• APAC stocks were ultimately mixed in holiday-thinned trade with most major markets in the region shut.
• US President Trump said he is willing to lower tariffs on China at some point. He answered no when asked if he plans to speak with Chinese President Xi this week.
• US President Trump reiterated that the Fed should lower interest and said he won’t remove Fed Chair Powell.
• European equity futures indicate a slightly lower cash market open with Euro Stoxx 50 futures down 0.1% after the cash market closed with gains of 2.4% on Friday.
• DXY has begun the week on the backfoot, notable strength seen in APAC-currencies (TWD), EUR/USD returned to a 1.13 handle.
• OPEC+ members agreed to raise oil output by 411k bpd in June, a source report noted the group will likely approve another accelerated hike of 411k bpd for July.
• Israel is readying a "massive response" to Houthis and Iran after the airport missile attack, according to the Washington Examiner.
• Looking ahead, highlights include Swiss CPI, EZ Sentix Index, US Employment Trends, ISM Services, Supply from the US. UK markets are closed. 

US TRADE

EQUITIES

• US stocks and yields finished Friday in the green with equity gains broad-based but the Russell outperformed with the strong April Jobs data reducing fears around the economy after the US NFP report came in above expectations while the unemployment rate remained steady at 4.2%, as expected. The data set the tone for the day with yields continuing to rise into settlement while stocks closed out around highs.
• SPX +1.43% at 5,684, NDX +1.60% at 20,103, DJI +1.39% at 41,319, RUT +2.18% at 2,019.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump’s 25% tariffs on engines, transmissions and other key auto parts took effect on Saturday.
• US President Trump posted that he is "authorizing the Department of Commerce, and the United States Trade Representative, to immediately begin the process of instituting a 100% Tariff on any and all Movies coming into our Country that are produced in Foreign Lands".
• US President Trump answered no but stated that China and his people are talking about different things when asked if he plans to speak with Chinese President Xi this week, while he replied could well be when asked if any trade deals are coming this week. Furthermore, Trump said he wants a fair trade deal with China and they are meeting with many countries, including China, on trade deals.
• US President Trump said he is willing to lower tariffs on China at some point because the levies now are so high that the world's two largest economies have essentially stopped doing business with each other, although he also noted that he would need to keep at least some tariffs on foreign goods in place to convince businesses to move production to the US, according to Bloomberg and Axios citing an interview with NBC News.
• US President Trump’s trade adviser Navarro warned the UK against deepening trade ties with China, potentially complicating tariff talks between the UK and the US, according to Bloomberg which cited comments by Navarro to The Telegraph.
• Fox Business’s Gasparino posted on X that he is getting guidance from Wall Street sources close to the White House that a bunch of trade deal “frameworks” can be expected in the coming weeks, while they might trickle out sooner such as deals with India, South Korea or Japan and it is always possible they could be as early as this week as people have been forecasting. However, he was told that delays involved the time-consuming nature of getting various foreign sign-offs on all the details in the agreements.
• Japanese Finance Minister Kato said on Sunday that Japan has no intention of using the possibility of selling its US Treasury holdings for advantage in trade negotiations with the US, according to Nikkei.
• Chinese exporters are reportedly increasing efforts to avoid US tariffs by shipping their goods via third countries to conceal where they originated from, according to FT.
• Malaysia's PM Anwar said they will finalise negotiations to improve the free trade agreement between the ASEAN regional bloc and China in the near future, while he stated tariff talks with the US are to continue and there is a chance of reducing levies
• Mexican President Sheinbaum said she rejected an offer from US President Trump to send US troops to Mexico to help combat drug trafficking.

NOTABLE HEADLINES

• US President Trump said he is not worried about a US recession and that anything can happen, but he thinks they are going to have the greatest economy in history. Trump reiterated that the Fed should lower interest and said he won’t remove Fed Chair Powell. He also said he doesn’t know if people in the US deserve due legal process which is guaranteed by the constitution as he criticized the judiciary for opposing his plans to deport undocumented immigrants, according to an interview with NBC News.
• US President Trump administration officials are exploring ways of challenging the tax-exempt status of non-profits, according to WSJ.
• Apple (AAPL) plans an iPhone release schedule shake-up and new styles, according to The Information.
• Warren Buffet is to step down as CEO of Berkshire Hathaway (BRK/A) by year-end with Greg Abel to succeed Buffet as CEO later this year.

APAC TRADE

EQUITIES

• APAC stocks were ultimately mixed in holiday-thinned trade with most major markets in the region shut including in Japan, South Korea, China and Hong Kong, while tariff concerns lingered after 25% tariffs on auto parts took effect on Saturday and President Trump announced a 100% tariff for foreign films but had also noted a willingness to lower tariffs on China at some point because the levies now are so high that the world's two largest economies have essentially stopped doing business with each other.
• ASX 200 was led lower by weakness in the energy sector following a decline in oil prices due to the OPEC+ decision for another accelerated oil output increase, and with the top-weighted financial sector also hit post-Westpac's earnings, while the landslide victory by Australian PM Albanese's Labor party had little impact.
• TAIEX retreated with Taiwan-listed US Treasury ETFs heavily pressured amid headwinds from the recent surge in the local currency.US equity futures (ES -0.7%, NQ -0.7%) pulled back after last Friday's data-driven advances and heading into the latest FOMC meeting mid-week.
• European equity futures indicate a slightly lower cash market open with Euro Stoxx 50 futures down 0.1% after the cash market closed with gains of 2.4% on Friday.

