MNI US OPEN - Trump Calls Japan's PM Ahead of Tariff Talks
EXECUTIVE SUMMARY
- TRUMP CALLS JAPAN’S ISHIBA AHEAD OF LATEST TARIFF TALKS IN DC
- TRUMP PUSHES EU TO CUT TARIFFS OR FACE EXTRA DUTIES
- MERZ BACKS NORD STREAM BAN TO PREVENT US AND RUSSIA RESTARTING GAS LINK
- UK RETAIL SALES SURPRISE TO THE UPSIDE AGAIN
Figure 1: German Q1 GDP upwardly revised from flash release
NEWS
US/JAPAN (BBG): Trump Calls Japan’s Ishiba Ahead of Latest Tariff Talks in DC
US President Donald Trump initiated a phone call with Japanese Prime Minister Shigeru Ishiba and discussed tariffs in general terms, just as Tokyo’s top negotiator left for the US for another round of trade talks. Trump didn’t say anything specific about tariffs while Ishiba reiterated Japan’s existing stance over the levies during a 45-minute meeting, the prime minister told reporters on Friday in Tokyo. The two agreed they’re looking forward to meeting in person at a Group of Seven leaders’ gathering in June in Canada, Ishiba said.
US/JAPAN (BBG): Japan’s Akazawa Heads to US for Third Round of Trade Talks
Japan’s top trade negotiator Ryosei Akazawa set off Friday for the US for a third round of trade talks with the Trump administration, with Tokyo determined to avoid a deal that doesn’t address levies on its key auto industry. “An agreement can’t be reached unless both sides are satisfied,” Akazawa told reporters Friday at Haneda airport in Tokyo before his departure. “The US has its own national interests. And Japan naturally has its own national interests too that must be protected.” His latest visit comes as Japan, first considered likely to strike an early deal, appears to be falling behind other nations after the US reached its first agreement with the UK and a truce over tariffs with China. Akazawa is to return to Japan on Sunday.
US/EU (FT): Trump Pushes EU to Cut Tariffs or Face Extra Duties
Donald Trump’s trade negotiators are pushing the EU to make unilateral tariff reductions on US goods, saying without concessions the bloc will not progress in talks to avoid additional 20 per cent “reciprocal” duties. US trade representative Jamieson Greer is preparing to tell his EU counterpart Maroš Šefčovič today that a recent “explanatory note” shared by Brussels for the talks falls short of US expectations, according to people briefed on his thinking.
US/EU (BBG): EU and US to Hold Trade Call Friday Amid Differences on Tariffs
The European Union’s trade chief, Maros Sefcovic, is planning to hold a call with Jamieson Greer, his US counterpart, on Friday to take stock of talks, according to a European Commission spokesperson. The call is expected to take place late afternoon, amid pessimism in Brussels that negotiations will progress quickly. Earlier this week, the EU shared a revised paper with the US that includes proposals on international labor rights, environmental standards, economic security and gradually reducing tariffs to zero on both sides for non-sensitive agricultural products as well as industrial goods, Bloomberg reported.
US/INDIA (BBG): India Says US Trade Talks Were ‘Constructive’ on Bilateral Deal
India’s Commerce Minister Piyush Goyal said that he had a “constructive meeting” with his counterpart Howard Lutnick for a mutually beneficial trade agreement between the two countries. Both sides remain “committed to enhancing opportunities for our businesses and people,” Goyal said in a post on X on Friday. Indian officials, including chief negotiator Rajesh Agrawal, are meeting Trump administration officials in Washington this week to advance the first tranche of the trade agreement.
US/IRAN (BBG): Iran Says ‘Time to Decide’ Ahead of US Talks on Nuclear Deal
Iran said it’s “time to decide” ahead of Friday’s nuclear talks with the US, with the main sticking point being whether Tehran will be able to continue enriching uranium. The first four rounds of talks, mediated by Oman, have broadly gone well, according to both US and Iranian officials. But Iran insists that any deal must enable it to continue enrichment, even if to the low level needed for civilian purposes. Washington has given conflicting messages, sometimes seeming to accept that position and at others saying Iran won’t be able to enrich uranium at all.
