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President Trump following Monday's phone calls with Russia's Vladimir Putin and Ukraine's Volodymyr Zelensky said that the United States should have never intervened in Ukraine in the first place.

He blasted his predecessor Joe Biden for sinking boundless billions in arms and aid into Kiev's coffers and yet it has only been a "death trap" and "real mess" which US decision-makers should have avoided altogether. "This is not my war. We got ourselves entangled in something we shouldn't have been involved in, and we would have been a lot better off. It's a real mess. It's a death trap," he said before reporters Monday afternoon.

Via Reuters

"I do have a certain line, but I don't want to say what that line is because I think it makes the negotiation even more difficult than it is," Trump asserted. When pressed, he refrained from divulging what precisely that red line is in the press briefing.

Trump also addressed the ever-present potential for the US to get drawn in deeper, which is why he said this should be Europe's mess and responsibility, and not the United States'.

"We don’t have boots on the ground, we wouldn’t have boots on the ground. But we do have a big stake. The financial amount that was put up is just crazy," he added.

"Again, this was a European situation. It should have remained a European situation. But we got involved – much more than Europe did – because the past administration felt very strongly that we should," he said. "We gave massive amounts, I think record-setting amounts, both weaponry and money."

Watch a key segment of the Trump presser:

Reporter: “Do you have a red line of what would cause you to back away?”

Trump: “Yeah, in my head, but not something I'm going to announce…This isn't our war…We got ourselves entangled in something that we shouldn't have been involved in.” pic.twitter.com/tVCZcyfLhj

Meanwhile, in the wake of the Trump-Putin call, which lasted over two hours, the mainstream media has been slamming the US president as essentially giving Putin a free hand. President Trump had said it went "very well" and that he seems "an imminent end to the war".

For example, below is The Washington Post's perspective in a fresh Tuesday report:

A phone call between President Donald Trump and Russian President Vladimir Putin shut down an effort to pressure Russia into an immediate ceasefire and instead opened the way for continued fighting while lengthy negotiations take place — much to the consternation of Ukraine and its European allies Tuesday.

Trump’s abandonment of new sanctions on Russian indicated that he may be stepping away from involvement in the talks, something that his team has been flagging for weeks. Trump said Monday that the conditions for a ceasefire could only be agreed by the warring parties “because they know details of a negotiation that nobody else would be aware of.”

European leaders say they had originally been planning with U.S. officials to levy new sanctions on Russia if it did not declare an immediate ceasefire in Ukraine.

And yet the reality is that the sanctions themselves would certainly escalate the conflict and proxy war further, providing even less of an opportunity for a diplomatic off-ramp, and Trump knows this.

Trump had written just after the call: "Russia and Ukraine will immediately start negotiations toward a Ceasefire and, more importantly, an END to the War.

Growing impatience on all sides, even among Trump supporters and conservatives, amid fears that the proxy war could just continue endlessly...

Trump continues to pose as a mediator while simultaneously supplying weapons and intelligence to Ukraine. pic.twitter.com/Q8vzJr7Bbz

He wrote on Truth Social, "The conditions for that will be negotiated between the two parties, as it can only be, because they know details of a negotiation that nobody else would be aware of. 

He then emphasized, "The tone and spirit of the conversation were excellent. If it wasn’t, I would say so now, rather than later."

* * * 

Fresh remarks from Rubio on Tuesday, defending the president's talks with Putin...

Rubio pushes back against claims about the administration's disengagement, says "I see some of those Foreign Ministers, including individuals from Ukraine, more than i see my own children."

WATCH!! Rubio argues that Putin “hasn’t gotten a single concession” pic.twitter.com/rMhVwU5SSd

Authored by Steve Watson via Modernity.news,

Disgraced former FBI Director James Comey is playing dumb and innocent after essentially calling for President Trump to be assassinated last week, claiming he had no idea his post would be so controversial.

After Comey posted an image of shells on a beach he arranged to read ‘8647’, meaning get rid of Trump, The Secret Service questioned him, but then let him go without any charges.

Now, in an interview with MSNBC he claims he’s just a silly old fella who wears baggy jeans and sweaters and had no idea what he was doing.

“I don’t know how we ended up here. Never occurred to me that it was any kind of controversial thing, but that’s the time we live in,” Comey told MSNBC’s Nicolle Wallace.

It’s got nothing to do with the time we live in, shit posting an image threatening to kill the President when you’re a deep state lackey is always going to cause outrage.

Comey then claimed that he wasn’t the one who arranged the shells, and they were put there by some other TDS addled leftist.

“We were walking on the beach, we went to the beach to prepare for this week… and we were walking back towards the road and we saw in the sand someone had arranged shells with numbers. And Patrice, my wife, said, ‘why would someone put an address in the sand?’ and I said, ‘I don’t know’ and we stood over and I said, ‘I think it’s some kind of political message.'”

