Articles

• Prior 20k
• Unemployment rate % vs 6.4% expected
• Prior 6.4%

More to come..

This article was written by Justin Low at investinglive.com.

• CPI +3.2% vs +3.4% y/y expected
• Prior +3.2%
• HICP +3.6% vs +3.6% y/y expected
• Prior +3.5%

The preliminary estimate shows that Spanish headline inflation held steady in May, keeping at a similar rate to April. However, core annual inflation continues to tick up and is keeping above the average seen for last year already. And we’re only just five months in, still having to factor in further spillovers from higher energy prices in the months ahead.

Core annual inflation is estimated to move up to 2.9%, same as it was in March but well above any levels that were recorded last year. The estimate is the highest since June 2024 otherwise.

Circling back to headline prices, the Spanish stats office points out that higher prices were observed in the transport category – which arguably points to fuel prices being much higher than they were a year ago. That comes as no surprise amid the oil and gas price surge due to the Middle East conflict. And that looks set to intensify further in the months ahead, especially as we look to the summer time.

The monthly rate shows just a 0.1% increase in headline inflation, at least reaffirming that general price pressures are holding thereabouts after the spike in March and April.

This article was written by Justin Low at investinglive.com.

• Don’t want to comment on forex levels, intervention
• But is extremely concerned about speculative moves
• The stance by the government has always been to take appropriate action on forex matters

A bit of a verbal warning shot there as Tokyo officials continue to be alarmed by USD/JPY lingering above 159.00 but still not yet wanting to take a run at the 160.00 level. But even so, we’ve already seen the rebound in the currency pair over the last few weeks. And that is one that almost negates the entirety of Japan’s intervention efforts since late April.

We are expected to see some intervention data come out later in the day. But at this point, it should just confirm what we already know and not offer too much else.

From earlier this week:

• USD/JPY continues to nudge higher in testing Japan’s intervention limits
• USD/JPY faces up against risk of another round of FX intervention – Credit Agricole

This article was written by Justin Low at investinglive.com.

• Prior +0.2%

French economic growth was revised down to -0.1% in the first quarter of the year, reflecting a contraction. That’s not a good look especially as much of the drag came about from March, with the Middle East conflict weighing. As conditions look set to worsen further in the months ahead, that will make it very difficult to see an improved outlook for Europe’s second largest economy ahead of the summer.

As such, a technical recession beckons for France with stagflation worries surely set to rise as the weeks go by.

This article was written by Justin Low at investinglive.com.

• CPI +2.4% vs +2.5% y/y expected
• Prior +2.2%
• HICP +2.8% vs +2.9% y/y expected
• Prior +2.5%

On the month itself, French headline inflation was up 0.1% in May compared to April. That reflects some moderation in energy prices over the past month but that is still much higher than what it was a year ago. For some context, the headline annual inflation rate is now the highest since February 2024.

Looking at the breakdown, food prices held steady at 1.2% while services inflation ticked a little higher to 2.0% (previously 1.8%). The latter continues to be a key sticking point and with higher energy prices set to permeate to other categories, the danger is that it will see a stronger uptick in the months to come.

To add a bit of flavour to the report, energy prices were seen at -8.0% year-on-year in May last year. This year, energy prices are seen at +16.8% year-on-year instead. What a difference twelve months make.

The major worry for the French economy now is that economic growth looks set to soften further in Q2 while price pressures are likely to pick up further going into the summer months later. Stagflation worries will be a key concern and that pose a considerable threat to the ECB’s plans to manage monetary policy this year.

This article was written by Justin Low at investinglive.com.

• Import prices +1.2% vs +1.1% m/m expected
• Prior +3.6%

The annual change shows that German import prices were seen up by 5.3% compared to April last year. That represents the strongest year-on-year increase since January 2023. After the spike in March, we’re seeing a continued rise in import prices as the fallout from the Middle East conflict continues.

That is leading to a further surge in energy prices but also the prices for intermediate goods. The former was up 2.8% on the month and 31.0% year-on-year. Meanwhile, the latter is up 2.4% on the month and 7.8% year-on-year. So, those two are the biggest contributors to the rise in import prices for April.

Among intermediate goods, non-ferrous metals and their semi-finished products were significantly more expensive. And adding to that, prices for imported fertilizers and nitrogen compounds were also considerably higher compared to the month before (+7.6%).