US/S.KOREA (WSJ): U.S. Considers Withdrawing Thousands of Troops From South Korea
The Trump administration is weighing a withdrawal of thousands of American troops from South Korea, according to defense officials familiar with the discussions, a move that could stir new anxiety among allies worried about the White House commitment to Asia. An option being developed by the Pentagon is to pull out roughly 4,500 troops and move them to other locations in the Indo-Pacific region, including to Guam, the officials and a person familiar with the matter said. The idea is being prepared for consideration by President Trump as part of an informal policy review on dealing with North Korea, two of the officials said.
US (BBG): Bessent Wins G-7 Partner Plaudits in First Conference Abroad
US Treasury Secretary Scott Bessent kept a low public profile during this week’s gathering of finance chiefs of the world’s top industrialized nations. But he made a noted impact privately, people involved in the Group of Seven gathering said. Soothing nerves rattled by President Donald Trump’s aggressive moves on trade, security and even social issues, the well-traveled former hedge fund manager used charm to offer counterparts a sense they could work with the US Treasury chief on key issues, the people said.
US (WSJ): Big Banks Explore Venturing Into Crypto World Together With Joint Stablecoin
The nation’s biggest banks are exploring whether to team up to issue a joint stablecoin, a step intended to fend off escalating competition from the cryptocurrency industry. The conversations have so far involved companies co-owned by JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and other large commercial banks, according to people familiar with the matter. Those include Early Warning Services, the operator of the peer-to-peer payment system Zelle, and the Clearing House, the real-time payment network.
RUSSIA (MNI): Work on Ukraine Ceasefire Memorandum is at Advanced Stage - Lavrov
State-run Tass reporting comments from Russian Foreign Minister Sergey Lavrov, who is speaking at an Ambassadorial Conference, hosted at the Diplomatic Academy of the Ministry of Foreign Affairs, titled "Historically South Russian Lands: National Identity and Self-Determination of Peoples". Lavrov says that "Work on a memorandum leading to a ceasefire in Ukraine is at an advanced stage". There will be significant scepticism regarding Lavrov's comments, with Ukraine and its allies have lambasted Russia over the past week, claiming that President Vladimir Putin has no plans to halt the war, and is simply biding his time until US President Donald Trump loses patience and walks away from any involvement.
ISRAEL/MIDEAST (NYT): Aid Deliveries Begin to Reach Gazans After Days of Delays
About 90 truckloads of aid had entered Gaza by Thursday, according to the United Nations, the first major influx of food that Israel has allowed in after a two-month blockade that deepened the humanitarian crisis in the territory. The U.N. humanitarian affairs office and the Israeli military both confirmed that the aid deliveries were reaching warehouses and other points inside Gaza after days of delays. But aid officials said the shipment was a tiny fraction of what was needed.
ISRAEL/MIDEAST (WSJ): Israeli Airstrike That Killed Top Hamas Leader in Gaza Hit Meeting of Top Militants
The Israeli airstrike that targeted Hamas’s Gaza chief this month hit him as he attended a meeting of the group’s highest ranking militants, killing several important operatives and leaving a void in its top leadership, Hamas and Arab officials said. The airstrike killed Mohammed Sinwar, who was quietly buried days later, along with other top militants including Mohammad Shabana, the commander of the group’s Rafah brigade, the officials said.
