• APAC stocks began the week mostly in the green following last Friday's record highs on Wall St; participants digested a slew of data including mixed Chinese PMIs.
• US and Canada agreed to resume negotiations with a view towards reaching a deal by July 21st after Canada rescinded the Digital Services Tax.
• The Senate is set to vote on Trump's sweeping tax cut and spending bill on Monday following a 51-49 vote to open the debate on the bill.
• European equity futures indicate a positive open with Euro Stoxx 50 future up 0.3% after the cash market closed with gains of 1.6% on Friday.
• DXY has kicked the week off on the backfoot but holding above Friday's low, JPY outperforms, EUR/USD sits on a 1.17 handle.
• Looking ahead, highlights include UK GDP (Q1 final), German Import Prices, Retail Sales & CPI, Italian CPI, US Chicago PMI, ECB’s de Guindos & Lagarde, Fed’s Bostic & Goolsbee.

SNAPSHOT

US TRADE

EQUITIES

• US stocks gained on Friday in which the S&P 500 and Nasdaq printed record intraday and closing highs with outperformance in the Consumer Discretionary sector which was led by Nike (NKE) after earnings and revenue guidance topped expectations, and it signalled a plan to reduce exposure to China amid the trade tensions. Nonetheless, there was a bout of pressure seen in the latter part of the session amid trade frictions after President Trump terminated trade discussions with Canada over their Digital Services Tax on US tech.
• SPX +0.52% at 6,173, NDX +0.39% at 22,534, DJI +1.00% at 43,819, RUT +0.02% at 2,173.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said on Friday that Europe has been very tough on trade and said they have a good relationship but it is a tough situation, while he added that the US has the cards regarding trade with Europe and the problem is that Europe has a lot of taxes and that they sue US companies. Trump also commented that Canada is difficult to deal with and that the US has all the cards and has such power over Canada.
• US President Trump announced on Friday that the US is stopping trade talks with Canada due to the latter putting a digital services tax on US tech companies. However, it was reported a few days later that Canada rescinded the Digital Services Tax to advance broader trade negotiations with the US, while PM Carney and US President Trump agreed that parties will resume negotiations with a view towards agreeing on a deal by July 21st.
• US President Trump said on Friday that they are in the process of making trade deals and at a certain point over the next week, they will send out letters to countries to tell them what they have to pay. Trump also said he wants full trade barriers dropped with India and thinks they'll reach a deal with India, while it was separately reported that Trump said he doesn't expect to extend the July 9th tariff deadline.
• US President Trump said in an interview with Fox Business News, which aired on Sunday, that Japan takes in no American cars and its vehicles should be subject to a 25% auto tariff in the US.
• UK government said the UK-US trade deal has today come into force, slashing US export tariffs for the UK's automotive and aerospace sectors, while it added that UK car manufacturers can now export to the US under a reduced 10% tariff quota and that 10% tariffs on goods like aircraft engines and aircraft parts are removed with a commitment to maintain them at 0%.
• Canada acted to support its steel producers and workers in which it set new tariff rate quotas for steel mill product imports from non-FTA partners.
• China Customs said it resumed imports of qualified aquatic products from some Japanese regions.
• Indonesia is to ease import restrictions on some goods including forestry products, plastic materials and some fertilisers, while it offered the US to jointly invest in the Brownfield Project of critical minerals in Indonesia as part of tariff talks.
• Bank for International Settlements said the global economy and financial system have entered a new era of heightened uncertainty, while it added that rising protectionism and trade fragmentation are particularly concerning.

NOTABLE HEADLINES

• US President Trump’s sweeping tax cut and spending bill cleared the first US Senate hurdle on Saturday with a 51-49 vote to open the debate on the bill, which raises the odds of passage in the coming days, while US President Trump commented that there was a great victory in the Senate with the “great big, beautiful bill”.
• Non-partisan US Congressional Budget Office said the Senate version of the Trump tax bill will add USD 3.3tln to US debt over the next decade.
• Elon Musk posted on X that the latest Senate draft bill will destroy millions of jobs in America and cause immediate strategic harm to the country, while he added it is utterly insane and destructive, as well as gives out handouts to industries of the past while severely damaging industries of the future.
• Fed Stress Test results on Friday showed large banks are well-positioned to weather a severe recession in 2025, and that all 22 banks passed.