Hurling his own wife under a bus, Comey then added, “She said you know, when I was a server – she did a lot of work in restaurants – 86 meant to remove an item from the menu when you ran out of ingredients. And I said, ‘well to me, as a kid it always meant to leave a place, to ditch a place.’ And she said well that’s very clever you should take a picture of that and I did and posted it on my Instagram and thought nothing more of it until I heard through her that people were saying that it was a call for some sort of assassination which is crazy!”

Pfffffft, SURE.

James Comey addresses his “8647” threat against Trump: “We were walking along the beach and we saw on the sand someone had arranged shells with numbers. I thought 86 meant to ditch a place.”

What a FRAUD! pic.twitter.com/oTt5hQsu2v

He added, “I thought, what a clever way to express a political view.”

“The shells were the same color for each of the letters, the different colors for the letters. It took a lot of work. Somebody with artistic flair did that. And I have a hard time believing it was anybody with a a dark intention,” Comey asserted, adding “And it certainly was no dark intention on my part or my spouse’s part.”

JUST IN: James Comey says he's just a silly old man who wears sweaters and jeans, and was so enamored with the random "clever" shells he "found" on the sand.

Comey also boasted about his tax refund, which earned him $347.

"I was a grandfather and an author wearing sweaters and… pic.twitter.com/xCPoLFRf9p

Aw shucks grandpa.

Did the Secret Service really buy this BS?

He thinks he's effing Mr. Rogers.

He probably hired a crisis management PR firm and there is no telling how many iterations went into that answer and how many times they rehearsed it.

And it’s still laughable.

The full thing is here:

Of course, Wallace didn’t bother asking him about this ‘coincidence’:

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Via SchiffGold.com,

For now, the U.S. dollar still reigns supreme as the world’s reserve currency. But cracks in this hegemony are widening, and in the wake of de-dollarization, there’s a golden opportunity for the yellow metal to re-emerge as a neutral global reserve asset in a multipolar currency regime. 

As nations like China, India, and Russia challenge the dollar’s monopoly, the rise of a multi-currency world underscores why physical gold is not just a hedge, but a strategic necessity.

The dollar’s dominance, cemented by the 1944 Bretton Woods agreement, has rested on its role as the primary medium for international trade, oil pricing, and reserve holdings. Yet, its foundation is eroding. The U.S. national debt exceeds $33 trillion, with interest payments projected to hit $1 trillion annually next year. 

Decades of quantitative easing have bloated the Federal Reserve’s balance sheet, diluting the dollar’s purchasing power. Meanwhile, geopolitical tensions—sanctions on Russia, trade disputes with China—have further fed global de-dollarization. Now we have high inflation, interest rates that are still way too low, and a ballooning debt. In fact, almost half of new debt in 2024 came from interest payments on the debt itself. In that scenario, it would be impossible for other countries not to start considering de-dollarization more seriously.

That’s exactly what’s happening. Data from the International Monetary Fund (IMF) shows a steady decline in the dollar’s share of global foreign exchange reserves. Central banks keep stockpiling gold at a historic pace, especially in Poland and BRICS-aligned countries. As the rest of the world continues to lose trust in the dollar, they’ll bet on gold as a neutral, non-politicized asset.

Look at Treasurys: they’ve been swinging wildly since Trump’s trade wars began and are now sitting over 4.5%.  The dollar’s exorbitant privilege has always been unsustainable, and with the world increasingly realizing that we can’t fix our fiscal mess, a multipolar currency regime is an unfolding reality. 

As Peter Schiff recently said on X:

The yield on 10-year Treasuries is back up to 4.5% as the U.S. dollar resumes its broad-based decline. Despite the trade truce, the world is losing confidence in the dollar and our ability to get our fiscal house in order. The consequences of de-dollarization will be profound.

A multipolar currency regime envisions a world where no single national currency dominates. China is increasingly pushing for different ways to exchange yuan instead of dollars. Russia’s push for gold-backed trade with other BRICS nations is also accelerating the shift. The 2024 BRICS summit floated proposals for a gold-linked trade unit, a direct challenge to the petrodollar.

After years of exporting our inflation, taking advantage of cheap manufacturing elsewhere, and using the threat of war to enforce petrodollar supremacy, Trump claims we’re being “ripped off.” In reality, his policies are smashing through everything that has allowed America to enjoy our standard of living to begin with. Those are the same factors that have allowed the dollar to survive for so long.

As nations diversify away from dollar-denominated assets, gold’s share in global reserves is climbing. 

With the government’s culture of blatantly unsustainable borrowing trickling down to consumers, America’s unpayable debt cannot simply go on forever. Now other countries are not only realizing it, but acting on it. Though the story of unipolar dollar dominance was always bound to come to an end, in this case, the finale will be a spectacular collapse that upends the way of life Americans have become so accustomed to. 

