• APAC stocks were mixed following a similar handover from the US where participants digested data, trade commentary and a slew of central bank rhetoric.
• US President Trump said he doubts the US will have a deal with Japan but will possibly have an agreement with India.
• US Senate narrowly passed President Trump's sweeping tax and spending bill; House to vote by Thursday "at the latest".
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.6% after the cash market closed with losses of 0.4% on Tuesday.
• DXY is modestly firmer, JPY narrowly lags on negative trade headlines, EUR/USD is lingering just below the 1.18 mark.
• Looking ahead, highlights include EU & Italian Unemployment Rate, US Challenger Layoffs, ADP National Employment, Canadian Manufacturing PMI, NBP Policy Announcement, ECB’s de Guindos, Cipollone, Lane, Lagarde & BoE's Taylor, Supply from UK & Germany.

SNAPSHOT

US TRADE

EQUITIES

• US stocks finished mixed and underperformance was seen in the tech-heavy NDX with Technology and Communication Services the only sectors in the red amid weakness in mega-cap names, although the Russell 2000 and Dow Jones both saw gains of around 1% as participants digested several moving parts including data with a very solid JOLTS report and a slight beat for ISM Mfg. Attention was also on the Senate which narrowly passed President Trump's sweeping tax and spending bill after VP Vance casted the tie-breaking vote, while there were also a slew of comments from central bank officials at the Sintra Forum including from Fed Chair Powell who did not rule out a July rate cut as he stated that he wouldn't take any meeting off the table or put it directly on the table.
• SPX -0.11% at 6,198, NDX -0.89% at 22,478, DJI +0.91% at 44,495, RUT +0.94% at 2,195.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said regarding the July 9th deadline that they are not thinking about extending it and doubts they'll have a deal with Japan but will possibly have a deal with India. Furthermore, Trump suggested Japan could pay 30% or 35% tariffs, while it was separately reported that the US is to handle Japan later in tariff talks and prioritising India, according to Nikkei.
• Japan's tariff negotiator Akazawa is arranging a US visit as early as this weekend for trade talks, according to TV Asahi.
• Canada's Ambassador to Washington said Canada still aims to lift all Trump tariffs as part of a deal with the US, according to the Globe and Mail.
• South American bloc Mercosur concluded talks for a free-trade agreement with European bloc EFTA, while the blocs are set to announce finalisation of a free trade agreement on Wednesday, according to Brazilian sources cited by Reuters.

NOTABLE HEADLINES

• US President Trump said anybody would be better than Powell and noted they have 2 or 3 top choices for Fed Chair.
• WSJ's Nick Timiraos said "Powell dodged a pointed question about July, declining to rule anything out four weeks before a policy meeting. His overall comments offered little to suggest there's any effort to set the stage for a cut this month."
• US Senate passed President Trump's tax bill after VP Vance broke the tie to pass the Trump tax bill.
• US House Speaker Johnson said the Senate went a “little further than many of us would have preferred” in amending the bill, according to Punchbowl. It was later reported that US House Speaker Johnson said voting on the bill will be on Thursday at the latest, according to a Fox News interview.
• US House GOP leaders in a statement said the House will consider the bill immediately for final passage and put it on President Trump’s desk by the Fourth of July, according to Politico.

APAC TRADE

EQUITIES

• APAC stocks were mixed following a similar handover from the US where participants digested data, trade commentary and a slew of central bank rhetoric.
• ASX 200 gained as strength in the mining, materials and real estate sectors offset the losses in tech and financials, but with further upside contained by disappointing Australian Retail Sales and Building Approvals data.
• Nikkei 225 declined amid trade uncertainty after President Trump noted doubts about a deal with Japan and suggested Japan could pay 30% or 35% tariffs.
• Hang Seng and Shanghai Comp traded mixed with the Hong Kong benchmark underpinned on return from the holiday closure as gambling stocks surged owing to the jump in Macau gaming revenue for June, while the mainland was contained after the PBoC's open market operations resulted in a net CNY 266.8bln drain.
• US equity futures (ES +0.3%, NQ +0.3%) remained afloat in quiet trade after yesterday's choppy mood and with participants awaiting key data releases, as well as the latest trade developments with the July 9th tariff deadline drawing closer.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.6% after the cash market closed with losses of 0.4% on Tuesday.

