MNI US OPEN - US, China to Resume Trade Talks on Rare Earths
EXECUTIVE SUMMARY
- US, CHINA TO RESUME TRADE TALKS WITH FOCUS ON RARE EARTHS
- L.A. PROTESTS STRETCH INTO THIRD NIGHT AFTER CHAOTIC SUNDAY
- JAPAN TO CONSIDER BUYING BACK SOME SUPER-LONG GOVERNMENT BONDS: RTRS
- CHINA EXPORTS & IMPORTS BELOW FORECASTS, EXPORTS TO US FALL FURTHER
Figure 1: Japan April BOP Data Shows Largest Net German Bond Sales Since 2014
NEWS
US/CHINA (BBG): US, China to Resume Trade Talks With Focus on Rare Earths
The US and China are set to resume trade negotiations in London on Monday in a bid to further defuse tensions over rare-earth minerals and advanced technology following a phone call between leaders Donald Trump and Xi Jinping last week. Both sides have accused the other of reneging on a deal in Geneva in May, when they reached an agreement to at least temporarily lower tariffs that had climbed to more than 100%. After reaching an understanding with Xi on resuming flows of critical minerals, Trump said he expected the London meeting to go “very well.”
US (WSJ): L.A. Protests Stretch Into Third Night After Chaotic Sunday
National Guard troops arrived in Los Angeles early Sunday on the order of President Trump after protests roiled the city in recent days as federal law enforcement officers carried out immigration operations in the region. Members of California’s 79th Infantry Brigade Combat Team were first on the ground in Los Angeles, authorities said. Trump said he would deploy some 2,000 National Guard troops to the city, over objections from Gov. Gavin Newsom. The deployment of troops under federal authority in response to civil unrest is a rare step, one that usually requires the president to find under the Insurrection Act that they are needed to enforce the law or restore order.
US (WSJ): GOP Senators’ Competing Demands Risk Pulling Trump Megabill Apart
Senate Majority Leader John Thune (R., S.D.) is trying to release this week a revised version of President Trump’s “big, beautiful bill.” But as he races to pass the legislation ahead of Republicans’ self-imposed July 4 deadline, he has got about as many problems as there are GOP senators, with lawmakers battling over the additional borrowing and spending cuts that will be used to finance tax relief, plus spending on the border and military.
CANADA (Globe & Mail): Defence Spending to Hit NATO Target This Year
Carney to announce Canada’s defence spending will hit 2% of GDP NATO target this fiscal year, sources say
JAPAN (RTRS): Japan to Consider Buying Back Some Super-Long Government Bonds, Sources Say
Japan is considering buying back some super-long government bonds issued in the past at low interest rates, two sources with direct knowledge of the plan said on Monday, underscoring its focus on reining in any abrupt rise in bond yields. The move would come on top of an expected government plan to trim issuance of super-long bonds -- such as those with 20-, 30- or 40-year maturities -- in the wake of sharp rises in their yields. The Ministry of Finance, which oversees the government's debt issuance plan, will reach a final decision after holding meetings with bond market participants on June 20 and June 23, the sources said. Buying back super-long Japanese government bonds (JGB) would require budget approval and will likely take time, they said.
JAPAN (RTRS): Rising Rates Could Affect Japan’s Spending Plans, PM Ishiba Says
Japan must be aware that rising interest rates would push up the government's debt-financing costs and affect its spending plans, Prime Minister Shigeru Ishiba said on Monday. "Japan is shifting to a phase where interest rates rise as a trend," Ishiba told parliament. "Japan's debt-to-gross domestic product ratio is high. When interest rates rise, the cost of funding government debt increases. That could weigh on spending," he said, calling on the need to ensure the government maintains public and market trust in its finances.
JAPAN/S.KOREA (BBG): S. Korea’s Lee, Japan’s Ishiba Vow to Boost Ties in First Call
South Korea’s President Lee Jae-myung and Japanese Prime Minister Shigeru Ishiba held their first phone conversation and vowed to seek ways to deepen bilateral ties so both nations can respond together to future challenges. “The two leaders agreed to build a more solid and mature South Korea-Japan relationship based on mutual respect, trust, and a responsible attitude,” Lee’s office said in a readout Monday. The conversation lasted 25 minutes and marked their first direct contact since Lee’s victory in a snap election last week.