2008 was nothing, and neither was the Great Depression, compared to the end of the dollar’s reign. The longer it gets put off, the worse it will be in the end. However, for better or worse, it may be coming soon. As Peter recently said on Metals and Miners:

“…stagflation, a combination of a weak economy and rising interest rates, is the one scenario that the Fed never stress tested any of the banks for…They did not run a stress test where you have a recession with high unemployment, but inflation and interest rates go up, not down.”

The IMF reports that gold now accounts for significantly more of total reserves than it did a decade ago. Other countries know that gold is the ultimate safe haven, not US Treasurys. As the multipolar world takes shape, the dollar’s decline could trigger volatility in equities, bonds, and real estate—assets that are tethered to the stability of the dollar.

Gold thrives in uncertainty. Its price has skyrocketed this year, outpacing inflation and most asset classes. However, its true value lies not in short-term gains, but in its role as a wealth preserver when currencies like the US dollar collapse under the weight of inflationary mismanagement and central planning hubris. 

As demand for dollars goes down it will devalue U.S. assets, particularly Treasuries, which foreign entities hold to the tune of trillions. As the dollar’s shadow fades, gold reclaims its role as the world’s ultimate store of value—unchained, enduring, and essential.

US equity futures are weaker with Tech underperforming, threatening a six-day winning streak that propelled the S&P 500 to the brink of a bull market. Then again, Monday started off even worse and then we saw the biggest burst of retail buying on record resulting in one of the biggest intraday reversals in recent history (according to JPM, more here), so brace for more unexpected moves. As of 8:00am ET, S&P futures are down 0.2%, while Nasdaq 100 futs drop 0.3% with Mag7 stocks mixed amid weakness in semis into today’s Google I/O developer conference; healthcare is leading Defensives over Cyclicals. The yield curve is twisting steeper with the 10Y yield flat and USD weakening. Commodities are mixed with crude down, natgas up, base metals down, precious up, and Ags generally higher. Macro data is light, with just the Philly non-mfg PMI on deck ahead of Thursday’s Flash PMIs & Claims prints, but we have another round of Fed speakers where the message continues to be patience.

In premarket trading,  Mag 7 stocks were mixed (Tesla +1.4%, Alphabet +0.5%, Nvidia -0.2%, Microsoft -0.1%, Apple -0.3%, Amazon -0.2%, Meta Platforms -0.3%). Home Depot gained 2.2% after maintaining its guidance for the fiscal year as US sales ticked up, a sign that consumer spending has held up despite economic turbulence. Vipshop’s US-listed shares (VIPS) decline 8% after the China-based online marketplace reported its first-quarter results and gave an outlook. here are some other notable premarket movers:

• Air Lease (AL) rises 1.2% as Citi upgrades to buy, saying a possible capital allocation creates a “tactical opportunity.”
• ASP Isotopes (ASPI) jumps 15% after signing financing and supply agreements with TerraPower to support the construction of a new uranium enrichment facility.
• ImmunityBio (IBRX) rises 4% after Piper Sandler upgraded the drug developer to overweight, saying the launch of the firm’s newly approved bladder cancer drug Anktiva is off to a strong start.
• Pegasystems Inc. (PEGA) rises 6% as the customer relationship management software company will join the S&P Midcap 400 Index before trading opens May 22.
• Pony AI ADRs (PONY) jump 5% after the Chinese autonomous-driving company reported revenue for the first quarter of $14 million vs $12.5 million year-over-year.
• Trip.com (TCOM) US-listed shares fall 4% after the online travel agency reported its first-quarter results.
• Yalla (YALA) falls 8% after the social-network operator saw a drop in the number of paying users on its platform.

Ironically, as everyone was expecting a Monday metldown in US treasuries - and got just the opposite - the big move was in Japan, where bonds cratered and long-end yields soared to a record high after a near-failed government bond auction saw the weakest bid-to-cover demand since 2012 and the biggest tail since 1987, pointing screaming to increasing concerns about investor support as the Bank of Japan dials back its huge debt holdings.

As markets continue to meltup, investors are looking for clarity on market direction, with strategists in a Bloomberg poll now far more optimistic about European stocks than the US market. Jamie Dimon, meanwhile, has been warning about risks from inflation and credit spreads to geopolitics. “The market came down 10%, it’s back up 10%; I think that’s an extraordinary amount of complacency.”

Meanwhile, the threat of US tariffs showed up in Chinese shipments of smartphones, which fell 72% in April, according to China’s customs data.

Tech has been the main driver of the recent market bounce and will remain in focus into next week’s key earnings release from Nvidia. Google is holding its I/O developer conference, with the keynote speech at 4:30 pm ET. Broader deployment of AI mode on Google search will be a big focus, Bloomberg Intelligence said. 