FX

• DXY traded rangebound following yesterday's indecisive mood as participants digested US data including a strong JOLTS report, comments from Fed Chair Powell who essentially kept the door open for a July cut, and the latest developments on Capitol Hill where the Senate narrowly passed Trump's sweeping tax cut and spending bill after VP Vance cast the tie-breaker vote. This sends the bill back to the House which is said to vote on it by Thursday "at the latest", while participants also look ahead to data releases leading up to the all-important Non-Farm Payrolls report on Thursday.
• EUR/USD lacked direction after oscillating through the 1.1800 level following mixed data releases and a slew of ECB rhetoric including from Lagarde who stated that the mission is not yet accomplished, but they are now through that disinflationary process and that there is a lot of uncertainty.
• GBP/USD remained confined in relatively tight parameters at the 1.3700 handle and with little impact seen from recent comments from BoE Governor Bailey who said they see signs of softening in the economy and labour market, as well as noted that the path of interest rates will continue to be gradually downwards.
• USD/JPY extended its mild rebound following yesterday's brief dip beneath the 143.00 handle but with the recovery contained amid the downbeat risk appetite in Japan and after US President Trump suggested a 30% or 35% tariff for Japan.
• Antipodeans were ultimately flat amid the mixed risk tone and disappointing Australian Retail Sales and Building Approvals.
• PBoC set USD/CNY mid-point at 7.1546 vs exp. 7.1623 (Prev. 7.1534).

FIXED INCOME

• 10yr UST futures remained contained after recent curve flattening and headwinds from a strong JOLTS report.
• Bund futures took a breather following the prior day's whipsawing and with a EUR 6bln Bund issuance scheduled today.
• 10yr JGB futures conformed to the lack of overnight conviction seen in global peers in the absence of tier-1 data releases and after BoJ Governor Ueda signalled he is in no rush to raise interest rates.

COMMODITIES

• Crude futures struggled for direction after the prior day's choppy performance and with demand not helped by mixed private sector inventory data.
• US Private inventory data (bbls): Crude +0.7mln (exp.-1.8mln), Distillate -3.5mln (exp. -1.0mln), Gasoline +1.9mln (exp. -0.2mln), Cushing -1.4mln.
• US President Trump said regarding the SPR that they will fill it up when the market is right.
• Spot gold lacked conviction amid a range-bound dollar and as participants awaited further job-related metrics ahead of Thursday's Non-Farm Payrolls report.
• Copper futures languished near this week's trough amid the mixed risk appetite across the Asia-Pac region.

CRYPTO

• Bitcoin gradually edged higher and breached the USD 106k level to the upside.

NOTABLE ASIA-PAC HEADLINES

• BoK said regarding June CPI data that the June CPI gain was mainly due to base effects and the CPI gain is to ease if the oil and FX trend continues.

DATA RECAP

• Australian Retail Sales MM Final (May) 0.2% vs. Exp. 0.4% (Prev. -0.1%)
• Australian Building Approvals (May) 3.2% vs. Exp. 4.8% (Prev. -5.7%, Rev. -4.1%)
• South Korean CPI MM (Jun) 0.0% vs. Exp. 0.0% (Prev. -0.1%)
• South Korean CPI Growth YY (Jun) 2.2% vs. Exp. 2.1% (Prev. 1.9%)

GEOPOLITICS

MIDDLE EAST

• US President Trump said he will be firm with Israeli PM Netanyahu on ending the war and thinks there will be a deal next week.
• US President posted that his representatives had a long and productive meeting with the Israelis on Gaza and Israel agreed to the necessary conditions to finalise a 60-day ceasefire during which they will work with all parties to end the war. Furthermore, the Qataris and Egyptians will deliver this final proposal and he hopes, for the good of the Middle East, that Hamas takes this deal, because it will not get better and will only get worse.
• Senior Israeli official said there is a good chance the new proposal will enable progress to proximity talks between Israel and Hamas to finalise the deal's details and that Qatar had conveyed an updated proposal for a hostage deal and ceasefire to Israel and Hamas.
• Israel's army said a missile was launched from Yemen towards Israeli territory and defence systems were operated to intercept the threat.
• US officials said Iran made preparations to mine the Strait of Hormuz last month although mines were not deployed in the strait, according to Reuters.
• Iran's Foreign Minister warned in a phone call with the EU foreign policy chief against a 'destructive approach' of several European countries, criticising their stance on escalation between Iran, Israel and the US.

RUSSIA-UKRAINE

• US Pentagon has halted shipments of some air defence missiles and other precision munitions to Ukraine due to worries that US weapons stockpiles have fallen too low, according to Politico.

OTHER

• Quad joint statement expresses serious concern over the situation in the East China Sea and South China Sea, while they called for the perpetrators, organisers and financiers of the April 22nd attack in Indian Kashmir to be brought to justice.

EU/UK

NOTABLE HEADLINES

• UK PM Starmer won the vote in parliament on welfare reform; was forced to back down on certain aspects of his proposal. Savings under the plan are now expected to be closer to GBP 2bln vs. initially planned GBP 5bln.
• EU reportedly blocks Britain's attempts to join the pan-European trading bloc, according to the FT.