ECB (BBG): Kazimir Says ECB Nearly Or Already at the End of Easing Cycle
The European Central Bank is nearly, if not already, at the end of its cycle of interest-rate cuts, according to Governing Council member Peter Kazimir. “Looking ahead, I continue to see clear downside risks to growth, and there is also uncertainty about future price developments,” Kazimir, who is also Slovak central bank governor, said in an op-ed published on Monday. The ECB lowered its deposit rate to 2% last week, stating that inflation — which dipped to 1.9% in May — is “currently around” its target. Speaking to reporters afterward, President Christine Lagarde said the ECB’s policy is “in a good position to navigate the uncertain conditions” likely to arise from global trade dynamics and increased spending in Europe.
RUSSIA/UKRAINE (BBG): Ukraine Rejects Claim Russian Forces Enter Key Central Region
Kyiv’s armed forces rejected as “disinformation” Russia’s claim that its ground troops have crossed into Ukraine’s Dnipropetrovsk region for the first time, even as prospects for a US-brokered ceasefire remain elusive. Separately, Ukraine and Russia continued testy exchanges over the details of a planned large prisoner swap agreed to during last week’s talks in Turkey. The exchange is likely to move ahead in the coming days. Russia’s defense ministry said Sunday that units of its 90th tank regiment had crossed the western administrative border of Donetsk into neighboring Dnipropetrovsk, in what would be a symbolic milestone in their years-long offensive.
IRAN (MNI): Iran to Respond Within Two Days to Latest US Proposal - Tasnim
Earlier, Reuters reported Iranian Foreign Ministry spox Esmaeil Baghaei saying that Tehran will soon present a nuclear proposal to the US. Providing a more detailed timeline, the IRGC-linked Tasnim reports that Iran is set to respond within two days, saying "Iran will present a proposal for an agreement in response to the United States, in which, while maintaining the principle of enrichment on Iranian soil, Iran will propose measures to address US concerns and claims in exchange for the effective lifting of sanctions. Iran will also announce its readiness to hold the next round of indirect talks with the United States if Iran's red lines are maintained." This comes as the International Atomic Energy Agency (IAEA)'s Board of Governors meeting gets underway today in Vienna, Austria, running to 13 June.
COLOMBIA (WaPo): Colombian Presidential Hopeful Shot At Campaign Event in Capital
Colombian presidential hopeful Miguel Uribe Turbay was in intensive care Sunday after being shot at a campaign event the night before, shaking the capital of a nation that has struggled to move past its long history of political violence. Uribe Turbay, 39, is a senator from the right-wing Centro Democrático party. He was shot from behind at about 5 p.m. Saturday in the Fontibón neighborhood of Bogotá, according to a statement from his party. The Santa Fe Foundation hospital, where Uribe Turbay was being treated, said Sunday that he was admitted in critical condition and immediately taken to surgery. He survived, the hospital's medical director said in a statement, but added that his condition is "extremely serious."
DATA
CHINA DATA (MNI): Exports & Imports Below Forecasts, Exports To US Fall Further
- CHINA MAY TRADE SURPLUS +$103.2 BLN VS MEDIAN +$101.1 BLN
- CHINA MAY EXPORTS +4.8% Y/Y VS MEDIAN +6.0% Y/Y: CUSTOMS
- CHINA MAY IMPORTS -3.4% Y/Y VS MEDIAN -1.0% Y/Y: CUSTOMS
China's May trade data saw recent trends broadly maintained, while outcomes were slightly below market expectations. Exports were 4.8%y/y, against a 6.0% forecast and 8.1% prior. Imports fell -3.4%y/y (versus -0.8% forecast and -0.2% prior). This left the trade surplus at $103.22bn, above April's outcome ($96.18bn) and the market consensus of $101.1bn. Trade with the US remains a focus point, with exports now down to $28.82bn, versus levels close to $49bn at the end of last year. This a -34%y/y outcome, per Bloomberg. Exports with other parts of Asia were mostly down a touch in May.