A slate of Fed speakers will be closely watched today for clues on the outlook for the US economy and any commentary on the Moody’s downgrade. Two Fed officials suggested on Monday that policymakers may not be ready to lower rates before September as they confront a murky economic outlook. 

In Europe, the Stoxx 600 climbs 0.4%, on pace for a fourth session of gains, led by utilities, telecoms and health care. Germany’s DAX topped 24,000 for the first time. Among individual stocks, Orange advances after Bloomberg reported that Patrick Drahi is weighing a SFR sale. Wall Street strategists are betting European stocks will enjoy their best performance relative to the US in at least two decades as the region’s economic outlook improves. While US stocks have rallied in recent weeks, two Federal Officials warned on Monday that they would adopt a wait-and-see approach before lowering interest rates. Here are the most notable European movers:

• Orange shares rise as much as 3.1% after Bloomberg reported that billionaire Patrick Drahi’s Altice France is considering the sale of a controlling stake in SFR, raising hopes of further industry consolidations in a competitive market.
• Smiths Group gains as much as 4.4%, to highest since Jan. 31, after the UK engineering firm says full-year organic revenue growth is expected to be toward the top end of its guided range.
• SoftwareOne shares gain as much as 4.5% after Kepler Cheuvreux raised the recommendation on the stock to buy from hold saying cost-cutting is gaining traction and 1Q should show early margin recovery.
• Greggs shares rise as much as 8.8% to a three-month high after the UK food-on-the-go retailer gave a trading update in which it said it is seeing an improved performance, and kept its expectations for the year unchanged.
• Diploma shares surge as much as 18%, hitting a record high, as analysts hail the building components supplier’s positive first-half performance, mainly driven by its Controls unit.
• SSP shares rise as much as 5.3%, to the highest in three months, after the operator of food and beverage outlets at travel locations reiterated its full-year outlook, in spite of softer current trading in North America amid weaker travel demand.
• Schaeffler shares rise as much as 7.6% after the German auto parts firm was double-upgraded to buy at Bank of America, which sees the firm’s adjusted Ebit doubling by 2028.
• Orsted shares rose as much as 15% the Trump administration lifted an order that halted construction on Equinor’s $5 billion project off the coast of New York.
• Fincantieri shares rise as much as 9.7% a record high, after it unveiled targets for a newly created Underwater Armament Systems unit.
• UBS shares declined as much as 3.5%, the most since April 9, after Bloomberg News reported the lender is likely to face defeat in its effort to water down the Swiss government’s law that could force it to maintain up to $25 billion in extra capital.
• Salmar falls as much as 5.6%, the most in almost a month, after the Norwegian seafood and salmon company reported its latest earnings, which DNB Carnegie describes as a “big miss.”
• Kingfisher falls as much as 4.8% as Barclays cuts its recommendation on the UK construction and DIY supplier to underweight from equalweight. A 25% rally this year is “overly generous,” the bank says.

Asian stocks gained for the first time in four sessions, with Hong Kong-listed shares leading the advance thanks to a slew of positive corporate developments. The MSCI Asia Pacific Index rose as much as 0.6%, the most in nearly a week, with Alibaba and Sony among key gainers. Xiaomi shares jumped after the CEO said the company is starting mass production of a new chip, while Chinese healthcare stocks surged after biotech company 3SBio entered into a pact with Pfizer. Shares in India slipped.  Momentum is returning to Asian stocks with tensions easing on the trade front while global growth seems intact. Chinese battery giant CATL gained in its debut in Hong Kong after wrapping up the world’s largest initial public offering this year, showing the appetite for such themes in the region.

The RBA delivered a 25bp cut at their May meeting, as widely expected, but with clear dovish elements to the meeting as a whole. The statement was materially more positive on the progress made on the inflation mandate, with inflation expected to remain around the RBA’s 2-3% target band, and with a removal of the previous language on being determined to “sustainably return inflation to target”. The updated macro projections were also materially softer, in-line with our economists’ expectations, with lower profiles for growth and inflation, and a higher path for the unemployment rate. Perhaps the most notable dovish news though was Governor Bullock noting that the Board discussed a 50bp cut at today’s meeting, suggesting a clearer break from their previously more cautious thinking. Goldman economists revised their RBA call to include an additional cut at the November meeting, in addition to the cuts they continue to expect at the July and August meetings.

