EU COMMUNICATIONS: Softbank: Final Terms

Turkish President Recep Tayyip Erdogan told reporters that the meeting between Russian and Ukrainian delegations in Istanbul today “was great” and he desires to arrange a leaders’ summit between Russian President Vladimir Putin, Ukrainian President Volodymyr Zelenskyy, and US President Donald Trump, per Reuters.

• Max Seddon at The Financial Times downplayed the prospect of a summit in a message on X: “Ukraine has offered Russia another meeting before June 30. But it doesn't sound like there was much progress beyond the exchanges. Russia rejected the idea of US/EU involvement in the talks. Russia does not seem excited about a Putin-Zelensky summit, even if Trump comes.”
• The contents of the Russian ceasefire memorandum are not yet clear, but it is likely to track closely with the maximalist demands outlined by Russia at the first Istanbul talks and rejected by Ukraine, including a pledge that Kyiv never join NATO and recognition of occupied Ukrainian territories.
• Senator Lindsay Graham (R-SC), whose sanctions package is awaiting approval from Trump, said in Germany this weekend after a trip to Ukraine: “What I learned on this trip was [Putin] is preparing for more war. We saw credible evidence of a summer or early fall invasion.”
• Speaking to reporters on May 29, Trump appeared to give Putin two weeks to show Russia is working towards a ceasefire: "Within two weeks. We're gonna find out whether or not [Putin is] tapping us along or not. And if he is, we'll respond a little bit differently."

Construction spending looks increasingly recessionary, with the latest drop of 0.4% M/M in April representing the 3rd consecutive sequential contraction (with the readthrough exacerbated by a 0.3pp downward revision to March to -0.8%).

• Construction spending is now falling at a 4.6% 3M/3M annualized (ie quarterly) pace, which is the weakest momentum since the start of 2010. To put this into perspective, total value is lower than it was a year earlier.
• Even more worryingly, it's led by private sector construction which saw spend drop 0.7% M/M for a 3rd consecutive fall, leaving the 3M/3M annual pace at -6.9%, the poorest since 2009.
• Public sector construction is keeping the rest of the sector afloat, rising for a 4th straight month and accelerating to 3.4% 3M/3M.
• In turn, private residential (-10.7% 3M/3M) saw its first double-digit quarterly annualized drop since 2009, and private non-residential (-2.1%) was the weakest since the pandemic in 2020, with the pullback in manufacturing spending increasing.
• These figures are by value and not in volume terms, so the "real" impact is trickier to gauge. But the retrenchment looks broad-based and for residential construction in particular we see few reasons to expect a re-acceleration.
• Additionally this report provides some evidence that private sector ex-residential investment is falling, potentially owing to tariff/policy-related uncertainty, with the three largest sectors - commercial, power, and manufacturing - the biggest drags in April.

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