Market News

UK business confidence remains deeply negative, CBI and IoD surveys show, with output expectations well below pre-Iran-war levels and Middle East tensions adding fresh cost pressure on firms.

Summary: Sources: Confederation of British Industry (CBI), Institute of Directors (IoD), Reuters

• CBI output expectations balance edged up to -24 in May from -25 in April, remaining well below February's 15-month high of -13 recorded before the Iran war began
• The CBI output balance for the three months to May fell to -31 from -24 in April, though above March's four-month low of -35
• CBI selling price expectations remained elevated but retreated from April's three-year high
• The IoD economic confidence index rose to -53 in May from -64 in April, having hit…

Australia's S&P Global Manufacturing PMI eased to 50.7 in May from 51.3 in April, with new orders falling at the steepest pace since October and selling price inflation hitting a 45-month high.

Summary:

• The S&P Global Australia Manufacturing PMI fell to 50.7 in May from 51.3 in April, remaining above the 50.0 no-change threshold, per S&P Global
• New orders declined for a third consecutive month in May and at the steepest pace since October 2025, with respondents citing squeezed client budgets and muted demand driven by sharp price rises, per S&P Global
• Selling price inflation reached a 45-month high in May, while input cost inflation was the second-fastest in nearly four years, with higher fuel and transportation costs widely cited, per S&P…

Iranian President Pezeshkian has resigned (media sources), telling Supreme Leader Khamenei the IRGC had seized control of all major decisions and rendered elected civilian government unworkable.

• Oil is higher on Globex to open the new week.

Treat this report with care, social media sources only at this stage. Iran's government has denied it as 'fake news'.

Summary:

• Iranian President Masoud Pezeshkian resigned and addressed a direct communication to Supreme Leader Ali Khamenei stating that the Islamic Revolutionary Guard Corps had assumed control of all major decision-making, per the source material
• Pezeshkian stated he had been excluded from every significant decision and said he could not continue to govern under those conditions, per the…

• Unemployment change -12k vs 10k expected
• Prior 20k
• Unemployment rate 6.3% vs 6.4% expected
• Prior 6.4%

The jobless figure shows a drop of 12,000 and that brings the overall unadjusted number of unemployed persons to 2.95 million. That being said, this likely should be a one-off and doesn't excuse the fact that the labour market picture has been softening in recent months.

The unemployment rate held steady for most of 2025 but the broader trend reflects a decline since 2023. And that fits with weakening economic conditions in Europe's largest economy as well, especially in the industry sector. And with the US-Iran conflict now, things look set to continue down that path again potentially.

The German labour office notes that "despite a decline in…

Former Federal Reserve Chair Powell has stayed on at the Bank as one of the members of the Board of Governors. He said he'll be keeping a low profile. I can't find any details on the venue, topic etc. Maybe that's all part of the low profile? I'll keep an ear to the ground at 0030 GMT.

China's official manufacturing PMI slipped to 50.0 in May from 50.3, matching forecasts, as export orders contracted sharply; the non-manufacturing PMI rose to 50.1, beating the 49.5 consensus.

Summary:

• China's NBS Manufacturing PMI fell to 50.0 in May from 50.3 in April, matching the Reuters poll forecast of 50.0, according to the National Bureau of Statistics
• The result was the lowest reading in three months, per NBS data
• New export orders declined to 48.6 from 50.3 in April, with analysts at the China Logistics Information Center attributing the drop primarily to contraction in consumer goods exports
• The raw material purchase price sub-index eased to 60.5 from 63.7 in April but remained well above the 50-point threshold, per NBS data
<li class="font-claude-response-body whitespace-normal break-words…

Iran's parliament security spokesman says no nuclear commitments have been made to the US, as the foreign minister confirms talks are ongoing but urges patience over premature judgements.

Summary:

• Iran's parliamentary national security committee spokesman Ebrahim Rezaei said on Sunday that Iran has made no nuclear commitments to the United States, according to state media
• Rezaei warned that the US must choose between Iranian diplomats or Iranian missiles, per state media reports
• Foreign Minister Abbas Araqchi told state media separately that message exchanges and talks with the US are continuing
• Araqchi cautioned against drawing conclusions from the process, saying outcomes cannot be judged until a clear result is reached, per state media
• The…

• On Iran blockade says anything that is taken off will be taken off slowly
• There are 3 scenarios on Iran: deal, no deal, or kinetic action
• There's more we can do on Iran if we have to
• See real wage growth to resume, on the other side of the war
• 100% approve of the Fed getting rid of forward guidance
• Rates peaked the day before Warsh was sworn in
• People have a wrong notion of what a strong dollar means
• A strong dollar means doing the right things for the economy
• When asked about maintaining the dollar as a reserve currency he said nothing has changed

US Treasury Secretary Scott Bessent said the administration remains committed to pursuing a diplomatic resolution with Iran but warned that alternative options remain on the table if negotiations fail,…

Full report here

Trump did not reach a final decision on a Memorandum of Understanding (MoU) with Iran during a nearly two-hour meeting in the White House Situation Room, according to a senior administration official familiar with the deliberations.

The meeting came after Trump publicly suggested that a major breakthrough with Tehran could be imminent, outlining what he described as elements of a possible agreement involving the Strait of Hormuz, Iran's nuclear activities, and broader regional security arrangements.

However, despite the lengthy discussion among senior national security and foreign policy officials, no final approval was given for a new deal, the official said.

According to the administration official, who spoke on condition…

• Trump did not reach a decision on any new deal with Iran after Situation Room meeting
• How have interest rate expectations changed after this week's event?
• Iran's Baghaei: No agreement has been finalised with the United States so far
• Fed's Daly says she doesn't see mass unemployment or displacement from AI
• Blockade lift announcement by Trump seen as first step toward broader US-Iran agreement
• Iran's Fars News says Iranian sources deny Trump's latest comments
• Trump: The US naval blockade will now be lifted
• Tech sector surges while communication services face downturn
• Trump administration wants autos under USMCA to be at least 50% made in the US - WSJ
• Major US stock indices extend gains to new record highs on US-Iran deal optimism
• Fed's Paulson says…

Rate hikes by year-end

• RBNZ: 75 bps (79% probability of rate hike at the next meeting)
• ECB: 52 bps (89% probability of rate hike at the next meeting)
• BoJ: 42 bps (71% probability of rate hike at the next meeting)
• BoE: 32 bps (94% probability of no change at the next meeting)
• BoC: 28 bps (99% probability of no change at the next meeting)
• RBA: 18 bps (93% probability of no change at the next meeting)
• Fed: 13 bps (99% probability of no change at the next meeting)
• SNB: 11 bps (97% probability of no change at the next meeting)

The main theme of this week has been US-Iran deal optimism as several reports since the weekend have been pointing to an imminent breakthrough. That breakthrough hasn't come yet, but it still led to a sizeable drop in oil prices…

• No agreement has been finalised with the United States so far
• The management of the Strait of Hormuz must be decided by Iran and Oman
• At this stage, we are focused on ending the war; we are not negotiating over Iran's nuclear program

Iran's Foreign Ministry spokesperson Esmaeil Baghaei said no final agreement has yet been reached with the United States, pushing back against growing speculation that Washington and Tehran are on the verge of formalizing a broader understanding over nuclear-related issues.

Baghaei emphasized that discussions remain ongoing and that reports suggesting a finalized deal are premature. Iranian officials have repeatedly stated in recent days that while conclusions have been reached on parts of a potential memorandum…