In Fx, the Bloomberg Dollar Spot Index slips 0.1%. The Aussie lags G-10 peers, down 0.6% versus the greenback after RBA Governor Michele Bullock said the board considered a 50bps rate cut before opting for 25.  The Dollar continues to underperform, but within tight ranges this morning. EUR (+10bps) price action remains constructive after the trading desk’s flow bias being skewed towards selling yesterday. Our Spot Traders (KBS) note that there was a lack of interest from HFs to chase yesterday - partly an element of some still tending to prior wounds but we seem to have hit the limit of false starts without a clear identifiable catalyst that HFs are willing to chase. USDJPY is trading -25bps lower after a choppy price action overnight. Despite continued spot moves lower in USDJPY and increased speculation that there may be some kind of “currency deal” as part of trade negotiations, our traders noted that downside USDJPY gamma has repriced lower (1m ATM -0.25v vs the roll) with the market struggling to digest front end vol supply the last 48hrs. USDCNH is trading +10bps higher after jumping on headlines that cut benchmark lending rates for the first time since October. The outlier overnight was AUD (-70bps), amid the dovish 25bps cut from the RBA.

In rates, treasuries are mixed as US session gets under way with the yield curve steeper. Front-end yields are 1bp-2bp lower on the day while 30-year is higher by around 3bp near 4.93%. Treasury curve pivots around little-changed 7-year sector, with 10-year near 4.46%, trailing bunds and gilts in the sector by 1.8bp and 2.5bp. Bunds and gilts outperform following softer-than-expected German PPI data and pricing of a £4 billion 2056 syndicated gilt issue. Gilts lead a rally in European bonds, with UK 10-year yields down 3bps to 4.63%. Traders shrugged off BOE Chief Economist Huw Pill’s warning that interest rates may be coming down too quickly. US economic data calendar includes only a regional indicator, however several Fed speakers are slated. Treasury auctions ahead this week include $16 billion 20-year new issue Wednesday and $18 billion 10-year TIPS reopening Thursday

In commodities, Oil pares earlier gains seen after Iran’s Supreme Leader Khamenei voiced skepticism over talks with the US. WTI drops 0.2% to near $62.50.  Spot gold rises $8 to around $3,238/oz.

The US economic data calendar includes May Philadelphia Fed non-manufacturing activity (8:30am). Fed speaker slate includes Bostic, Barkin (9am), Collins (9:30am), Musalem (1pm), Kugler (5pm), Hammack and Daly (7pm)

Market Snapshot

• S&P 500 mini -0.2%,
• Nasdaq 100 mini -0.3%, 
• Russell 2000 mini -0.3%
• Stoxx Europe 600 +0.4%, 
• DAX +0.2%, 
• CAC 40 little changed
• 10-year Treasury yield little changed at 4.45%
• VIX +0.3 points at 18.44
• Bloomberg Dollar Index -0.1% at 1223.55, 
• euro +0.2% at $1.1262
• WTI crude -0.1% at $62.6/barrel

Top Overnight News

• Freedom caucus chair Harris said the votes are not there for the Trump bill and predicts a deal on the tax bill will be delayed until June.
• Trump has claimed that Russia and Ukraine  will “immediately” begin negotiations on preparations for peace talks, but signaled that he was leaving Moscow and Kyiv to find a deal without the US as a broker. FT
• Crypto scored a big win after a group of Democrats dropped their opposition to stablecoin legislation. The bill may pass this week. BBG
• Iranian Supreme Leader Ayatollah Ali Khamenei said negotiations with the US over his country’s nuclear program are unlikely to result in a deal and called the Trump administration’s latest demands on Iran “outrageous.”
• China cut benchmark lending rates for the first time since October on Tuesday, while major state banks lowered deposit rates as authorities work to ease monetary policy to help buffer the economy from the impact of the Sino-U.S. trade war. RTRS
• China’s smartphone exports to the US fell 72% last month, outpacing an overall 21% drop in shipments. At the same time, the value of phone component exports to India roughly quadrupled. BBG
• The Bank of Japan will sound out market participants this week to gauge their views on how aggressively it should proceed with quantitative tightening as yields surge nearly a year after it began scaling back its huge bond purchases. BBG
• Japan's top trade negotiator, Ryosei Akazawa, said on Tuesday there was no change to Tokyo's stance of demanding an elimination of U.S. tariffs in bilateral trade negotiations.
• Tokyo will not rush into clinching a trade deal if doing so risked hurting the country's interests, he said. RTRS
• India is discussing a US trade deal structured in three tranches and expects to reach an interim agreement before July, when President Donald Trump’s reciprocal tariffs are set to kick in, according to officials in New Delhi familiar with the matter. BBG
• Donald Trump plans to go to the Capitol today to push House Republicans to back his tax-cut bill. Speaker Mike Johnson’s meeting with holdout GOP members from high-tax states failed to produce a deal on SALT. BBG

