• APAC stocks traded mixed/mostly lower with the region failing to coattail on Wall Street's gains, as geopolitical angst kept risk subdued.
• US President Trump posted that "Everyone should immediately evacuate Tehran!" before cutting his G7 trip short, stoking fears of a US military offensive. Sentiment later stabilised after CBS reported that the US is not joining Israel offensively in its military operations against Iran.
• BoJ maintained its rate at 0.5% as expected via unanimous vote, and is to reduce the amount of monthly JGB purchases by about JPY 200bln each quarter from April 2026 onward (as telegraphed); Tamura dissented on the taper plan.
• Japanese PM Ishiba and US President Trump did not reach a tariff agreement, but confirmed they are to continue tariff talks, according to Fuji TV.
• European equity futures are indicative of a softer open with the Euro Stoxx 50 future -0.6% after cash closed with gains of 1.0% on Monday.
• Looking ahead, highlights include German ZEW, US Export/Import Prices, Retail Sales, Industrial Production, BoJ Press Conference, BoC Minutes, G7 Leaders' Summit, IEA OMR, Supply from UK, Germany & US.

SNAPSHOT

US TRADE

EQUITIES

• US stocks were bid across the board on Monday, with notable outperformance in the Nasdaq and the majority of sectors in the green.
• In terms of sectors, Energy, Health Care and Utilities were hit, with energy stocks tracking crude prices lower.
• Risk on trade was seen despite the continued conflict in the Middle East, but reports in WSJ suggested Iran wants to de-escalate, which took crude prices to session lows and stocks to highs but ultimately finished off best levels as the two sides continued with the missile exchanges.
• SPX +0.95% at 6,034, NDX +1.42% at 21,938, DJI +0.75% at 42,515, RUT +1.15% at 2,125.
• Click here for a detailed summary.

NOTABLE HEADLINES

• US Senate Finance Republicans release revised tax portion of US President Trump's reconciliation bill; " It includes major tax overhaul and Medicaid cuts", according to CNN's Raju. Senate Republican Tax and Budget Bill would end the USD 7,500 electric vehicle tax credit 180 days after signed into law. (of note for EV stocks). Proposes full phase-out of solar and wind energy tax credits by 2028, extends to 2036 for hydro, nuclear and geothermal.
• OpenAI and Microsoft (MSFT) tensions are reaching a boiling point, via WSJ; "The startup, growing frustrated with its partner, has discussed making antitrust complaints to regulators". OpenAI seeks new financial concessions from Microsoft (MSFT), according to The Information. OpenAI wants to modify existing clauses in the contract with Microsoft that give the Co. exclusive rights to host OpenAI models in its cloud. OpenAI wants Microsoft to have a roughly 33% stake in reshaped units in exchange for foregoing its rights to future profits.
• Final Senate passage vote on the GENIUS Act scheduled for Tuesday at 16:30 EDT.

TRADE/TARIFF

• US President Trump said he signed a document finalising a trade deal with Britain (as expected). US President Trump said the UK is protected (regarding tariffs) because he likes the UK. US tariff on UK steel to remain at 25% for now, according to Bloomberg citing a UK official. Imports of automobiles within tariff-rate quota that would otherwise be subject to a 25% tariff shall instead be subject to a combined tariff of 10%. The US and UK committed to strengthening aerospace and aircraft manufacturing supply chains by establishing tariff-free bilateral trade in certain aerospace products. The US intends to promptly construct a quota at most-favoured-nation rates for steel and aluminium articles and certain derivative steel and aluminium articles that are products of the UK. The US and UK committed to negotiate significantly preferential treatment outcomes on pharmaceuticals and ingredients of the UK, contingent on findings of an investigation. The US intends to create an annual quota of 100,000 vehicles for United Kingdom automotive imports at a 10 per cent tariff rate.
• US President Trump met with European Commission President von der Leyen per her request, according to CBS' Jacobs.
• EU and US leaders reportedly instructed teams to accelerate work on trade, according to Bloomberg citing European Commission President von der Leyen
• Canadian PM Carney and US President Trump agreed to pursue negotiations toward a new economic and security relationship within the coming 30 days, according to the Canadian PM's office.
• Japanese PM Ishiba and US President Trump did not reach a tariff agreement; but confirmed they are to continue tariff talks, according to Fuji TV. Japan Finance Minister Kato said no fixed plan right now to hold further talks with US Treasury Secretary Bessent.
• White House said, concerning steel and aluminium, Secretary Lutnick will determine the quota of products that can enter the US without being subject to 25% Section 232 tariffs, according to Reuters.
• FBN's Gasparino posted "“As of today Xi and Trump have not talked about the fate of TikTok US. It’s last on the list. Most likely get punted for another 75 days on June 19th. The AI chip sales to China are emerging as a much bigger issue”.

