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The sharp acceleration in PPI is the notable number here, and it carries direct implications for global goods inflation. Chinese factory-gate prices feeding into export supply chains will lift input costs for manufacturers worldwide, adding to the inflationary pressure already flowing from the Middle East conflict and the AI-driven surge in electronic component prices. The soft CPI read, however, suggests domestic demand in China remains constrained, which limits the degree to which producers can pass costs through locally. The PPI-CPI divergence is a classic margin squeeze signal and may weigh on Chinese industrial earnings expectations.

China's factory-gate prices jumped 3.9% year-on-year in May, well ahead of the prior month's 2.8% and…

Wholesale inflation remains elevated in Japan, way above expectations.

May 2026 PPI, or corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services:

6.3% y/y

• expected 5.5%, prior 4.9%)

0.9% m/m

• expected 0.5%, prior 2.3%

Here's a BoJ forecast:

• Daiwa sees BOJ June hike as bid to avoid falling behind the curve

Japan's m/m 'wholesale inflation' measure, PPI, is expected to pull back.

For China, m/m CPI is expected to be subdued, despite rising costs for manufacturers,- both for the inputs they buy and the goods they produce, as a result of the Middle East conflict. Further upward pressure is likely from the surge in electronic component prices fuelled by the global AI investment wave, as well as Beijing's moves to rein in overcapacity and cut-throat competition among domestic producers.

• US May existing home sales 4.17m vs 4.07m expected
• US International trade balance for April -$55.9B vs -$56.1B estimate
• SpaceX IPO said to be almost four-times oversubscribed
• Anthropic releases Claude Fabel 5, it's "Mythos-class" model.
• Trump: Iran responsible for shooting down Apache Helicopter. Must respond militarily.
• Reports of explosions in Tehran
• Canada April trade balance +$2.72 billion vs $2.57 billion expected
• US May NFIB small business optimism index 95.3 vs 96.0 expected

Markets:

• Gold down $72 to $4256
• WTI crude oil down $2.77 to $88.54
• GBP leads, AUD lags
• US 10-year yields down 2.6 bps to 4.52%
• S&P 500 down 0.3%

It was a tough day to pin down with any one theme.

There is a tug-of-war ongoing in tech and chip names that started positively…

There were rumors that Mythos would get a public release today and that's proven to be true. Anthropic is calling it Fable 5 and says it's a 'Mythos level' model.

It's been immediately rolled out and says it takes 2x the usage of Opus, so those rate limits will come fast.

Fable 5 is clearly positioned as the new top general-use model. It leads most benchmarks shown, especially agentic coding, knowledge work, spatial reasoning, tool use, legal, biology, cybersecurity, and health.

Here are the benchmarks it touts:

Reports say Claude Fable 5 and Claude Mythos 5 share the same underlying model, but Fable has stronger safeguards and this underscores it.

Here are the five killer applications, based on those benchmarks:

1. Agentic coding: Best-in-table…
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• High yield 4.192%
• WI level at the time of the auction 4.189%
• Bid to cover 2.64X versus average of 2.61X
• Tail 0.3 basis points
• Dealers 15.3% versus average of 13.9%
• Directs 21.01% versus average of 22.2%
• Indirects 63.71% versus average of 63.9%

Auction Grade: C

The mix of the buyers was near the averages as was the bid to cover. The tail was positive 0.3 basis points but given the volatility in the markets, the auction was near the averages.

Trump warned that a US response was coming due to the shot-down helicopter but the public pre-warning and him highlighting that the soldiers weren't hurt is a sign that he doesn't truly want to escalate.

Journalist Mohamad Ahwaze on X said he's hearing the sound of powerful explosions in Tehran. We will wait for more confirmation and details but this hasn't hit the main wires yet.

h/h @newsquawk for the quick tip.

Pres. Trump has posted on TruthSocial:

Stocks have continued their slide with the NASDAQ now down around 900 points or -3.5%. The S&P is down -160 points or -2.15% and the Dow industrial average is down close to 500 points on the day. The shooting down of the helicopter was reported last night but it wasn't clear what was your responsibility.

With the US likely to respond, it most likely opens the door for Israel to continue its offensive against Lebanon.

The price of crude oil did spike on the news but is coming off. It is still down $-3.17 at $88.07 which may suggest that if the wars intensified it would also end much sooner than through negotiations. The low price did extend to $85.95. The high prices at $91.55 for the day. The current…

The main reason to expect a wrap-up to the Iran war is this chart:

That's an ugly look for the party that prides itself on focusing on the economy and a President that campaigned on bringing down inflation.

The combination of tariffs and the Iran war have tanked his credibility and now have Republicans talking about a new package of economic measures. That's going to be a very tall order given that the party has divided itself with Trump and his allies defeating some long-time Republicans in Primaries, essentially leaving them as lame duck opponents while remaining in the party with razor-thin majorities.

No doubt charts like this are fuel for vulnerable Republicans who want Trump out of Iran ASAP. I think the administration has done…

• Prior was 4.02m (revised to 4.04m)
• Sales +3.2% vs +0.2% prior
• Median sale prices +1.3% to $429,300.
• 4.5 months of supply, unchanged vs April

“More Americans are on the move, with home sales rising to the highest level since December. This is great news for the housing market and the economy,” said NAR Chief Economist Lawrence Yun. “Improving affordability is helping drive this momentum. Even with mortgage rates ticking up compared to earlier in the year, they remain lower than a year ago and are essentially at the long-term historical average. Income gains are also outpacing home price growth by a small margin in most parts of the country.”

Yun continued, “The new record-high May home price reflects solid fundamentals for homeowners and…

• Prior was +1.78 billion
• Exports $75.16 billion vs $72.77 billion prior
• Imports $72.44 billion vs $70.99 billion prior

This was the largest monthly surplus since January 2025 and is the second month of surpluses.

Energy did the heavy lifting again, up 9.7% after March's 23.4% jump — and both moves were price, not volume. Crude prices kept climbing on the Iran conflict, and StatCan flags that current-month crude is estimated and prone to fat revisions when prices are this jumpy. March already got marked up nearly $1.2 billion on exports alone. Treat April as a placeholder.

Strip out energy and the offsetting 17.5% drop in metals/minerals, and exports were still up a solid 5.1%. So there's underlying strength — wheat to China, autos, machinery…

• Prior month -$60.3B revised to -$56.6B
• Good trade balance (R) -$-83.01B vs -$82.4B (Prelim). Prior -$85.30B
• Exports $327.1 Billion,+2.6%°
• Imports $327.1 Billion,+2.0%°

Headline Numbers

• Exports: $327.1 billion
  • Up $8.3 billion from March
• Imports: $383.0 billion
  • Up $7.6 billion from March
• Trade Deficit: -$55.9 billion
  • Improved from March as exports rose slightly more than imports

Monthly Changes

• Goods Deficit: Decreased $2.4 billion to -$83.7 billion
• Services Surplus: Decreased $1.7 billion to +$27.8 billion
• The overall improvement in the trade balance was driven primarily by the narrowing of the goods deficit.

Year-to-Date (vs. Same Period in 2025)

• Trade Deficit: Decreased $213.5 billion
  • Down 49.1%
• Exports: Increased $128.2 billion
  • Up 11.3%
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