Tariffs/Trade

• Japan is reportedly mulls accepting US tariff reduction, not exemption, according to Kyodo. The Japanese government is reportedly considering the option of accepting a reduction in the rate of additional tariffs and reciprocal tariffs on automobiles and other items. Due to the US, according to sources, refusing to eliminate tariffs in prior negotiations and is said to have "indicated its intention to exclude additional tariffs on automobiles, steel, and aluminium, which are important to Japan, from the talks".
• US Treasury Secretary Bessent will travel to Canada to participate in the G7 Finance Ministers and Central Bank Governors meeting, while he will focus on the need to address global economic imbalances and non-market practices.
• Japanese Economy Minister Akazawa said Japan and the US conducted working-level talks on bilateral trade on Monday, while he added there was no change to Japan's stance of demanding the elimination of US tariffs. It was also reported that the US and Japan could hold talks as soon as this Friday although US Treasury Secretary Bessent is not expected to attend, according to Kyodo.
• Taiwan's President Lai said tariff talks with the US are going smoothly, while he added that Taiwan is to initiate a national wealth fund and is to broaden economic connections with nations other than the US.
• India is discussing a US trade deal structured in three tranches and expects to reach an interim agreement before July.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were marginally higher as the region took impetus from the rebound stateside where the major indices gradually recouped the losses triggered by the US rating downgrade, and both the S&P 500 and the Dow notched six-day win streaks. ASX 200 was led by outperformance in tech and financials, while the attention was on the RBA which delivered a  widely expected rate cut. Nikkei 225 rallied at the open in tandem with a surge in USD/JPY but then gave back the majority of the spoils amid currency fluctuations and with little in the way of fresh catalysts for Japan. Hang Seng and Shanghai Comp were kept afloat after China's largest banks cut deposit rates and slashed the benchmark Loan Prime Rates by 10bps as guided by PBoC Governor Pan, while sentiment was also underpinned by a jump in CATL shares on its Hong Kong debut.

Top Asian News

• China's state planner said they will make greater efforts to attract and utilise foreign capital, while China is drafting loan management rules for renewal projects and most policies will be implemented before end of June.
• BoJ releases briefing material used at a meeting with bond market participants: notes some members said JGB market functionality is improving as a trend due to the BoJ taper. Some look for an eventual end to bond buying, some are after bigger cuts in the next plan. Some seek substantial cuts in one go. Deteriorating demand-supply for super-long JGBs is not something the BoJ can fix.

RBA

• RBA cut the Cash Rate by 25bps to 3.85%, as expected, while it stated that inflation continues to moderate and that the outlook remains uncertain. RBA affirmed that maintaining low and stable inflation is the priority and the board judged that the risks to inflation have become more balanced, as well as assessed that this move on rates will make monetary policy somewhat less restrictive. Furthermore, the RBA stated that headline inflation is likely to rise over the coming year to around the top of the band as temporary factors unwind and the remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply. RBA also released its Quarterly Statement on Monetary Policy which noted that the escalation of global trade conflict a key downside risk to economy and that the global growth outlook was downgraded, while it added that uncertainty has increased due to US tariff policies and it trimmed its core domestic inflation forecasts.
• Governor Bullock: prepared to take further rate actions if required; price increases have slowed; Bullock adds this was a confident cut in rates; There was a discussion between a 50bps cut or a 25bps cut; discussed holding rates or cutting. Cannot say where the cash rate will end up, does not endorse market pricing (Note: ~55bps of cuts currently seen by year-end).

European bourses (STOXX 600 +0.3%) opened modestly firmer across the board and have traded within a tight range thus far, given the lack of pertinent updates. European sectors are mixed, and aside from the top performer, the breadth of the market is fairly narrow. Utilities takes the top spot, with sentiment in wind names boosted after the Trump administration lifted a stop-work on Equinor’s (+1.3%) New York offshore wind farm project; the name is higher by around 1.5% - peers such as Orsted (+14%) have also been edging higher.

Top European News

• BoE's Pill says "dissenting vote stems from a concern that the pace of withdrawal of monetary policy restriction since last summer – quarterly cuts of 25bp – is too rapid given the balance of risks to price stability". Dissent was in line with his preference for “cautious and gradual” cuts in Bank Rate expressed over the past twelve months. Would characterise his dissenting vote as favouring a ‘skip’ in the quarterly pattern of Bank Rate cuts. It should not be seen as favouring a halt to (still less a reversal of) that withdrawal of restriction. Is concerned that structural changes in the price and wage setting behaviour have increased the intrinsic persistence of the UK inflation process. The underlying disinflation continues. The prospective path of Bank Rate from here is downward. Dissent from the most recent decision does not reflect a fundamental difference with the MPC. Says "we should not be dependent on how the data turns out". Can't assume that the inflation "pain" of new economic shocks will dissipate quickly. Agrees with the MPC that there is an easing in the labour markets, has questions over the pace. Some key pay indicators "remain quite strong".
• ECB's Schnabel says disinflation is on track, though new shocks could pose new challenges. Tariffs could be disinflationary in the short run but result in upside risk over the medium term. "We are facing a historical opportunity to foster the international role of the euro" & "When the inflation regime changes, we must be ready to respond swiftly".
• German VCI Chemical Industry Association: Q1 Production +0.6% Y/Y; Revenue +1.8% Y/Y; notes that production is expected to stagnate this year and industry sales will decrease slightly.