APAC TRADE

EQUITIES

• APAC stocks traded mixed/mostly lower with the region failing to coattail on Wall Street's gains, as geopolitical angst kept risk subdued, namely after US President Trump posted that "Everyone should immediately evacuate Tehran!" before cutting his G7 trip short, stoking fears of a US military offensive. Sentiment later stabilised after CBS reported that the US is not joining Israel offensively in its military operations against Iran, with US officials also backing a defensive stance amid assets in the region.
• ASX 200 traded slightly softer and in a narrow range, with upside in gold miners cushioning losses for the index.
• Nikkei 225 was kept afloat amid the softer JPY after the US and Japan failed to reach an agreement. The index saw a modest hawkish reaction to the BoJ decision which reduced the pace of JGB purchases as telegraphed.
• Hang Seng and Shanghai Comp opened flat before tilting lower in overall uneventful trade across the Chinese bourses amid the cautious risk tone with the immediate focus largely on geopolitics.
• US equity futures were subdued with the initial dip seen after US President Trump's aforementioned post, but contracts then found a floor following clarity that the US was not joining Israel on a military offensive.
• European equity futures are indicative of a softer open with the Euro Stoxx 50 future -0.6% after cash closed with gains of 1.0% on Monday.

FX

• DXY was choppy within tight ranges despite the myriad of geopolitical updates. DXY traded in a narrow 98.07-98.28 range vs Monday's 97.69-98.37 parameter.
• EUR/USD was overall uneventful, with the pair in a 1.1543-67 range with a lack of newsflow for the region, although reports suggested US President Trump and European Commission President von der Leyen spoke, but details were light.
• GBP/USD similarly uneventful, although GBP experienced some choppiness shortly after the US and the UK formally signed their trade agreement, with volatility stemming from US President Trump stating he likes the UK. Nonetheless, the US tariff on UK steel is to remain at 25% for now, according to Bloomberg citing a UK official.
• USD/JPY was initially lifted with heaven flows from geopolitics short-lived as Japanese PM Ishiba and US President Trump failed to reach a tariff agreement, with Japan Finance Minister Kato adding that there is no fixed plan right now to hold further talks with US Treasury Secretary Bessent. The pair then saw downticks on the BoJ announcement which saw a hawkish dissent on the bond taper plan.
• Antipodeans traded between modest gains and losses as the high-beta currencies largely tracked risk.
• PBoC set USD/CNY mid-point at 7.1746 vs exp. 7.1820 (prev. 7.1789); strongest CNY fix since March 19

FIXED INCOME

• 10yr UST futures held an upward bias, with upticks seen amid haven flows from the aforementioned geopolitical developments. Monday's 20-year bond auction sparked little reaction in futures.
• Bund futures were softer with the German benchmark playing catchup to some of the losses stateside, alongside the lack of progress between the EU and the US at the G7 on tariffs.
• 10yr JGB futures initially played catchup with the selling across Western counterparts. Contracts then saw a leg lower on the BoJ announcement which saw a hawkish dissent on the bond taper plan.
• US sold USD 13bln of 20-year bonds; Tail: 0.0bps (prev. 1.2bps, six-auction average 0.1bps); WI: 4.942%. High Yield: 4.942% (prev. 5.047%, six-auction average 4.818%). B/C: 2.68x (prev. 2.46x, six-auction average 2.59x). Dealer: 13.4% (prev. 16.9%, six-auction average 14.8%). Direct: 19.9% (prev. 14.1%, six-auction average 18.1%). Indirect: 66.7% (prev. 69.0%, six-auction average 67.2%)
• Australia sold AUD 300mln 4.75% 2054 bond; b/c 2.84x (prev. 2.48x), average yield 4.9497% (prev. 4.9633%)

COMMODITIES

• Crude futures were boosted by geopolitics, with the first leg higher seen as US President Trump posted that "Everyone should immediately evacuate Tehran!", shortly after, a further uptick was seen after Iranian media reported several explosions and heavy air defence fire in the capital Tehran, whilst Trump also cut his G7 trip short. Thereafter, oil prices trimmed gains after several US officials clarified that the US would not join Israel offensively in its military operation, easing fears of the US joining the war.
• Spot gold was initially buoyed by haven flows amid the aforementioned geopolitical updates, with some downticks seen following several US officials clarifying that the US will not join Israel offensively in its military operation. Spot gold hit resistance just above USD 3,400/oz before gradually warning to session lows.
• Copper futures were pressured amid the broader cautious risk profile following Israel-Iran updates alongside a subdued tone across Chinese markets.