Even when excluding energy prices, import prices were still up by 1.0% on the month and 2.8% compared to April last year. As such, it also reflects a broader increase in other categories such as prices for capital goods (+0.5%), durable consumer goods (+0.1%), and non-durable consumer goods (+0.1%).

This article was written by Justin Low at investinglive.com.

At the end of it, this will be framed as a “deal to put an end to the conflict”. However, what it actually will be is a memorandum of understanding to lay out the necessary preconditions to facilitate nuclear discussions. And that means extending the actual negotiations phase by another 60 days.

Markets remain optimistic on the face of it but looking through it all, a lot will depend on what happens with the Strait of Hormuz.

While the US and Iran are still squabbling about some details, both sides know very well the puzzle pieces that are needed to complete the picture. The only question is if they can fit them all together and make it last for 60 days or longer. It’s going to be tough but I wouldn’t be surprised if we see some empty promises get put out just so both sides can create an illusion of moving forward. You can read more on that below:

• US and Iran know what the puzzle pieces are, but can they fit them all together?

For markets, the biggest concern remains the threat to the inflation outlook. In that lieu, energy prices and oil and gas supply remain the most critical factors at the moment. As such, the reopening of the Strait of Hormuz is the most important detail.

The US wants an unconditional reopening of the waterway i.e. resumption of traffic akin to pre-war conditions. Let’s be real. That is not going to happen.

Control over the strait remains Iran’s biggest and most important leverage in talks. If they allow the waterway to reopen fully, they are basically just giving up on the conflict and there’s no need for nuclear discussions. Without any leverage, the US can just bully Iran into any terms without any pushback.

So, what is going to happen here instead?

I would wager this is how things are going to play out. The US and Iran will tell a story that they have taken the next step to “end the war”. The Strait of Hormuz will reopen slowly as “Iran will need time to clear mines along the waterway”. This may take up to 30 days or perhaps more. There will be no tolls charged.

This allows US president Trump to brag about “winning” while at the same time allowing Iran to keep management of the strait.

Iran will then continue feeding data, as they have been doing recently, that traffic along the strait is picking up. But in reality, that is not the case. They are merely trying to play to the optics of a deal, making it so that the US has something to brag about back home.

In essence, it will be a theatrical performance just so that the politics will cloud market judgement long enough before reality slaps hard.

The actual shipping data is not likely going to corroborate with the narrative here. So while market prices will reflect one story, physical prices and what businesses/consumers are paying will be a different story.

All this while global oil market supply continues to tighten further into the summer, and that’s when the pain will really hit hard for many economies as well.

It’s a case of kicking the can down the road long enough in hoping markets will forget about it. Let’s see how that is going to work out.

This article was written by Justin Low at investinglive.com.

• Dollar faces renewed strength if US-Iran talks fail, MUFG warns
• Bank of England Bailey, Mann and Greene due to speak at conferences: rates, crypto
• NZ business confidence bounces in May but Middle East cost squeeze persists
• RBNZ’s Breman signals faster and larger rate hikes than previously flagged
• PBOC sets USD/ CNY reference rate for today at 6.8176 (vs. estimate at 6.7685)
• Katayama warns on yen volatility as intervention data looms at 1900 JST
• More Japan data: April retail sales and Manufacturing output both rise fast than expected
• Tokyo core CPI misses forecasts in May, complicating case for BOJ June rate hike
• Dell earnings explained: why the stock exploded after Q1 FY27 results
• RBNZ’s Silk flags near-term inflation pressure and rate hikes in coming meetings
• Tokyo May CPI data: Headline, core, and core-core all rise more slowly than in April
• Yen edges back toward 160 as traders await Japan intervention data due Friday
• DELL up 30% in after hours trading – here’s why (massive contract with US military)
• US Vice Pres Vance says Trump not yet ready to endorse Iran agreement
• NZ consumer confidence lifts off lows but remains well below January peak
• US officials say there have been no US aircraft shot down, contradicting Iranian claims
• Recap: US-Iran ceasefire extension agreed but unconfirmed, markets whipsaw on war signals
• investingLive Americas FX news wrap 28 May: Softer PCE pressures dollar and yields
• Iran state TV says they destroyed a US aircraft. No US comment at this stage.
• Trump is speaking, says the US holds all the cards, Iran has been defeated ‘militarily’
• The major US stock indices close at record levels