FX

• After a contained start, DXY has extended on Monday's downside which was largely attributed to the Moody's downgrade on the US on Friday. Newsflow on the trade front has been non-incremental aside from a Reuters sources piece noting that the US Treasury does not anticipate any trade deal announcements at the G7 Finance Meeting in Canada this week.
• PBoC set USD/CNY mid-point at 7.1931 vs exp. 7.2112 (Prev. 7.1916). Today's speaker slate includes Fed's Bostic, Barkin, Collins, Musalem, Kugler, Daly & Hammack. DXY is just about holding above the 100 mark.
• EUR fractionally firmer vs. the USD with not a great deal in terms of Eurozone newsflow aside from ongoing ECB speak with Executive Board member Schnabel noting that disinflation is on track, though new shocks could pose new challenges. EUR/USD sits towards the top end of Monday's 1.1169-1.1288 range.
• JPY at the top of the G10 leaderboard with some of the move attributed to moves in Japanese yields with the 30yr JGB yield hitting its highest level since its debut since 1999 following a soft JGB auction overnight. On the trade front, Japanese Economy Minister Akazawa said Japan and the US conducted working-level talks on bilateral trade on Monday. Note, Japanese Finance Minister Kato and US Treasury Secretary Bessent are expected to discuss exchange rates on the sidelines of the G7 meeting in Canada this week. USD/JPY has delved as low as 144.10 but stopped shy of the 144 mark.
• GBP is a touch firmer vs. the USD and steady vs. the EUR. This morning has seen remarks from BoE Chief Economist Pill, who dissented at the 8th May rate decision by voting for an unchanged rate vs. consensus for a 25bps cut. Pill noted that his dissenting vote stemmed from a concern that the pace of withdrawal of monetary policy restriction since last summer is too rapid, given the balance of risks to price stability. He added that his vote should be seen as a skip and not a halt to the withdrawal of the restriction process. The remarks had little follow-through to GBP; currently around 1.3370.
• Antipodeans are both softer vs. the USD with AUD lagging across the majors post-RBA. As expected, the RBA pulled the trigger on a 25bps cut whilst offering a cautious view on the outlook and lowering its inflation forecasts in its accompanying Statement on Monetary Policy. At the follow-up press conference, AUD/USD hit a session low at 0.6409 after Governor Bullock revealed that the board discussed cutting by 25bps or 50bps.

Fixed Income

• JGBs were initially firmer, in-fitting with peers after Monday’s eventual intraday recovery from Moody’s-driven pressure. However, upside in Japan was limited into supply. But a poor 20yr outing caused JGBs to slip from 134.40 to a 138.78 base - pressure which has since pared.
• USTs experienced a slight bearish blip on the above auction. However, Monday’s intraday recovery remained intact for USTs overnight and the benchmark has since extended to a 110-14+ high, eyeing 110-21+ from last week as the next point of resistance. Today's speaker slate includes Fed's Bostic, Barkin, Collins, Musalem, Kugler, Daly & Hammack.
• Bunds a little firmer today, in-fitting with peers. Early doors remarks from Schnabel this morning, though nothing that has fundamentally changed the narrative. Numerous speakers ahead incl. Cipollone, Knot & Nagel. Similarly, no move to German Producer Prices printing lower than expectations and the prior, driven primarily by energy prices for both Y/Y & M/M components. Continues to rebound from Monday’s pressure, at best has been 15 ticks above that session’s 130.60 peak. German 10yr and 30yr auctions were well received but had little impact on German paper.
• Gilts are firmer and currently outperforming. Outperformance which comes as Gilts didn’t get as much time to benefit from Monday’s late-door rebound and as the UK benchmark was that session’s underperformer, given EU-UK updates. As it stands, at the upper-end of a 91.45-91.91 band. BoE’s Pill outlined that his vote in May to leave rates unchanged was a “skip”. In fitting with his preference for “cautious and gradual” cuts and stemmed from a view that the recent quarterly pace “is too rapid given the balance of risks to price stability”. No move in Gilts to his speech.
• Hong Kong pension fund managers are reportedly sounding the alarm of potential forced selling of US Treasury holdings following Moody's downgrading US' rating, according to Bloomberg sources Hong Kong Investment Fund Association (HKFIA) has recommended that an exception to the maximum 10% holding rule is made for US Treasuries, to allow funds to invest above the limit even if the US is rated one notch below AAA, according to the sources. Japan's R&I still has an AAA rating (outlook stable) on the US, and is not considering a downgrade currently "don't believe the situation described there has significantly changed"
• UK price guidance for new 5.375% 2056 Gilt in sale via syndication seen +1.75bps to +2.25bps over 4.25% 2055 Gilt, orders over GBP 70bln.