ECB (BBG): ECB’s Stournaras Sees June Rate Cut and Then Pause: Kathimerini
European Central Bank Governing Council members Yannis Stournaras and Olli Rehn anticipate a further reduction in the central lender’s rates in June. “I believe we will cut interest rates one more time in June and then I see a pause,” Stournaras said in comments to Greece’s Kathimerini newspaper. The ECB will continue to follow a meeting-by-meeting and data-driven approach, the Bank of Greece’s head said. “We are applying dependence on data. So if the incoming data and the macroeconomic analysis confirm the current outlook for stabilization of inflation and somewhat subdued growth, the appropriate response in June would be to continue monetary easing and cut interest rates,” Rehn told the newspaper
EU (BBG): EU Will Delay Capital Rules for Bank Trading Desks by One Year
The European Union has decided to delay the application of tougher capital requirements for banks’ trading businesses as the bloc is concerned about the industry’s competitiveness. The standards known as the Fundamental Review of the Trading Book will be pushed back by one year to the start of 2027, a European Commission spokesperson said in response to questions from Bloomberg. It’s the second such delay. Europe’s plan to implement the trading regulations this year was derailed after the US failed to agree on its own version of a wider package of capital rules, which is known as Basel Endgame in industry parlance.
EU (MNI EXCLUSIVE): Demand for EU's SAFE Loans Seen Limited to CEE - Officials
GERMANY/RUSSIA (FT): Merz Backs Nord Stream Ban to Prevent US and Russia Restarting Gas Link
German chancellor Friedrich Merz is “actively” backing a proposed EU ban on the Nord Stream pipelines connecting Russia to Germany in a bid to stop any US and Russian efforts to reactivate the gas links. Merz’s government earlier this week said it endorsed the ban as part of the bloc’s upcoming round of sanctions against Russia for its war in Ukraine. According to three officials familiar with the matter, the chancellor sought to quell any domestic debates about the merits of a potential reactivation.
GERMANY/CHINA (MNI): Chancellor Merz to Hold First Call w/China's Xi at ~12:00CET
MNI (London) Chancellor Friedrich Merz is set to hold a call with Chinese President Xi Jinping at around 12:00CET (05:00ET, 11:00BST), his first with the Chinese leader since taking office at the start of May. Politico outlines the likely direction of the conversation from the German side: "The German government is calling for more Chinese pressure on Putin to finally agree to a ceasefire, and Beijing should stop directly supporting Russian rearmament through dual-use goods such as microchips.[...] Merz has spoken out against the EU's countervailing tariffs on electric cars from China, but now that they are in place, he would like to see a negotiated solution."
UK (FT): UK Household Energy Bills to Fall After Ofgem Lowers Price Cap 7%
Britain’s household energy bills are set to fall in the summer after regulator Ofgem lowered the price cap by 7 per cent, in a boost to Sir Keir Starmer’s government as it tries to tackle the high cost of living. Ofgem on Friday set the price cap for July to September at a level that would mean a typical household pays £1,720 per year, down from £1,849 at present, following a fall in wholesale gas prices. It is the first reduction in the cap since July 2024 and will provide some relief for households struggling to pay energy bills.
RBA (MNI EXCLUSIVE): Ex-RBA Economists Tip Two Cuts on Tight Labour Outlook
Former RBA economists discuss the RBA's next moves. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
PHILIPPINES (BBG): Philippines May Cut US Treasury Holdings After Moody’s Move
The Philippine central bank may consider reducing its holdings of US Treasuries after Moody’s Ratings downgraded the US’ credit score, according to Governor Eli Remolona. “We’re looking at it,” Remolona said when asked at a briefing on Friday if there’s a chance the Philippines will start cutting its US treasuries as part of its reserves. “It’s one thing when other countries’ debt is downgraded, but the US Treasuries, now that’s a big thing.” US Treasuries are “still the most liquid market” and will likely remain an important part of the Philippines’ gross international reserves, he said. “The dollar is still the number one currency in terms of international lending environment, in terms of investments,” he added.