APAC TRADE

EQUITIES

• APAC stocks began the week mostly in the green following last Friday's record highs on Wall St but with some of the gains capped heading into month-end and as participants digested a slew of data including somewhat mixed Chinese PMIs.
• ASX 200 edged higher with strength in the defensive sectors but with upside limited by data including softer-than-expected private sector credit.
• Nikkei 225 outperformed despite disappointing Industrial Production data which showed a surprise Y/Y contraction and with the index also unfazed by recent comments from US President Trump who noted that Japanese vehicles should be subject to a 25% auto tariff in the US.
• Hang Seng and Shanghai Comp were mixed following the latest PMI data which showed headline Manufacturing PMI remained in contraction territory, as expected, although Non-Manufacturing PMI accelerated at a faster pace than forecast.
• US equity futures (ES +0.4%, NQ +0.6%) extended on last week's advances as the attention turns to trade negotiations and Trump's megabill which narrowly passed the procedural vote at the Senate.
• European equity futures indicate a positive open with Euro Stoxx 50 future up 0.3% after the cash market closed with gains of 1.6% on Friday.

FX

• DXY traded lower ahead of a slew of key releases this week culminating in the latest US non-farm payrolls data which will be released on Thursday due to the Independence Day holiday and with the focus also on Congress with the Senate set to vote on Trump's sweeping tax cut and spending bill on Monday after it cleared the procedural vote on Saturday. Furthermore, the trade front remains tumultuous after President Trump announced on Friday that the US is stopping trade talks with Canada due to the latter putting a digital services tax on US tech companies although the sides have since agreed to resume negotiations with a view towards reaching a deal by July 21st after Canada rescinded the Digital Services Tax.
• EUR/USD was uneventful amid quiet catalysts and as several key data releases loom, while participants also await a slew of key central bank speakers scheduled at the ECB's Sintra Forum this week including Fed Chair Powell, BoE Governor Bailey, ECB President Lagarde and BoJ Governor Ueda.
• GBP/USD lacked direction ahead of GDP data and with a muted reaction seen to the latest UK Lloyds Business Barometer which printed its highest since 2015.
• USD/JPY retreated despite the outperformance in Japanese stocks and disappointing Industrial Production data from Japan.
• Antipodeans benefited from the mostly constructive risk appetite and after the PBoC set a firmer CNY reference rate.
• PBoC set USD/CNY mid-point at 7.1586 vs exp. 7.1681 (Prev. 7.1627).
• South Africa’s DA Party leader said the Democratic Alliance will withdraw from national dialogue with immediate effect and is in the process of losing confidence in the President’s ability to lead the government.

FIXED INCOME

• 10yr UST futures were little changed following relatively quiet newsflow from the US over the weekend aside from President Trump’s sweeping tax cut and spending bill clearing the first US Senate hurdle on Saturday with a 51-49 vote which sets the stage for a vote-a-rama on the Trump megabill on Monday.
• Bund futures remained afloat and got some mild reprieve after last week's selling pressure but with the rebound contained ahead of a slew of German data including Retail Sales and CPI figures.
• 10yr JGB futures languished at a weekly trough amid the outperformance in Japanese stocks and despite the disappointing Industrial Production data from Japan.

COMMODITIES

• Crude futures initially retreated before clawing back some of the losses amid quiet energy-specific catalysts and following a lack of any major geopolitical escalation from over the weekend, while participants digested a slew of data releases and awaited approaching key events including the OPEC+ meeting later this week with producers said to be likely to make another oil output hike of 411k BPD for August.
• Israel’s Oil Refineries said it resumed partial operation of refining activity in Haifa after damage caused by an Iranian missile during the Israel-Iran war, with full operation expected by October.
• Smoke arose from Iran’s Tabriz refinery, which was caused by a nitrogen tank explosion, although there were no casualties from the incident.
• Spot gold traded indecisively and ultimately recovered from an early dip to return to flat territory heading into month-end and a slew of data.
• Copper futures lacked firm demand amid the mixed risk appetite seen in Greater China following the latest Chinese PMI data which showed Manufacturing PMI remained in contraction territory despite the US-China trade truce.