FX

• DXY began the week on the back foot amid gains in its major counterparts and more notably, strength in Asia-Pac currencies with the advances led by TWD which appreciated by another 4% in a continuation of Friday's surge to print its strongest since June 2022, while the greenback was also not helped by further Trump tariffs after the 25% tariffs on auto parts took effect on Saturday and with Trump announcing to impose 100% tariffs on all movies coming into the US.
• EUR/USD benefitted from the pressure in the dollar which facilitated the single currency's re-emergence from beneath the 1.1300 handle, while weekend macro newsflow for the bloc was light and participants now look to the EZ Sentix Index
• GBP/USD eked mild gains and eyes a return to the 1.3300 territory but with further upside capped with the world's largest FX trading hub closed on Monday due to the bank holiday in the UK.
• USD/JPY trickled lower and approached closer towards the 144.00 level amid a softer greenback and in the absence of Japanese participants for a four-day weekend.
• Antipodeans strengthened in tandem with the gains in the Asia FX space including CNH after President Trump suggested a willingness to lower tariffs on China at some point and despite intervention by the HKMA on Friday which bought the USD to cap advances in HKD in its first such intervention since 2020.

FIXED INCOME

• 10yr UST futures attempted to nurse some of Friday's losses after slumping on the stronger-than-expected NFP report but with the rebound limited amid the closure of overnight cash treasuries trade due to the holiday in Tokyo.
• Bund futures languished around last week's lows after slipping to sub-131.00 territory in the absence of pertinent drivers.

COMMODITIES

• Crude futures gapped lower following the OPEC+ virtual meeting on Saturday where members agreed to raise oil output by 411k bpd in June, while a source report noted that the group will likely approve another accelerated hike of 411k bpd for July and could unwind the 2.2mln bpd of voluntary cuts by end of October if members don't improve their compliance with quotas.
• OPEC+ countries with voluntary cuts agreed to raise oil output by 411k bpd in June in a virtual meeting held on Saturday. It was also reported that OPEC+ will likely approve in June another accelerated oil production hike of 411k bpd for July and could unwind voluntary cuts of 2.2mln bpd through October 2025 if compliance with quotas doesn’t improve as Saudi Arabia looks to punish some members for exceeding quotas, according to sources cited by Reuters. Furthermore, it was also reported that eight OPEC+ countries are to meet next on June 1st.
• UAE’s ADNOC set June Murban crude OSP at USD 67.73/bbl.
• Spot gold climbed back above the USD 3250/oz level with prices underpinned by the dollar weakness.
• Copper futures eked mild higher with the upside capped amid the holiday closures including its largest buyer, China.

CRYPTO

• Bitcoin traded indecisively and briefly dipped beneath the USD 94,000 level to the downside.

NOTABLE ASIA-PAC HEADLINES

• Australian PM Albanese’s Labor Party won an increased majority in the election on Saturday with at least 87 seats in the 150-seat parliament, while the opposition Liberal-National Coalition leader Dutton lost his seat which he had held for 24 years.
• Singapore’s ruling PAP won in 29 out of 32 constituencies contested in the election on Saturday and was confirmed the winner of 87 of 97 House seats.
• US President Trump said he would extend the TikTok deadline if there is still no deal.

GEOPOLITICS

• A missile fired by Yemen’s Houthis hit the grounds of Israel’s Ben Gurion Airport after interception failed, while six were reportedly injured, but none seriously, according to The Times of Israel. It was separately reported that Yemen’s Houthis said they are working on imposing a comprehensive air blockade on Israel by targeting its airports.
• Israeli PM Netanyahu said Israel will respond to Houthis and their 'Iranian terror masters' at a time and place of its choosing, while it was also reported that Israel’s army chief issued an order for reservists to expand operations in Gaza.
• Israel is readying a "massive response" to Houthis and Iran after the airport missile attack, according to the Washington Examiner.
• Iran’s Defence Minister warned they will respond with force if Iran is attacked and said if a war is initiated by the US or Israel, Iran will target their interests, bases and forces wherever they may be and whenever deemed necessary, according to state TV.
• Israel's cabinet unanimously approved the expansion of the army's operation in the Gaza Strip.
• Israel called on Qatar to stop playing both sides with its double talk and decide if it is on the side of civilisation or if it is on the side of Hamas, according to the Israeli PM’s office.

RUSSIA-UKRAINE

• Ukraine launched drone attacks targeting Moscow, according to the mayor of Moscow. It was also reported that the Russian aviation watchdog closed one of Moscow's key airports after reports of a drone attack targeting the Russian capital.
• US President Trump said they had some very good discussions about Russia and Ukraine over the weekend.
• Russian President Putin said they have enough strength and the means to bring the conflict with Ukraine to a logical conclusion, while he said there has been no need to use nuclear weapons in the conflict and hopes there never will be.
• Russia’s Kremlin said President Putin’s offer to Ukraine of a 3-day ceasefire to coincide with World War Two commemorations was a test to assess Kyiv’s readiness for peace and Ukraine’s refusal to agree shows ‘neo-Nazism’ lies at the foundation of the Ukrainian government.
• Russian senior security official Medvedev said US President Trump’s claim that the US did more than any other country to win World War Two is pretentious nonsense, according to TASS.
• Chinese President Xi will conduct a state visit to Russia and attend a war victory celebration on May 7th-10th, while Chinese President Xi and Russian President Putin are to discuss the development of a comprehensive strategic partnership.

OTHER

• US Army Pacific Commander General Clark said the region is more dangerous now due to China’s aggressive behaviour and that China’s rehearsals of a Taiwan blockade ‘leave you speechless’.

EU/UK

NOTABLE HEADLINES

• EU is reportedly eyeing closer ties to the trans-Pacific CPTPP bloc to defend the rules-based global system, according to FT.