PHILIPPINES (MNI): Senators Think VP Duterte Has Numbers to Survive Impeachment Trial
Re-elected Senator Ronald Dela Rosa said that Vice President Sara Duterte likely has the numbers to secure an acquittal when the Senate convenes for her impeachment trial, but refused to name specific senators, Politiko reports. Given the two-thirds threshold for an impeachment conviction in the 24-member Senate, it would be enough if Duterte secured the backing of nine to avoid an ouster. Outgoing Senator Nancy Binay also suggested that 'there are many Duterte-allied senator candidates who won in the elections. That will surely have an impact on voting. At the end of the day, it’s a numbers game. If you look at the composition, the incoming Senate seems dominated by her allies.'
DATA
GERMANY DATA (MNI): Q1 Final GDP Comparatively Bright, Potential Growth Muted
Germany's final Q1'25 GDP growth figures were upwardly revised from the flash release, by 0.2pp to 0.4% Q/Q (-0.2% Q4). "Production in the manufacturing sector and exports in particular developed better than initially assumed", Destatis explains. Underlying drivers partially were a flip from recent quarters, pointing towards a comparatively bright Q1 which was however underpinned by some one-offs. While Q2 might look a bit more muted so far, sentiment overall continues to stands off lows. An uptick in German growth is expected when higher government investment is set to kick in - that might take until 2026, however. By then, rough estimates of potential growth in the country point toward a mere 0.5% Y/Y.
UK DATA (MNI): Retail Sales Surprise to the Upside Again
- UK APR RETAIL SALES EX-FUEL +1.3% M/M, +5.3% Y/Y
UK retail sales have surprised to the upside for four consecutive months now today coming in +1.3%M/M (ex-fuel, prior revised down to 0.2% from 0.5%). This month saw strong food sales (for which the ONS notes good weather), department store sales (again good weather) and household goods store sales but soft "other non-food store" sales and clothing sales. Looking at the inc fuel index levels, this is the strongest month for sales since July 2022. We don't tend to like one off prints of this data (as it can be so volatile) but there appears to be an uptrend developing here. Next month's print will be interesting as the weather in May doesn't appear as though it will be as good as it was in April.
UK MAY GFK CONSUMER CONFIDENCE INDEX -20 (MNI)
FRANCE MAY CONSUMER SENTIMENT 88 (MNI)
SWEDEN APR UNEMPLOYMENT 8.9% (MNI)
CHINA DATA (MNI): China’s Online Retail Sales Up 7.7% Y/Y
China’s online retail sales increased by 7.7% y/y from January to April, the Ministry of Commerce announced on Friday, highlighting improved consumer quality had strengthened domestic circulation. Internet sales of digital products increased by 8.4%, among which smart robots and home systems increased by 87% and 16%, while online sales of 15 categories of home appliances and digital products increased by 11.5%, with mobile phones up 18.5% y/y.
JAPAN DATA (MNI): Japan April Core CPI Rises 3.5% vs. March 3.2%
- JAPAN APRIL CORE CPI +3.5% Y/Y; MARCH +3.2%
- JAPAN APRIL CORE-CORE CPI +3.0% Y/Y; MARCH +2.9%
- JAPAN APRIL SERVICES PRICES +1.3% Y/Y; MARCH +1.4%
Japan's annual core consumer inflation rate accelerated to 3.5% in April from 3.2% in March, driven by rising food prices excluding perishables and energy, data from the Ministry of Internal Affairs and Communications showed Friday. April marked the 37th consecutive month that core CPI stayed above the Bank of Japan’s 2% target. Foods excluding perishables led the increase, rising 7.0% y/y, up from 6.2% in March, alongside energy prices, which rose 9.3% from 6.6%. Core-core CPI – which excludes both fresh food and energy and serves as a key underlying inflation measure – increased 3.0% in April, slightly faster than March’s 2.9%.
NEW ZEALAND DATA (MNI): Q1 Retail Volumes Up More Than Forecast, Y/Y Pace Edges Higher
New Zealand Q1 retail sales volumes rose 0.8%q/q, versus a flat market forecast. The Q4 rise was also nudged a little higher to +1.0% (against an originally reported 0.9% gain). Today's print is a positive in the sense that other retail/consumer spend indicators have suggested a more adverse backdrop. In y/y terms spending was up 0.65%, a modest improvement on the 0.32% outcome seen in Q4 last year. This suggests further modest improvement in underlying spending momentum (we were at -4.04%y/y back in Q4 2023). The RBNZ meets next week and is expected cut the policy rate by 25bps.
