Market News

• ILO unemployment rate 5.0% vs 4.9% expected
• Prior 4.9%
• Employment change 148k vs 104k expected
• Prior 25k
• Average weekly earnings +4.1% vs +3.8% 3m/y expected
• Prior +3.8%; revised to +3.9%
• Average weekly earnings (ex bonus) +3.4% vs +3.4% 3m/y expected
• Prior +3.6%
• April payrolls change -100k
• Prior -11k; revised to -28k

Those are a softer set of jobs numbers from the UK, with the payrolls change for April also looking rather poor. The 100k drop marks a 0.3% decline in the estimate of payrolled employees to 30.2 million. That comes with the jobless rate also continuing to tick higher, being up 0.5% on the year.

On payrolls, ONS is putting out a caveat though in saying that: "The April 2026 estimate should be treated as a provisional estimate and is…

Despite the constant back and forth between the two sides, it doesn't look like much has changed in recent weeks. Iran's deputy foreign minister is out confirming that their latest proposal to the US will still include the same terms laid out before. And that is calling for Washington to lift its naval blockade and sanctions on Tehran.

Besides that, the proposal is also calling for the US to release frozen funds tied to Iran and also "ending the war" on all fronts including Lebanon. The request is for the US to call a retreat on all of its forces and to exit areas close to Iran.

I just don't see how that can be agreed upon, not least when the US is already firm on not wanting to offer up too much concessions. With Iran continuing to keep a…

It looked like risk sentiment was bound to take a big knock yesterday but not for some mix of headlines to start the week. First, we had Iranian media saying that the US is to propose a temporary waiver to sanctions. That helped to bring risk trades off their lows before the news was denied by US officials later on. That led to the market mood being not as bad as it was from the start of European trading.

After which, US president Trump helped to lift the mood further in calling off a large-scale military strike against Iran that had been scheduled for Tuesday. He said that the suspension was at the request of Gulf leaders, to allow for peace talks to continue. He then went on to say that there is a "good chance" of a deal now that the…

• ICYMI (Monday): Japan signals FX intervention readiness, vowing to shield US bond market
• ICYMI - Iran launches Bitcoin-backed ship insurance scheme for Strait of Hormuz transit
• Japan economy minister backs recovery but warns of Middle East conflict fallout risk
• RBA minutes: Eight of nine members backed May hike as inflation expectations risk grew
• Japan Q1 GDP beats forecasts at 2.1% but Iran war energy shock threatens momentum
• ICYMI - EU plans supply chain rules forcing firms to source key parts from three suppliers
• PBOC sets USD/ CNY reference rate for today at 6.8375 (vs. estimate at 6.7909)
• PM Albanese secures 600,000 barrels of jet fuel from China as Australia shores up supplies
• Australian May consumer confidence +3.5% m/m to 83.0. Yippee.…

Japan's economy minister Kiuchi cited strong wage momentum and improving job conditions underpinning a moderate recovery, while pledging nimble government action to address Middle East conflict risks.

Earlier:

• Japan Q1 GDP beats forecasts at 2.1% but Iran war energy shock threatens momentum
• USD/JPY on approach to 159! How you left, Ministry of Finance?

Summary: Source: Japanese Economy Minister Kiuchi, public remarks, 18 May 2026.

• Kiuchi described momentum in this year's wage negotiations as strong, with job market conditions also improving
• Government policy steps are expected to underpin a moderate economic recovery
• The minister called for vigilance regarding the economic impact of the Middle East conflict
• Kiuchi pledged the government would…

The EU is planning rules capping single-supplier sourcing of critical components at 30-40%, forcing firms to use at least three suppliers, with punitive tariffs on Chinese chemicals and machinery also planned.

Summary: Source: Financial Times, citing two EU officials familiar with the matter.

• The EU plans to require companies to source critical components from at least three different suppliers, with no single supplier allowed to account for more than 30-40% of purchases
• Sectors targeted include chemicals and industrial machinery, both of which have flagged damage from cheap Chinese imports
• EU Trade Commissioner Maros Sefcovic is separately planning punitive tariffs on Chinese chemicals and machinery
• The plan is a response to China's export…

Japan's Q1 GDP grew an annualised 2.1%, beating forecasts of 1.7%, but analysts warn the Iran war energy shock is set to slow growth sharply and could force the BOJ to delay rate hikes.

Earlier:

• USD/JPY on approach to 159! How you left, Ministry of Finance?

Summary: Source: Japanese government GDP data and analyst commentary, reported Tuesday 18 May 2026.

• Q1 real GDP grew an annualised 2.1%, beating the median market forecast of 1.7% and a revised 0.8% gain in Q4
• Quarter-on-quarter growth came in at 0.5%, above the 0.4% forecast
• Private consumption rose 0.3% against a 0.2% forecast; capital expenditure gained 0.3% against a 0.2% forecast
• Net external demand contributed 0.3 percentage points to growth, above the 0.2 point forecast
• The GDP price…

Westpac's survey of consumer sentiment remains deeply sad.

Japan Q1 GDP (preliminary):

• GDP annualised: +2.1% (vs 1.7% exp, 1.3% prev)
• GDP quarter-on-quarter: +0.5% (vs 0.4% exp, 0.3% prev)
• Private consumption Q/Q: +0.3% (vs 0.2% exp, 0.3% prev)
• Capital expenditure Q/Q: +0.3% (vs 0.2% exp, 1.3% prev)
• External demand Q/Q: +0.3% (vs 0.2% exp, 0.0% prev)

The price index from the GDP results is running hot at 3.4% y/y

• expected 3.1%, prior 3.4% also

I'll have more to come on this separately.

New Zealand producer input prices rose 1.4% in Q1 and output prices gained 0.8%, while electronic card retail sales fell 1.3% in April, Statistics New Zealand data showed on Tuesday.

Summary: Source: Statistics New Zealand, released Tuesday 18 May 2026.

• Q1 producer price index inputs rose 1.4% quarter-on-quarter, reversing a 0.5% decline in the prior quarter
• Q1 producer price index outputs gained 0.8% quarter-on-quarter, up from 0.1% previously
• The input-output gap signals producers are absorbing a portion of cost increases rather than passing them fully through
• Electronic card retail sales fell 1.3% in April on a seasonally adjusted monthly basis, reversing a 0.7% gain in March
• Total card spending declined 1.6% month-on-month in April,…

• US stocks close mixed. Dow closes higher. S&P and Nadaq close lower
• Fed's Goolsbee; Inflation has got to be front of mind when Warsh starts as chair
• Trump: Stops the planned attack on Iran on request from Saudi's and UAE
• Jury rules against Elon Musk and for Sam Altman and OpenAI.
• Japan's Finance Minister Katayama seeing speculative moves in the financial markets
• Official: Report that US has agreed to lift oil sanctions while talks unfold, are false:
• European shares close mostly higher on the day
• US Senior Official: US rejects Irans most recent proposal
• NAHB housing market Index for May 37 versus 34 estimate
• Al Arabiya: Iran agrees to long-term nuclear freeze in lieu of a complete dismantling.
• investingLive European markets wrap: A more cautionary…

US President Trump says the number of drugs available on TrumpRx is to be increased by nearly 7 times.

Scheme will have more than 600 generics added.

This will help many people out. Kudos where its due, well done.