IRAN: Deputy Foreign Minister-'No Plans To Halt Enrichment'

The low 3.24% Y/Y services figure from May Eurozone HICP (3.98% April, 3.45% March) poses a couple of questions about the breadth of the slowdown.

• Part of the slowdown is due to the reversal of temporary Easter effects that impacted the April data. Comparing the Y/Y May number to the Y/Y March number shows that there has been a deceleration of 0.21ppt in services CPI over the two month period.
• Dutch services HICP was 4.37% in March, 5.97% in April and 2.81% in May. A simple back-of-the-envelope calculation indicates that circa 0.09pp of the 0.21pp Eurozone services deceleration over the last two months came from the Netherlands alone.
• Barclays noted that compared to its tracking, "headline and core were also slightly softer (4bp and 9bp), primarily due to a downside surprise in the Netherlands."
• There is very little information on the drivers for this Dutch services price slowdown, and we have seen very little discussion of this from the sellside. The final release of Dutch HICP will be released on Thursday 12 June.

• Treasury pare gains after much higher than expected JOLTS job gains, quits level lower than anticipated while layoffs level comes out higher. Factory orders, durables near expectations.
• Tsy Sep'25 10Y futures currently trades +7 at 110-22 vs. 110-20 immediately after the release, vs. 110-26.5 high. A bear cycle remains in play for now, and recent short-term gains still appear corrective. Sep'25 contract has breached an important resistance at 110-23, the May 16 high. A clear break of this level would undermine a bearish theme and highlight a stronger reversal, exposing 111-05+, the May 9 high.
• On the downside, a resumption of weakness would refocus attention on 109-12+, May 22 low.
• Curves flatter: 2s10s -2.174 at 47.946, 5s30s -1.076 at 94.784
• Cross asset: Stocks steady - near top of range (SPX eminis +2.0 at 5945.25), Gold lower at 3334.23, Bbg US$ index bounces to 1213.92 (+5.16).

After a two-hour cabinet meeting Prime Minister Dick Schoof has confirmed that he will travel to the Huis ten Bosch in The Hague to offer the resignation of the cabinet to King Willem-Alexander. This follows the collapse of the four-party governing coalition earlier on 3 June. The right-wing nationalist Party for Freedom (PVV) withdrew from gov't after party leader Geert Wilders failed to get his coalition partners to agree to a new 10-point asylum programme (see 'NETHERLANDS:  Wilders Pulls PVV Out Of Coaltion Amid Asylum Rule Row', 0845BST and 'NETHERLANDS: Cabinet To Meet @ 13:30CET To Assess Path After PVV Withdrawal', 1001BST). 

• Schoof will remain in place as caretaker prime minister, while all non-PVV ministers will retain their positions in an administration that will deal with day-to-day functions of gov't. This is until snap elections and a new gov't comes to power. A minimum of around two months is needed between the collapse of a gov't and election day to allow for preparations and campaigning, although in practice this can take several months.
• Wilders has confirmed that he will remain in frontline politics, saying, "In fact, I am going to become prime minister of the Netherlands next time and ensure that the PVV becomes bigger than ever in the next elections." As part of the previous governing agreement, no party leaders were allowed to sit in the cabinet, instead remaining on the parliamentary benches.
• Schoof called the PVV's withdrawal "irresponsible and unnecessary", with an eye on the NATO leaders' summit being hosted by the Dutch gov't in The Hague at the end of June.