RATINGS: Moody’s on Italy Headlines After Hours
Sovereign credit rating reviews of note scheduled for after hours on Friday include:
- Fitch on Cyprus (current rating: A-; Outlook Stable)
- Moody’s on Cyprus (current rating: A3; Outlook Stable), Italy (current rating: Baa3; Outlook Stable) & the United Kingdom (current rating: Aa3; Outlook Stable)
- Morningstar DBRS on Slovenia (current rating: A (high), Positive Trend)
- Scope Ratings on Italy (current rating: BBB+; Outlook Stable)
Please use this link to access the indicative sovereign rating review schedule covering the five most notable rating agencies for 2025. Note that this schedule is indicative only and ratings can be reviewed on an ad-hoc basis. Rating agencies may also adjust their schedules during the year.
FOREX: USD Weakness Pervades, China Currency Leading Gains
- Greenback slippage has resumed ahead of the NY crossover, with the USD lower against all others in G10 and adding additional pressure to the USD Index. The greenback is testing early May lows, with the USD/CNH chart a particular standout. A close at current or lower levels for the pair would be the lowest since November and the lowest of Trump's Presidential term so far, with prices cementing the recent close below the 200-dma in the price.
- JPY crosses remain a point of interest given the extended volatility in Japanese government bond markets. National CPI data came in ahead of expectations, supporting the recent run higher in the longer-end of the JGB curve and firming the downside argument for USD/JPY. Markets have tested, but failed to break meaningfully below, Y143.24 - the 61.8% retracement of the upleg posted off April's pullback low. The JGB yield curve has steepened further, putting the 2y10y spread to 80bps this week.
- Scandi currencies are outperforming early Friday, with NOK and SEK firming against all others alongside a generally better picture for European equity markets. Core indices are higher by 0.1 - 0.5%, with outperformance in German firms as final GDP data came in ahead of expectations.
- US data is few and far between Friday, with Canadian retail sales the highlight. CAD is underperforming headed into the release, undermined by weaker oil prices this week as markets anticipate a further production output hike from OPEC+ in the coming months.
BONDS: Pullback From Session Highs After Benefitting From Long End JGB Rally
Bonds pull back from session highs after the bid that was tied to a late Tokyo rally in the Japanese long end falters.
- ECB negotiated wage data was a touch softer than the loose consensus from the sell-side reports that we read (+2.4% Y/Y vs. +2.5-2.7%).
- This, coupled with some weakness in equities, has allowed bonds to stabilise after the pullback from highs.
- Bund futures trade in the middle of their range at 130.05, key support at 129.13 untested, with resistance located at 130.75. The early May pullback in the contract appears corrective.
- German curve flatter, yields little changed to -2.5bp. 5s30s back to 95bp after registering a fresh cycle high at 99.2bp yesterday.
- Less dovish than usual comments from ECB’s Stournaras provided some modest weight to the front end of the curve/EUR STIRs early today.
- EGB spreads to Bunds little changed.
- Focus continues to fall on the 10-Year BTP/Bund spread, which hovers around 100bp, with moves below remaining limited at this stage. We have previously argued that sustained moves below 100bp likely require more meaningful progress in EU-U.S. trade talks. We also noted that positive action from Moody's at this evening’s scheduled rating review of Italy could also provide a catalyst for further narrowing.
- Gilt futures +20 or so at 90.65, sticking within the pre-existing weekly range.
- Yields +1.5bp to -2.5bp, front end weigh by strong UK retail sales data, while the long end benefits from cross-market inputs detailed above.
- Lower tier U.S. data and Fedspeak is due in NY hours, with little scheduled Eurozone/UK event risk evident during the remainder of the session.