CRYPTO

• Bitcoin saw modest gains overnight and briefly topped the USD 107,500 mark.

BOJ

• BoJ maintained its interest rate at 0.5% as expected through a unanimous vote. The Bank has also decided to reduce the amount of its monthly JGB purchases by about JPY 200bln each quarter starting from April 2026, in line with source reports.
• The decision on the bond taper plan was made with an 8-1 vote, with Board member Tamura dissenting. Tamura dissented, arguing that the Bank should allow long-term interest rates to be determined by the market and its participants. He proposed that the Bank reduce its monthly outright purchases of JGBs by about 400bln yen each calendar quarter until January-March 2027 in principle, but this proposal was defeated by a majority vote.
• As part of the taper plan, Japan will continue to reduce JGB purchases by JPY 400bln per month until March 2026. From April 2026 onwards, the amount of monthly JGB purchases will be reduced by about JPY 200bln per quarter, with the total monthly purchases expected to be around JPY 2tln by January-March 2027. An interim assessment of the bond taper plan for the period starting in April 2026 will take place at the June 2026 policy meeting, and Japan is prepared to amend the taper plan at future policy meetings if necessary. The BoJ’s holdings of JGBs are expected to decrease by roughly 16-17% by March 2027 compared to June 2024 levels.
• BoJ said the frequency of auctions will be changed from four times a month to three times a month in principle for JGBs with shorter maturities; the frequency of auctions for JGBs with longer maturities has been maintained.
• Regarding economic conditions, Japan has maintained its economic assessment, noting that the economy has recovered moderately despite some areas of weakness. However, uncertainty remains high, particularly over the impact of trade policies, which are a key focus. The BoJ emphasised the necessity of paying attention to the potential effects of trade policies on financial and foreign exchange markets. Inflation expectations have risen moderately, but it remains extremely uncertain how global trade policies will evolve and how overseas economic activities will respond.

NOTABLE ASIA-PAC HEADLINES

• PBoC injected CNY 197.3bln via 7-day reverse repos with the rate maintained at 1.40%.

DATA RECAP

• New Zealand Food Price Index (May) 0.5% (Prev. 0.8%)

GEOPOLITICS

IRAN-ISRAEL

Strikes

• Iran said they will continue to strike Israel until it stops its attacks, via Al Hadath. Iranian Revolutionary Guards spokesman says Iran's strikes against Israel will continue until morning.
• Iran is preparing for the 'largest and most intense missile attack in history on Israeli soil', according to Iranian state media.
• Iranian air defence activated at Isfahan nuclear facilities against 'hostile target', Iran state media reported. "Iranian media: Activating air defences in Natanz", according to Al Arabiya.
• Iran intercepted drones targeting the South Pars gas field, according to Mehr.
• Key Israeli and intelligence centres including Ramat David airbase near Haifa are on Iran's list of targets; "proportionate response" in the coming hours, via Iran's Student News Network. Iran tells the UN that any cooperation by third countries in Israel's strikes makes them complicit in the legal responsibility and consequences of the crisis.
• Iranian ballistic missiles reported over Tel Aviv, via Fox correspondent.
• Iranian media reported several explosions and heavy air defence fire in the capital Tehran; Several explosions east of Tehran amid air defence fire, according to Fars.
• Reports of multiple explosions in Ahvaz - in the oil-rich province of Khuzestan in southwest Iran, according to Iran International.
• Unconfirmed reports noted that three ships are on fire in the Gulf of Oman near the Strait of Hormuz, according to several social media accounts. Ambrey later said it is aware of an incident 22 nautical miles east of Khor Fakkan in UAE (close to the Strait of Hormuz). Incident in Khor Fakkan near the Strait of Hormuz seemingly was caused by two vessels colliding, according to Kpler's Bakr citing their terminal
• IAEA Director Grossi said the damage recorded at Fordow was very limited, underground spaces at the Isfahan facility do not appear to have been affected.

