -7.7%)
• US Nondefe Cap Ex-Air (May) 1.7% vs. Exp. 0.1% (Prev. -1.5%, Rev. -1.4%)
• US Adv Goods Trade Balance (May) -96.59B vs. Exp. -88.5B (Prev. -86.97B)
• US National Activity Index (May) -0.28 (Prev. -0.25, Rev. -0.36)

TARIFFS/TRADE

• European Commission President von der Leyen told EU leaders that the EU executive received the latest counterproposal from the Trump administration today, according to two EU diplomats cited by POLITICO. This marks the latest engagement between Brussels and Washington, as the EU is coming to terms with potentially having to accept an agreement that still includes a “reciprocal”.
• US President Trump said he just signed a deal with China on Wednesday, according to Reuters, and says he has one maybe coming up with India. Trump added that China is starting to open up.
• European Commission President von der Leyen told EU leaders that the EU executive received the latest counterproposal from the Trump administration today, according to two EU diplomats cited by POLITICO. This marks the latest engagement between Brussels and Washington, as the EU is coming to terms with potentially having to accept an agreement that still includes a “reciprocal”.
• EU reportedly considers lowering tariffs on US imports in a bid to woo US President Trump, via WSJ citing sources. "The European Union is considering lowering tariffs on a range of U.S. imports in a bid to clinch a speedy trade deal with President Trump, according to people familiar with the matter." "EU leaders are set to debate how much they are willing to sacrifice to win over Trump at a meeting in Brussels on Thursday evening. Other concessions under consideration include lowering nontariff barriers, buying more American products including liquefied natural gas, and offering to cooperate with the U.S. to tackle its economic concerns about China."
• White House Press Secretary Leavitt said the 9th July deadline for trade deals is not critical; trade deadline change would be Trump's decision. Trump can pick a reciprocal tariff rate if deals fail, according to Reuters.- US chip export curbs may slow China's adoption of Deepseek's next model, R2, via The Information.

CENTRAL BANKS

• BoE Governor Bailey says a gradual and careful approach to further withdrawal of monetary policy restraint remains appropriate. Interest rates remain on a gradual downward path. "Monetary policy needs to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term has dissipated further." Click for full comments.
• BoE Governor Bailey, when asked about Sterling's strength, says moves in FX have not been moving based on interest rate speculation. Uncertainties about structural changes in the world economy have impacted FX. Investors are reconsidering positions.
• ECB Schnabel says the growth outlook is broadly stable despite trade conflict with medium-term inflation near 2%, trade conflict is creating bouts of uncertainty in the economy and in financial markets. The monetary policy cycle is coming to an end as medium-term inflation stabilises at target. Inflation is projected to fall temporarily before returning to target over the medium term. Click for full comments.
• Fed's Barkin (2027 voter) says Fed policy is well positioned for where the economy might go; amid uncertainty, the Fed has time to take in data. Inflation will be pressured higher by tariffs. Don't expect a replay of pandemic-era inflation. Fed faces risks on both job and inflation mandates. Expect tariff policy to continue to change. The outlook for the economy remains cloudy. Recent economic data has been solid. Recent inflation data is encouraging, job market is healthy. Businesses are still in pause mode amid uncertainty. Doesn't think tariffs will be as inflationary as some fear. Not surprised to see near-term inflation expectations rise. Fed will act on policy based on how data comes in. The exact timing of a Fed move does not matter that much.
• Fed Goolsbee (2025 Voter) says the job market remains steady and around full employment; unemployment claims and other indicators support the view of a stable jobs market. Fed needs clarity that there will not be an increase in inflation. Hope is that there will not be much inflation from tariffs, but there needs to be a few months of clarity. If inflation stays in the range of 2%, and uncertainty is resolved, the Fed is on a path to lowering rates.
• Fed’s Daly (2027 voter) says new data confirms US labour market is solid; labour market data does not signal weakness, just slowing; Fall looks promising for a rate cut. Inflation could be a one-off and not materialise, or a small impact. Could look to begin to adjust rates in the Autumn, and this has been her view for some time. Her own view and modal outlook is tariffs will potentially raise inflation but should dissipate
• US President Trump said it would be helpful if the Fed lowered rates; Fed Chair Powell said "We have to fight this guy"

FX

• The Dollar was weaker and Treasuries were firmer on WSJ reports that US President Trump may reportedly speed up naming a successor to Fed Chair Powell, either this summer, September or October.
• G10 FX firmer was across the board and benefited from the broad Dollar weakness. EUR/USD traded between 1.1655-1744, and Rabo says while they have brought forward their 1.20 forecast from an 18-month view to 12 months, they do not expect the move to be a straight line, and as such continue to see scope for pullbacks in favour of the USD on a 3-month view.
• Safe-havens, CHF and JPY, gained as mentioned and profited on US yields falling on Powell's successor to potentially be announced earlier than originally anticipated, possibly triggering a dovish pivot from the Fed. This, coupled with the solid bid tone in CHF, has kept USD/CHF pinned near multi-year lows, despite better selling of the Franc yesterday.