At a glance:

• US-Iran ceasefire extension tentatively agreed but awaiting Trump sign-off; nuclear language sticking points remain; Iran’s claim of shooting down a US aircraft near Bushehr denied by US authorities
• Tokyo core CPI missed across all measures in May, extending a six-month slowdown; core ex-food and energy at 1.6% vs 1.9% forecast; Japanese factory output surprised to the upside in April
• RBNZ Governor Anna Breman signalled rates will rise sooner and by more than previously indicated
• Russian drone struck a residential building in Galați, Romania; NATO response expected to be diplomatic rather than kinetic
• Dell shares surged 25%+ after blowout first-quarter earnings; Pentagon’s $9.7 billion software contract an additional driver
• SpaceX targeting $1.8 trillion IPO valuation; Blue Origin’s New Glenn rocket exploded during a hot-fire test
• Japan MOF intervention data due 1000 GMT / 0600 Eastern covering April 28 to May 27

A tentative agreement to extend the US-Iran ceasefire for 60 days lifted risk sentiment through the session, but the deal remained unsigned and fragile. Vice President JD Vance said President Trump had yet to endorse the memorandum of understanding, with negotiations still grinding over language on Iran’s nuclear programme, specifically the disposition of Tehran’s highly enriched uranium stockpile and its future enrichment rights. Vance said he believed Iran was negotiating in good faith but could not guarantee an agreement would be reached. Iranian state television claimed a US aircraft had been destroyed near Bushehr, a report US authorities flatly denied.

In Japan, Tokyo’s key inflation gauges missed forecasts across the board in May. Core CPI, excluding fresh food, rose 1.3% year-on-year against a 1.5% forecast, marking a sixth consecutive month of slowdown. The core-core index, stripping out both fresh food and energy, came in at 1.6% against an expected 1.9%. Government subsidies on utilities and tuition were the primary drag, with analysts expecting inflation to re-accelerate as energy and import price pressures build. Offsetting the soft inflation data, separate figures showed Japanese factory output rose 0.8% in April, confounding forecasts for a 0.9% decline, with manufacturers projecting a further 5.1% rise in May.

The soft data complicates the BOJ’s messaging ahead of its June policy meeting, where overnight index swaps had been pricing around an 80% probability of a hike to 1% from the current 0.75%. With subsidies distorting the headline reads, the BOJ’s case for June rests heavily on the expectation that inflation will re-accelerate once those effects drop out.

New Zealand dominated the central bank narrative. RBNZ Governor Anna Breman, whose casting vote broke a 3-3 split on the monetary policy committee to keep the OCR on hold at 2.25% this week, made clear the pause is temporary. Breman said the OCR is likely to increase sooner and by more than previously signalled, with the bank focused on returning inflation to target while managing economic volatility. Assistant Governor Karen Silk had earlier reinforced the hawkish message, saying the bank does not need to wait for a quarterly CPI print to act and that the bias is toward rate increases at coming meetings. The New Zealand dollar firmed on the guidance.

Currencies otherwise consolidated against a broadly flat US dollar. Traders nudged away from the greenback on ceasefire optimism but stopped well short of a full risk-on move, with the deal’s unsigned status keeping positioning cautious.

Japan’s TOPIX moved to a record high.

A Russian one-way attack drone entered Romanian airspace during a strike on Ukraine and struck a residential apartment block in the eastern city of Galați, injuring several people. Romania’s defence ministry confirmed the incident and scrambled F-16s. NATO’s response is expected to be diplomatic, likely involving the summoning of the Russian ambassador and increased economic pressure rather than any kinetic reply.

Dell shares surged more than 25% after the company reported its strongest earnings since returning to public markets in 2018. Revenue hit a record $43.8 billion, up 88% year-on-year, while diluted EPS rose 282% to $5.24. The Pentagon’s award of a five-year, $9.7 billion software purchasing agreement to Dell Federal Systems added further impetus, reinforcing the market’s view of Dell as a major AI infrastructure supplier rather than a traditional hardware company. Separately, SpaceX is targeting a valuation of at least $1.8 trillion in its forthcoming IPO, while Jeff Bezos’ Blue Origin reported an anomaly during a hot-fire test of its New Glenn rocket, which exploded in footage circulated on social media.