CRYPTO

• Bitcoin traded rangebound with price action stuck near the USD 108,500 level.

NOTABLE ASIA-PAC HEADLINES

• US officials are drawing up plans for US President Trump’s state visit to China later this year with a delegation of dozens of CEOs, according to Nikkei.
• US President Trump said they have a buyer for TikTok and that it is a group of very wealthy people.
• Canada’s Industry Minister ordered Hikvision (002415 CH) to cease all operations and close its business in the country after a national security review.
• Japanese government official said regarding factory output that sentiment among manufacturers is worsening over uncertainties in the production environment and the number of firms concerned about the impact of US tariffs on production and shipments slightly increased in May from April.

DATA RECAP

• Chinese NBS Manufacturing PMI (Jun) 49.7 vs. Exp. 49.7 (Prev. 49.5)
• Chinese NBS Non-Mfg PMI (Jun) 50.5 vs. Exp. 50.3 (Prev. 50.3)
• Chinese Composite PMI (Jun) 50.7 (Prev. 50.4)
• Japanese Industrial Production MM SA (May P) 0.5% vs. Exp. 3.5% (Prev. -1.1%)
• Japanese Industrial Production YY SA (May P) -1.8% vs. Exp. 1.6% (Prev. 0.5%)
• Australian Private Sector Credit (May) 0.5% vs Exp. 0.7% (Prev. 0.7%)
• New Zealand ANZ Business Outlook (Jun) 46.3% (Prev. 36.6%)
• New Zealand ANZ Own Activity (Jun) 40.9% (Prev. 34.8%)

GEOPOLITICS

MIDDLE EAST

• Israel’s army said it identified the launch of a missile from Yemen on Saturday.
• Egyptian Foreign Minister said work is underway on an upcoming agreement in Gaza that includes a 60-day truce, according to Alhadath via X.
• US President Trump said Israeli PM Netanyahu is in the process of negotiating a deal with Hamas to get hostages back.
• US President Trump said he knew exactly where Iran’s Supreme Leader Khamenei was sheltered and would not let Israel or US armed forces terminate his life, while Trump said he demanded that Israel bring back a very large group of planes that were headed directly to Tehran in the final act of the war. Furthermore, Trump said he was working on the possible removal of sanctions in the last few days and other things which would have given Iran a much better chance at a recovery but warned that Iran has to get back into the world order flow or things will only get worse for them.
• US justified its strikes on Iran as collective self-defence under the UN Charter in a letter to the UN Security Council and said the objective was to destroy Iran’s nuclear enrichment capacity and stop the threat that Tehran obtains and uses a nuclear weapon, while it added that the US remains committed to pursuing a deal with the Iranian government.
• IAEA chief Grossi said Iran has the capacity to start enriching uranium again for a possible bomb in a matter of months, according to BBC.
• Iran’s Foreign Minister said if US President Trump is genuine about wanting a deal, he should put aside the disrespectful and unacceptable tone towards Iran’s Supreme Leader.
• Iran’s Armed Forces Chief of Staff Mousavi told Saudi Arabia’s Defence Minister that they highly doubt Israel’s commitment to the ceasefire, according to Tasnim.
• Iran permitted the transiting of international flights over the centre and west of the country. In relevant news, Emirates cancelled all flights to and from Tehran until July 5th due to the regional situation, while it is to recommence operations to Baghdad on July 1st and Basra on July 2nd.

RUSSIA-UKRAINE

• Russia said its troops captured Novoukrainka in eastern Ukraine, according to RIA.
• US President Trump said on Friday that he may send patriot missiles to Ukraine and commented that he will get the conflict solved with North Korea’s leader Kim.

OTHER

• India’s Ministry of External Affairs said they have seen and rejected the official statement by the Pakistan Army seeking to blame India for the attack in Waziristan on June 28th.

EU/UK

NOTABLE HEADLINES

• UK launches the biggest financial advice shakeup in more than a decade with the regulator unveiling plans for targeted support to help individuals get better returns, according to FT.

DATA RECAP

• UK Lloyds Business Barometer (Jun) 51 (Prev. 50); highest since 2015.