FIXED INCOME

• T-notes steepen on reports Trump may pick Powell's successor earlier than usual.
• US sells USD 44bln of 7yr notes; Stop through 0.2bps. High Yield: 4.022% (prev. 4.194%, six-auction average 4.289%); WI 4.024%. Tail: -0.2bps (prev. -2.2bps, six-auction avg. -0.9bps). Bid-to-Cover: 2.53x (prev. 2.69x, six-auction avg. 2.64x). Dealers: 11.64% (prev. 4.8%, six-auction avg. 10.1%). Directs: 11.62% (prev. 23.6%, six-auction avg. 21.0%). Indirects: 76.74% (prev. 71.5%, six-auction avg. 68.8%).

COMMODITIES

• Oil prices settled in the green in choppy trade as it was initially bid amid the weaker Dollar as Middle Eastern updates took a back seat.
• US EIA- Nat Gas, Change Bcf w/e 96.0bcf vs. Exp. 88.0bcf (Prev. 95.0bcf).

GEOPOLITICAL

• Iranian Foreign Minister Araqchi said Tehran is assessing whether diplomacy with the US is in its interest, adding that there is currently no understanding for renewed talks with the US. Araqchi dismissed speculation about the resumption of negotiations with the US, saying it should not be taken seriously. There are no plans to receive IAEA Chief Grossi in Tehran, according to Reuters.
• Trump admin has discussed possibly helping Iran access as much as USD 30bln to build a civilian-energy-producing nuclear programme, easing sanctions, and freeing up billions of dollars in restricted Iranian funds, according to CNN sources. All that is part of an intensifying attempt to bring Tehran back to the negotiating table.
• Al-Akhbar reports that another round of talks between Israel and Hamas is expected within the next few days, according to Egyptian sources cited; Hamas is reportedly ready to release all hostages in exchange for Israeli commitments.
• Hungarian PM Orban says Hungary will state that it does not support Ukraine's bid to become an EU member.
• Iranian Guardian Council spokesperson says the Parliamentary bill to suspend cooperation with the IAEA has been approved, according to YJC.
• Iran Supreme Leader Khamenei says any future aggression against Iran will come at a great cost.
• Israel is still interested in the framework proposed by US Envoy Whitkoff for a ceasefire in exchange for the release of Israeli hostages, whether alive or dead, according to Sky News Arabia citing CNN sources.
• Iran reportedly moved uranium from the Fordow facility prior to US strikes, EU capitals believe, via FT; early intelligence assessment indicate that Iran still has much of its enriched stockpile.- US President Trump posts on Truth that nothing was taken out of the facility at the Iranian nuclear site.
• US President Trump reiterates NATO Summit was great and that the agreed-upon 5% gives NATO "real power!"

EU/UK

DATA RECAP

• German GfK Consumer Sentiment (Jul) -20.3 vs. Exp. -19.3 (Prev. -19.9, Rev. -20.0)
• Swedish Total Industry Sentiment (Jun) 94.8 (Prev. 98.9); Sentiment (Jun) 92.8 (Prev. 94.6)Manufacturing Confidence (Jun) 99.3 (Prev. 100.1); Consumer Confidence SA (Jun) 84.6 (Prev. 83.1)
• UK CBI Distributive Trades (Jun) -46.0 (Prev. -27.0)

LATAM

• Banxico cut rates by 50bps to 8.00% as expected, and stated that looking ahead, the board will assess further adjustments to the reference rate — a shift from its previous guidance that it could continue the calibrating policy and consider adjustments in similar magnitudes.
• Brazil Treasury Secretary Ceron said Congress' reversal of the IOF tax increase will have a significant impact in 2025 and 2026, adding that the government has 2 to 3 weeks to define what the budget solution will be, according to Reuters.