Japan’s Ministry of Finance intervention data covering the period from April 28 to May 27 is due at 1000 GMT, 0600 Eastern. Bloomberg analysis of BOJ accounts had pointed to up to ¥10 trillion deployed in late April and through Golden Week, and the official figure will set the tone for yen trading heading into the weekend.

This article was written by Eamonn Sheridan at investinglive.com.

ANZ New Zealand Business Confidence rose 21 points to +10 in May but remained well below pre-conflict levels, with cost expectations near record highs and retail and construction activity still contracting.

Before you go on, the bigger news ICYMI:

• RBNZ’s Breman signals faster and larger rate hikes than previously flagged

Summary:

• ANZ-Roy Morgan Business Confidence rose 21 points in May to +10, recovering from -10.6 in April, though remaining well below levels prevailing before the Middle East conflict, per ANZ Research
• Expected own activity rose 6 points to 25.6, with manufacturing the standout at +28 and retail the laggard at +8, per ANZ Research
• Cost expectations held at 90.4% of firms reporting higher costs, unchanged from April, with agriculture hitting 100%; three-month cost expectations eased from 4.57% to 4.08% but remained well above pre-conflict levels, per ANZ Research
• Inflation expectations for the year ahead eased from 3.81% to 3.63%, while pricing intentions fell 1 point to 56.7, per ANZ Research
• Employment intentions recovered from -2.7 to +3.4, though reported employment versus a year ago fell from +3.0 to -5.2, with retail and construction both in contraction, per ANZ Research
• ANZ Research noted wage intentions were little changed and showed no signs yet of the price shock morphing into broader core inflation pressures, though indicators have only come back into line with RBNZ forecasts rather than suggesting downside risks

New Zealand business confidence staged a partial recovery in May, rising 21 points to +10 in the ANZ Business Outlook survey, though the result leaves sentiment well short of levels seen before the Middle East conflict upended the global cost environment.

The improvement was uneven across sectors. Manufacturing led with a confidence reading of +26, while agriculture and services also recovered. Retail remained a weak point, with activity versus a year ago falling into negative territory alongside construction, which has been contracting for several months.

Cost pressures showed little sign of easing. The net proportion of firms reporting higher costs held at 90.4%, unchanged from April, with agriculture reaching 100%. The gap between what businesses expect to pay and what they can charge customers remains wide, continuing to compress profit margins across most sectors. Profit expectations recovered from -13.3 to +2.0, but the underlying squeeze is evident.

Wage intentions were broadly steady and remain below pre-conflict levels, which ANZ Research said is consistent with a soft labour market and firms limiting cost increases where possible. No clear evidence of second-round inflation effects has emerged yet, though the bank cautioned it is early to draw firm conclusions. Freight disruption data, reintroduced to the survey this month, flagged emerging stress in retail inbound and manufacturing outbound shipping channels.

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The bounce in confidence is real but narrow, and the cost picture offers little comfort for the RBNZ. With cost expectations holding at 90.4% and agriculture hitting 100%, the inflation pipeline remains pressurised even as headline inflation expectations eased slightly. The gap between what firms expect to pay and what they can charge continues to compress margins rather than feed through cleanly to prices, which complicates the inflation signal. Wage intentions were little changed and remain below pre-conflict levels, giving the RBNZ’s monetary policy committee limited evidence of second-round effects so far, though ANZ noted it is early days. The freight disruption data, reintroduced this month, flags emerging stress in retail inbound and manufacturing outbound shipping that could add to cost pressures in coming months if the Middle East situation persists

This article was written by Eamonn Sheridan at investinglive.com.

We had CPI data earlier, along with jobs. I’ve included those results in the screenshot for retail and industry data ICYMI:

More on the inflation data here:

• Tokyo core CPI misses forecasts in May, complicating case for BOJ June rate hike

This article was written by Eamonn Sheridan at investinglive.com.

The core-core is excluding food and energy. its risen at its slowest rate since September 2024

This article was written by Eamonn Sheridan at investinglive.com.