Diplomacy

• US President Trump directed members of his team to attempt a meeting with Iranian officials as quickly as possible, according to CNN sources.
• Trump team proposes Iran talks this week on nuclear deal and ceasefire, according to Axios. The White House is discussing with Iran the possibility of a meeting this week between U.S. envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi, according to four sources briefed on the issue.
• Israeli PM Netanyahu said he is not interested in peace talks with Iran, according to an ABC News reporter.
• US official to Al Jazeera said the Pentagon is considering sending additional reinforcements to the Middle East, but a decision has not yet been made.
• Israeli political source said they do not know how interested Iran is in talks now, according to Al Arabiya; Will not stop for any talks and are seeking a final agreement to dismantle the Iranian nuclear project.
• US President Trump said Iran is not winning this war; they should talk before it's too late; Iranians want to talk about de-escalation.
• Oman and Qatar are leading the effort to get Iran and the United States back to the negotiating table and end the conflict in Iran, according to a European official cited by the Washington Post. Iranian leaders have said they are open to resuming nuclear talks, but they want Israel to stop its attacks first, the official said.
• Israeli media reports that Trump is preparing to make a 'final offer' to Iran in the coming days, according to Spectator Index.
• US President Trump said Iran should have signed the deal, Iran wants to make a deal, according to Reuters.
• French President Macron said Americans have made an offer to meet with Iranians, now will see what happensMacron said European partners are ready to take part in serious Iran nuclear negotiations if a ceasefire is reached. Macron said Trump told G7 leaders there were discussions to obtain a ceasefire between Israel and Iran.

Targets

• Israeli Foreign Minister told EU's Kallas that Israel has not finished its operation in Iran and Israel will act to complete it, according to Reuters.
• Israeli PM Netanyahu on the possibility of assassinating Iran Supreme Leader Khamenei said "I will not detail our plans publicly, but we will do whatever it takes", according to Reuters.

Trump

• US President Trump posted "Iran should have signed the “deal,” I told them to sign...IRAN CAN NOT HAVE A NUCLEAR WEAPON... Everyone should immediately evacuate Tehran!"
• US President Trump posted "AMERICA FIRST means many GREAT things, including the fact that IRAN CAN NOT HAVE A NUCLEAR WEAPON. MAKE AMERICA GREAT AGAIN!!!"
• "President Trump is leaving the G7 summit EARLY and will return to DC tonight.", according to CNN reporter; Bloomberg suggests due to the Middle East crisis.
• US President Trump requested the National Security Council be prepared in the Situation Room, according to reports citing Fox.
• "US is NOT joining Israel offensively in its military operation, per US officials. Despite reports that President Trump asked the NSC and Situation Room to be readied," according to CBS' Jacobs.
• CBS' Jacobs posted "Trump isn't leaving [right now] because of discussions for a ceasefire between Israel and Iran, I'm told...He is leaving G7 halfway through. Not entirely clear why".
• US President Trump posts that his return to Washington had nothing to do with a ceasefire.

Allies

• A US official tells i24 news that preparations are being made to allow joining the attack - if Trump gives the green light. US Central Command thinks it is necessary to join, but other senior administration officials are against it.
• Trump admin reportedly told several Middle Eastern allies on Sunday that it doesn't plan to get actively involved in the war between Israel and Iran unless Iran targets Americans, according to Axios sources
• US is sending another aircraft carrier, and more warships to the Middle East, according to NBC.
• US Defense Secretary Hegseth said over the weekend he directed the deployment of additional capabilities to the US CENTCOM; additional deployments are intended to enhance the defensive posture in the region, according to Reuters.
• US Defense Secretary Hegseth said US President Trump still aims for a nuclear deal with Iran, via Fox News; assets in the region will be defended.
• White House aide said it is not true that the US is attacking Iran; says American forces are maintaining their defensive posture.
• "This may really be the last chance for the Iranians before the US actively joins", according to journalist Stein citing a US source.

RUSSIA-UKRAINE

• US President Trump, when asked why he waits to sanction Russia, said sanctions are expensive.
• Journalists on X noted a huge explosion in Kyiv, Ukraine.

EU/UK

NOTABLE HEADLINES

• ECB President Lagarde, in an FT Opinion piece, said Europe faces structural challenges. Its growth remains persistently low.
• EU has refused to hold a flagship economic meeting with Beijing ahead of a leaders' summit next month, according to FT.
• UK Chancellor Reeves is exploring reversing a decision to charge UK inheritance tax on the global assets of non-doms, according to FT.