UKRAINE: Commission President Calls Zelenskyy Amid Anti-Corruption Agency Row

US Cash Opening calls, set for a close to flat Open.

• Calls: SPX: 5,984.3 (+0.3%); DJIA: 42,280 (+0.2%/+74pts); NDX: 21,691.5 (+0.3%) .

Based on a case study going back to the ’90 Iraqi invasion of Kuwait, Bank of America suggest that “U.S. rates shouldn't be expected to decline with global tensions, especially if oil is rising”. As a result, they recommend going long 10-Year BEIs as a hedge against upside oil price risks stemming from the Middle East tension.

• The S&P Global flash PMIs for manufacturing and services in June are released today at 0945ET, after some recent upward momentum.
• Recall that last month’s final May reading for services saw a surprisingly strong upward revision from 52.3 in the flash to 53.7, extending its bounce from 50.8 in April back towards the strong 54.4 in March.
• Manufacturing on the other hand was revised slightly lower to 52.0 (flash 52.3) but still marked an increase from two months at 50.2 for back to its highest since February.
• Alternative indicators ahead of today’s June flash releases are, as usual, limited. The two regional Fed manufacturing indicators have both missed: Empire at -16.0 (vs cons -6.0 after -9.2) and Philly at -4.0 (vs cons -1.5 after -4.0). There’s less go off for services, with the NY Fed index ticking up from -16.2 to -13.2.
• Price components will continue to be watched. May’s services press release noted that input cost inflation accelerated steeply to its highest since June 2023 on “tariffs and suppliers generally raising their prices” whilst these increased costs “were passed on to clients via the steepest increase in output charges since August 2022.”
• That price backdrop was echoed in the separate ISM Services report, which showed a painful combination of another increase in prices paid (highest since late 2022) whilst new orders slumped (lowest since late 2022).
• There has however been some renewed divergence on the activity side, highlighted by overall ISM Services falling 1.7pts to 49.9 in May for its lowest since Jun 2024 vs that 53.7 in the Services PMI.
• For what it’s worth from a cross-market angle, the Eurozone composite PMI disappointed slightly as it held steady at 50.2 in the June preliminary report (cons 50.4) earlier today.