ANZ-Roy Morgan NZ Consumer Confidence rose 6 points to 86.5 in May, partially recovering from April lows, though the index remains 21 points below its January peak amid petrol price pressures and war-driven uncertainty.

Summary:

• ANZ-Roy Morgan Consumer Confidence rose 6 points in May to 86.5, but remains 21 points below its January peak, per ANZ Research
• The current conditions index lifted 5 points to 77.2, described by ANZ as remaining very soft, while the future conditions index recovered more strongly from 85.9 to 92.7, per ANZ Research
• Two-year-ahead CPI inflation expectations fell sharply from a record high of 6.6% in April to 5.3% in May, more in line with COVID-era readings, per ANZ Research
• House price inflation expectations eased to 2.6% from 3.2%, with Wellington the most pessimistic region at 1.5% and Canterbury the most optimistic at 3.2%, per ANZ Research
• Perceptions of the 12-month economic outlook improved from a net -48% to -36%, though a net 20% still consider it a bad time to buy a major household item, per ANZ Research
• ANZ Research attributed the confidence lift largely to a small easing in petrol prices, and flagged that Wellington is significantly more downbeat than the rest of the country

New Zealand consumer confidence staged a modest recovery in May but remains deeply depressed, with the latest ANZ-Roy Morgan survey showing a 6-point rise to 86.5 that leaves the index still 21 points below where it stood at the start of the year.

The bounce appears largely tied to a small easing in petrol prices during the month. ANZ Research noted that the correlation between confidence and petrol costs has been particularly striking of late, with the two moving in close tandem as the ongoing US-Iran conflict continues to drive energy price volatility and household budget pressure across New Zealand.

Despite the improvement, the current conditions index, which captures how households feel about their situation right now, rose only 5 points to 77.2, a level ANZ described as very soft. The forward-looking component recovered more meaningfully, rising from 85.9 to 92.7, suggesting households are marginally less pessimistic about the year ahead even as they remain under immediate financial pressure.

The net proportion of households saying they are better off than a year ago improved from -31% to -25%, while those expecting to be better off in twelve months’ time rose 9 points to a net 12%. Perceptions of the economic outlook over the coming year improved from a net -48% to -36%, though that reading remains sharply negative by any historical standard.

The best retail indicator in the survey, the net proportion of households saying it is a good time to buy a major household item, rose 5 points to -20, an improvement but still a very weak read. ANZ noted that its May card spend data, due next week, showed discretionary spending taking a clear hit in March and April as households adjusted to higher fuel costs, and the ongoing softness in confidence points to continued caution at the checkout.

One of the more significant shifts in May was a sharp easing in two-year-ahead CPI inflation expectations, which fell from April’s record high of 6.6% to 5.3%, a level more consistent with readings from the COVID era. House price inflation expectations also softened, dropping from 3.2% to 2.6%.

A notable regional dimension emerged in the data, with Wellington significantly more downbeat than the rest of the country. Auckland had been the most confident region at the start of the year with Wellington not far behind, but the capital has since dropped well below the national average, a divergence ANZ noted has been a feature of recent years.

ANZ Research said the global oil price outlook remains highly uncertain, with the Middle East conflict clouding the inflation, interest rate and labour market picture for New Zealand households. The bank expects weaker consumption growth this year as lower purchasing power, reduced confidence and higher-than-anticipated unemployment weigh on spending. With headline inflation set to spike and the risk that it may not fall back quickly, ANZ said it expects the Reserve Bank of New Zealand to move the Official Cash Rate back toward a neutral setting of around 3% sooner rather than later, beginning in July, with multiple hikes already largely priced into wholesale interest rates.

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The modest bounce in confidence is unlikely to shift the RBNZ’s calculus materially. ANZ’s own view is that the central bank will move the Official Cash Rate back to neutral around 3% sooner rather than later, starting in July, with multiple hikes already largely priced into wholesale rates. The easing in two-year inflation expectations from a record 6.6% to 5.3% removes some urgency at the margin, but the current conditions index at 77.2 remains deeply depressed, and the retail spending outlook is poor heading into the ANZ card spend data due next week. Wellington’s pronounced regional underperformance adds a public sector demand drag to the picture that is unlikely to reverse quickly.

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Yes, I know, but I am posting this ’cause I found it interesting, K?

This article was written by Eamonn Sheridan at investinglive.com.