CHINA DATA (MNI): China May CPI Remains Negative for Fourth Month
- CHINA MAY CPI -0.1% Y/Y VS MEDIAN -0.2%; APR -0.1%: NBS
China's Consumer Price Index fell 0.1% y/y in May, unchanged from April's pace but above market expectations of -0.2%, mainly affected by falling energy prices, data from the National Bureau of Statistics showed on Monday. CPI fell 0.2% m/m, reversing April's 0.1% gain, driven by a 1.7% fall in energy prices which dampened the overall index by about 0.13 percentage points m/m, accounting for nearly 70% of the total decline, the Bureau added. Core CPI, excluding food and energy prices, rose 0.6% y/y, edging up from the previous 0.5% growth. PPI declined 3.3% y/y, the lowest level since July 2023, extending from April's 2.7% drop and marking the 32nd consecutive negative read, under performing the market consensus of -3.0%.
CHINA DATA (MNI): China Oil Imports Up 0.3% During First Five Months
MNI (Beijing) China imported 46.6 million metric tonnes of crude oil in May, down from 48.0 mmt in April, as total inbound shipments increased 0.3% y/y during the first five months of the year, data from the General Administration of Customs showed on Monday. Inbound shipments of copper ore and its concentrates reached 2.39 million tonnes last month, down from 2.92 million tonnes in April, bringing total import growth over January to May to 7.4% y/y.
JAPAN DATA (MNI): Japan Q1 GDP Decline Revised Up on Consumption
- JAPAN Q1 ANNUALIZED GDP REV -0.2%; PRELIM -0.7%; MEDIAN -0.7%
- JAPAN Q1 GDP REV -0.0% Q/Q; PRELIM -0.2%; MEDIAN -0.2%
Japan's economy fell at a slower pace than previously estimated during Q1, as the Cabinet Office revised up private consumption and the contribution from inventory, although capital investment declined by more than previously thought, the government's second preliminary data release showed on Monday. The nation’s GDP growth registered 0.0% q/q, or -0.2% y/y, revised up from the first preliminary estimate of -0.2% q/q and -0.7% y/y. Private consumption, which accounts for about 60% of Japan’s GDP, changed to 0.1% q/q growth from the previous 0.0%, with its contribution revised to 0.1 pp from 0.0 pp.
RATINGS: Austria Downgraded at Fitch, Slovenia Upgraded at S&P
Sovereign rating reviews of note from after hours on Friday include:
- Fitch downgraded Austria to AA; Outlook Stable
- Fitch affirmed Estonia at A+; Outlook Stable
- Fitch affirmed Hungary at BBB; Outlook Stable
- S&P upgraded Slovenia to AA; Outlook Stable
- Morningstar DBRS confirmed Austria at AAA, Outlook changed to Negative
- Morningstar DBRS confirmed Estonia at AA (low), Stable Trend
- Morningstar DBRS assigned a BBB credit rating to Hungary, Stable Trend
FOREX: Greenback Off Friday Highs as China, US Trade Teams Meet
- The USD Index is off the Friday highs, keeping the price within range of the early June pullback low at 98.351 - a key level of support before the YTD low of 97.921 comes into play. US and Chinese trade teams are set to meet again in London today, which will be of ample market focus given the recent call between Presidents Xi and Trump, at which the US President reportedly believed could unlock the deadlock in negotiations and ease the passage toward a new deal.
- Alongside the dollar slippage today, buoyant equity benchmarks are prompting AUD and NZD to outperform as cautious optimism surrounding the US/China talks provide tailwinds to the higher beta currencies. NZDUSD has broken back above an important
zone of resistance between 0.6025/40. Spot continues to threaten a daily close above the US election related highs, signalling scope for a more protracted recovery towards 0.6168, the 76.4% retracement of the Sep '24 - Apr '25 selloff. Initial resistance is seen at 0.6080, last week's high print. - JPY is firmer against most others, shrugging off reports that the Japanese finance ministry are considering looking into buying back super-long JGBs that had been issued in the past - a seemingly direct response to the particular weakness in the long-end of global yield curves in recent weeks. The US are to sell 30-year bonds on Thursday, which should provide a key litmus test for investor demand, and could have strong implications for dollar demand.
