LNG: Indonesia allocates four LNG cargoes for domestic market in July: Platts

EUR/USD now clear of the overnight lows as the backdrop USD tailwind continues to play out. The flattening of global curves, led by Japan, has worked in favour of USD/JPY which, combined with Trump's tariff threat delay on the EU is favouring core equities and driving new gains in the e-mini S&P toward overnight highs.

• This spillover USD buying is, in turn, meeting a weaker EUR after this morning's soft French CPI print and the resultant losses for EUR/USD are closing the gap with the $1.1300 handle support and sizeable option strikes set to roll off at tomorrow's NY cut (which also happens to be month-end value date).
• The EUR weakness is not unique, however, with GBP also under pressure. EUR/GBP has recovered off lows, but we continue to point to the SONIA/Euribor December '25 spread, which has stretched to 209bps, largely driven by shallow implied BoE rate cut pricing for this year. Nonetheless, the spread may struggle to meaningfully push through resistance at 213.5bps (Jan 14 close) without a fresh re-escalation of trade tensions - which has prevented EUR/GBP from further follow-through sales, keeping EUR/GBP above earlier 0.8373 lows.

May's Texas Manufacturing Outlook Survey showed an improvement from April and overall steady activity in the month, with the production index, "a key measure of state manufacturing conditions... indicating flat output this month after modest growth in March and April", per the Dallas Fed.

• Indeed, production fell 4.2 points to 0.9. But the general business activity index rose 20.5 points to -15.3, a three-month best, with 6-month ahead production up 16.3 points to 31.1, highest in 4 months. New orders picked up 11.3 points to -8.7, which apart from March's 29-month low would have still been the weakest since November 2024. Employment rose 7 points to 3.5.
• From an inflation perspective, prices paid pulled back 7.7 points to 40.7, with prices received up 0.2 to 15.1 - both still elevated. There was a bit more of a deceleration in 6-month ahead expectations, with prices paid down 7.8 points (39.8, 5-month low) and received ticking 1.4 points lower (28.2).
• The majority of anecdotal comments in the Dallas report mentioned "tariffs", mostly in a negative way though a couple respondents noted that confidence would improve if and when deals were struck. Indeed there was scarce mention of the May 12 US-China tariff climbdown (survey data were collected May 13–21) and even then the confidence seemed tentative (a firm in Computer and electronic product manufacturing: "I would say the uncertainty has decreased in the very short term (up to 90 days) based on the U.S.–China tariff rollback").
• The most tangible impact on the survey was in the 34.4 point drop in the Outlook Uncertainty index, to 12.7.
• We get the Richmond Fed's manufacturing survey Wednesday, which will help shore up the degree to which confidence improved after the May 12 tentative "deal". Improvements so far have been seen in Philadelphia, Dallas, and Kansas, with Chicago activity and NY Fed's Empire State current conditions indices lower vs April.

• US TSY 13W AUCTION: NON-COMP BIDS $2.347 BLN FROM $76.000 BLN TOTAL