EQUITIES: Eurostoxx 50 Futures Holding Onto Latest Gains
Eurostoxx 50 futures are holding on to their recent gains and a bullish theme remains intact. The contract is extending the recent breach of 5263.01, 76.4% of the Mar 3 - Apr 7 bear leg, and maintains the sequence of higher highs and higher lows. Sights are on 5516.00, the Mar 3 high and the key bull trigger. Key support to watch lies at 5219.78, the 50-day EMA. Clearance of this level would signal a possible reversal. A bullish trend condition in S&P E-Minis remains intact and the latest pullback is considered corrective - for now. Moving average studies have recently crossed into a bull-mode position. This has strengthened the current bullish theme and signals scope for a continuation near-term. Sights are on the 6000.00 handle next. Initial firm support to watch lies at 5715.60, the 50-day EMA. A clear break of it would highlight a potential reversal.
- Japan's NIKKEI closed higher by 174.6 pts or +0.47% at 37160.47 and the TOPIX ended 18.43 pts higher or +0.68% at 2735.52.
- Elsewhere, in China the SHANGHAI closed lower by 31.816 pts or -0.94% at 3348.372 and the HANG SENG ended 56.95 pts higher or +0.24% at 23601.26.
- Across Europe, Germany's DAX trades higher by 128.18 pts or +0.53% at 24126.69, FTSE 100 higher by 34.26 pts or +0.39% at 8773.26, CAC 40 down 1.6 pts or -0.02% at 7863.97 and Euro Stoxx 50 up 9.75 pts or +0.18% at 5434.5.
- Dow Jones mini up 59 pts or +0.14% at 41984, S&P 500 mini up 8.75 pts or +0.15% at 5865.25, NASDAQ mini up 23.25 pts or +0.11% at 21201.5.
Time: 09:50 BST
COMMODITIES: Gold Recovers Well From Recent Lows
WTI futures traded to a fresh S/T cycle high Wednesday before finding resistance. The recovery since Apr 9, appears corrective. Key resistance to watch is $62.82, the 50-day EMA. It has been pierced, a clear break of it would highlight a stronger reversal and open $65.82, Apr 4 high. For bears a reversal lower would refocus attention on $54.33, the Apr 9 low and bear trigger. Wednesday’s price pattern is a shooting star - a reversal signal. Gold has recovered from its recent lows. The climb signals the end of the corrective phase between Apr 22 - May 15. Medium-term trend signals are unchanged, they remain bullish. Note that moving average studies are in a bull-mode position highlighting a dominant uptrend. A continuation higher would open $3435.6 next, the May 7 high. Key support and the bear trigger has been defined at $3121.0, the May 15 low.
- WTI Crude down $0.43 or -0.7% at $60.76
- Natural Gas up $0.04 or +1.11% at $3.288
- Gold spot up $29.71 or +0.9% at $3324.2
- Copper up $5.35 or +1.14% at $473.15
- Silver up $0.14 or +0.42% at $33.191
- Platinum up $6.07 or +0.56% at $1087.3
Time: 09:50 BST
| Date | GMT/Local | Impact | Country | Event |
| 23/05/2025 | 1230/0830 | * |  CA | Quarterly financial statistics for enterprises |
| 23/05/2025 | 1230/0830 | ** | CA | Retail Trade |
| 23/05/2025 | 1230/0830 | ** | CA | Retail Trade |
| 23/05/2025 | 1335/0935 |  US | Kansas City Fed's Jeff Schmid | |
| 23/05/2025 | 1400/1000 | *** | US | New Home Sales |
| 23/05/2025 | 1400/1000 | *** | US | New Home Sales |
| 23/05/2025 | 1600/1800 |  EU | ECB's Schnabel Speech on Financial Education and Monpol | |
| 23/05/2025 | 1600/1200 | US | Fed Governor Lisa Cook | |
| 23/05/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 23/05/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 25/05/2025 | 1840/1440 | US | Fed Chair Jerome Powell |