- Focus across the week rests on the US CPI print for May due Wednesday, at which markets expect inflation to accelerate very slightly from the April print, justifying no move lower in interest rates until October. The UK spending review out on Wednesday could also prove key and while it will not contain fresh OBR forecasts or go into detail on tax & spend plans, Reeves will set out day-to-day departmental spending for the next three years and investment expenditure for the next four years.
EGBS: Early Rally in Futures Loses Steam; 2021 Low in BTP/Bund Holds for Now
The early rally in major EGB futures has lost steam, with Bunds and BTPs piercing but not clearing initial resistance levels. The move away from lows for crude oil prices may have also added pressure to FI markets.
- Headline flow has been light, with the Whit Monday holiday also limiting activity to some extent. The EGB supply calendar is empty for today.
- BTP futures led the early rally, with continued interest in tightening the 10-year BTP/Bund spread. Futures reached a session high of 121.37 earlier (above last Thursday’s 121.32 high), but have since eased back to 121.16, still +53 ticks today. The 10-year BTP/Bund spread has found a short-term base around the 2021 low (~90.4bps).
- Bund futures are +47 ticks at 130.84, unable to push through the 131.00 level (130.99 high). German yields are 3.5-5.0bps lower, with the belly outperforming.
- Japanese investors sold JPY1.48trln (~around E9bln) of German bonds in April, according to balance of payments data released overnight. Net sales were the most since March 2014.
- Limited reaction in the 10-year RAGB/Bund spread (38bps) after Fitch downgraded Austria’s rating to AA- (Outlook Stable) on Friday. Austrian fiscal fragilities are already well-documented.
- ECB’s Kazimir noted that ECB rates are in neutral territory, with the bank “almost at the end of the cycle of reducing key interest rates, if not already at the end of it.”
- The remainder of today’s macro calendar is light, with focus on news around the US/China trade talks in London.
GILTS: Early Rally Fades a Little, Curve Flatter
Gilts are off session highs after looking to Tsys and Bunds for cues for much of the morning.
- Futures trade as high as 92.17 before easing back to ~92.00, sticking within Friday’s range.
- The contract still trades closer to recent highs. The latest rally undermines the bearish theme. Key short-term resistance at 91.87, the May 20 high, has been cleared. This signals scope for an extension higher and sights are on 92.79, a Fibonacci projection. Initial firm support has been defined at 91.44, the Jun 4 low.
- Yields 0.5-2.0bp, curve flatter.
- 2s10s ~61bp, recent breaks below 60bp haven’t been sustained.
- 5s30s ~117bp, after forcing the first sub-120bp closes since early April last week.
- GBP STIRs still trade around levels flagged pre-gilt open, showing ~40bp of cuts through December.
- UK headline flow remains limited ahead of tomorrow’s labour market report and Wednesday’s spending review.
- A reminder that the BoE has shifted its focus to survey-based labour market inferences given the ongoing issues with the ONS data.
- Meanwhile, the spending review contains plenty of political hurdles for PM Starmer & Chancellor Reeves to navigate (as we have already detailed in earlier bullets and our Global Week Ahead).
- Expect our deeper previews of both events in due course.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Jun-25 | 4.218 | +0.6 |
Aug-25 | 4.062 | -15.0 |
Sep-25 | 4.021 | -19.1 |
Nov-25 | 3.879 | -33.3 |
Dec-25 | 3.817 | -39.5 |
Feb-26 | 3.725 | -48.7 |
Mar-26 | 3.705 | -50.7 |
EQUITIES: E-Mini S&P Trend Remains Bullish, Contract Close to Cycle Highs
The trend cycle in Eurostoxx 50 futures remains bullish and the contract is trading closer to its recent highs. Moving average studies are in a bull-mode position, highlighting a clear dominant uptrend. Sights are on 5516.00, the Mar 3 high and the key bull trigger. Clearance of this level would strengthen a bull theme. Key support to watch lies at 5280.33, the 50-day EMA. A clear break of this average would signal a possible reversal. The trend condition in S&P E-Minis is unchanged, it remains bullish and the contract traded to a fresh cycle high last week. The recent break of 5993.50, the May 20 high and a bull trigger, highlights a resumption of the uptrend and maintains a price sequence of higher highs and higher lows. A continuation would open 6057.00 next, the Mar 3 high. Key support lies at 5789.75, the 50-day EMA.
