Market News

• 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…

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…

• 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…

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…

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

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

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…

• The major US stock indices close at record levels
• Reports that Iran targeted 4 American ships that attempted to cross the Straits of Hormuz
• Crude Oil futures settle up $0.22 at $88.90. Technical bias is to the downside.
• Treasury Secretary Bessent: Oil prices will be lower than pre-conflict levels
• More from Musalem: Bond market is signaling a resilient economy/higher expected inflation.
• US Treasury sells $77B of 7 year notes at a high yield of 4.290%
• US/Iran MOU on ceasefire has reached an agreement but Trump still needs to approve it
• Crude oil inventories fall -3.327 million versus -4.143 million estimate
• Atlanta Fed GDPNow estimate for Q2 comes in at 3.8% down from 4.3%
• More from Fed's Musalem: Baseline is inflation will take longer to come down
• <a…

A tweet from Guy Elster, Walla Foreign Correspondent says:

The full opening of the Straits of Hormuz is a prerequisite (a redline) of any deal with Iran according to comments from White House officials. So this does not give a positive feeling. Although there were reports of a memorandum of understanding, the president had not signed off on the deal. Crude oil is trading at $89.50. That's up $0.82 on the day.

A packed data agenda ahead for the day here in Asia-Pacific.

Tokyo inflation data is due. Tokyo consumer prices are expected to show little movement in May compared with April, with key inflation measures remaining at or below the Bank of Japan's 2% target, as you can see in the screenshot.

The capital's CPI is likely to reflect competing forces. The expiry of government subsidies on gas and electricity and higher taxi fares introduced in late April point to modest upside, as do signs of rising apartment rents at the start of Japan's financial year. Offsetting those pressures, easing energy and food prices are expected to limit any gains, while emergency subsidies keeping petrol prices near ¥170 per litre remained in place through the month.

• Did have a call with Imans
• Oil prices will be lower than pre-conflict
• A 2000 ships are waiting to come out of the gulf, and the oil market is set to be very well supplied.
• Pres. Trump has said there are several redlines and the Strait of Hormuz has to be free and open.
• Nothing is on the table until the Strait is reopened
• Oman told him they will not toll the strait (So Trump need not bomb them).
• Believe Warsh will do the right thing to balance inflation and growth.
• US has been patient.Will continue defensive actions vs Iran
• Everything we have been done has been defensive so far.
• Patience with Iran is not forever.

Meanwhile, another report is now saying that the memorandum of understanding between Iran and the US has not been finalized nor…

• Bond markets are signaling a resilient economy and higher expected inflation.
• Most of the recent move higher in bond yields reflects a higher expected neutral rate.
• Wanted to remove the Fed’s “easing bias.”
• Reducing the banking system’s demand for reserves would provide a smoother path toward a smaller Fed balance sheet than shrinking reserve supply.

Overall tone: More hawkish. The comments emphasized resilient growth, rising inflation expectations, and a preference to remove easing bias, all of which lean toward keeping policy restrictive for longer.