- Japan's NIKKEI closed higher by 346.96 pts or +0.92% at 38088.57 and the TOPIX ended 16.08 pts higher or +0.58% at 2785.41.
- Elsewhere, in China the SHANGHAI closed higher by 14.413 pts or +0.43% at 3399.771 and the HANG SENG ended 388.89 pts higher or +1.63% at 24181.43.
- Across Europe, Germany's DAX trades lower by 80.35 pts or -0.33% at 24223.6, FTSE 100 lower by 3.83 pts or -0.04% at 8834.14, CAC 40 down 0.8 pts or -0.01% at 7804.07 and Euro Stoxx 50 down 8.75 pts or -0.16% at 5421.42.
- Dow Jones mini up 31 pts or +0.07% at 42838, S&P 500 mini up 4.75 pts or +0.08% at 6011, NASDAQ mini down 4.5 pts or -0.02% at 21783.75.
Time: 10:00 BST
COMMODITIES: Recovery Since Early-May for WTI Futures Could Still Be Corrective
WTI futures traded higher last week, resulting in a clear break of resistance around the 50-day EMA. The climb signals scope for an extension towards $65.82, the Apr 4 high. It is still possible that the recovery since early May is a correction. Moving average studies are in a bear-mode position, highlighting a dominant medium-term downtrend. Support to watch lies at $59.74, the May 30 low. A break would highlight a potential bearish reversal. A bullish theme in Gold remains intact and the latest pullback is considered corrective. Medium-term trend signals are bullish - moving average studies remain in a bull-mode position, highlighting a dominant uptrend. A resumption of gains would refocus attention on $3435.6 next, the May 7 high. A break of this hurdle would strengthen bullish conditions. On the downside, the next support to monitor is $3240.0, the 50-day EMA.
- WTI Crude down $0.03 or -0.05% at $64.54
- Natural Gas down $0.08 or -2.11% at $3.705
- Gold spot up $11.18 or +0.34% at $3321.12
- Copper up $1.05 or +0.22% at $486
- Silver up $0.33 or +0.92% at $36.299
- Platinum up $41.05 or +3.51% at $1209.23
Time: 10:00 BST
| Date | GMT/Local | Impact | Country | Event |
| 09/06/2025 | 1400/1000 | ** |  US | Wholesale Trade |
| 09/06/2025 | 1400/1000 | ** | US | Wholesale Trade |
| 09/06/2025 | 1500/1100 | ** | US | NY Fed Survey of Consumer Expectations |
| 09/06/2025 | 1530/1130 | * | US | US Treasury Auction Result for 26 Week Bill |
| 09/06/2025 | 1530/1130 | * | US | US Treasury Auction Result for 13 Week Bill |
| 10/06/2025 | 2301/0001 | * |  GB | BRC-KPMG Shop Sales Monitor |
| 10/06/2025 | 0600/0800 | *** |  NO | CPI Norway |
| 10/06/2025 | 0600/0700 | *** | GB | Labour Market Survey |
| 10/06/2025 | 0600/0800 | ** |  SE | Private Sector Production m/m |
| 10/06/2025 | 0800/1000 | * |  IT | Industrial Production |
| 10/06/2025 | 1000/0600 | ** | US | NFIB Small Business Optimism Index |
| 10/06/2025 | - | *** |  CN | Money Supply |
| 10/06/2025 | - | *** | CN | New Loans |
| 10/06/2025 | - | *** | CN | Social Financing |
| 10/06/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 10/06/2025 | 1530/1130 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 10/06/2025 | 1700/1300 | *** | US | US Note 03 Year Treasury Auction Result |