Commodities

• Crude is lower this morning despite a softer dollar but amid a cautious risk tone in Europe and following some of the more sanguine tones from US President Trump regarding Russia, whilst upside was seen on less conciliatory commentary from the Iranian Supreme Leader. He said that he "does not think nuclear talks with the US will be successful", via Mehr news. Brent Jul'25 rose from USD 65.07/bbl to USD 66.00/bbl over three minutes - a move which has since mostly faded.
• Relatively flat and lacklustre trade across precious metals amid a lack of pertinent macro drivers this morning, and following a relatively contained session on Monday. Spot gold resides in a current USD 3.204.67-3.232.85/oz range.
• Mixed trade across base metals and in narrow ranges amid a lack of pertinent catalysts during the European session, whilst the broader risk tone remains cautious. 3M LME copper currently resides in a USD 9,443.05-9,520.90/t.

Geopolitics: Middle East

• Iranian Supreme Leader Khamenei says "I don't think nuclear talks with the US will be successful"; via Mehr news. Says to the US that they must remain from making outrageous demands. Saying that Iran will not be allowed to enrich uranium is excessive and outrageous.
• "Israel Broadcasting Corporation: Netanyahu extends the stay of the Israeli negotiating team in Doha for an additional day", according to Alhadath.
• Israeli PM Netanyahu says "Gaza war could end "tomorrow" if hostages return and Hamas leaders lay down their arms", via Sky News Arabia.
• Iran has received a proposal for the next round of indirect negotiations with the US, according to Iran International.
• "Iranian Foreign Ministry Spokesman: The time and place of the next round of nuclear negotiations with the United States have not yet been decided", according to Sky News Arabia

Geopolitics: Russia-Ukraine

• US President Trump said the US isn't stepping back from Russia-Ukraine negotiations and that it would be helpful to host Ukraine-Russia talks at the Vatican, while he repeated it is not his war and thinks something is going to happen with Russia and believes Putin wants to stop. Furthermore, Trump said he has a red line in his head on when he will stop pushing on Russia-Ukraine but won't say what that red line is and noted there could be a time when Russia sanctions will happen.
• Kremlin spokesman said US President Trump and Russian President Putin talked about a direct conversation between Putin and Ukrainian President Zelensky although there is no decision yet on the place for the next direct contact between Russia and Ukraine. The spokesman stated there cannot be a deadline for preparing a memorandum between Russia and Ukraine, as well as noted that everyone is interested in a speedy settlement in Ukraine and that Russia is interested in eliminating the root causes of the conflict.

US Event Calendar

• Philadelphia Fed Non-Mfg activity survey

Central Bank Speakers

• 9:00 am: Fed’s Bostic Gives Opening Remarks
• 9:00 am: Fed’s Barkin Gives Speech at Richmond Fed Conference
• 9:30 am: Fed’s Collins Hosts Fed Listens Event in New Hampshire
• 1:00 pm: Fed’s Musalem Speaks on Economy, Policy
• 5:00 pm: Fed’s Kugler Gives Commencement Address

DB's Jim Reid concludes the overnight wrap

Yesterday felt like we were somewhere along the line of a "death by a thousand cuts" with regards to the US fiscal situation. Hard to know where in that thousand we are but probably much nearer a thousand than at zero even as yesterday saw an initial sell off reverse as the session went on. At the end of the day the loss of the final US triple-A rating late on Friday night doesn't change anything much immediately but it keeps the drip, drip, drip of poor fiscal news building up against the debt sustainability dam in the background. Anyway, that's enough of the metaphors.

In yesterday's CoTD (link here) I highlighted that Moody's base case is now for US deficits to hit nearly 9% by 2035 and asked in a flash poll whether this would happen, or how it would be avoided or dealt with if it did. I'll keep the poll open for a couple of hours before publishing the results in my CoTD this London lunchtime. See it here. It should only take less than 5 seconds and all views very welcome.

We saw a large round trip in Treasuries around the news, with the 30yr yield briefly reaching its highest intraday level since 2023, at 5.035%, before paring back that move to close at 4.90%, -4.1bps lower on the day and virtually in line with where we were immediately before the news late on Friday. That recovery started shortly after the US open and continued as the session went on. It perhaps indicates the slow moving trend of overseas investors selling Treasuries but domestic investors increasing their holdings.

Earlier on, the cross-asset moves had seen a minor rerun of what happened after Liberation Day as US assets lost ground across the board. The S&P 500 recovered from -1.05% at the lows to end +0.09% higher. The US asset that struggled the most was the dollar, with the index (-0.72%) seeing only a modest recovery from its -1.02% intra-day low. That dollar decline repeated the early April parallels of capital flight scenarios often seen in emerging markets, where the currency struggles even though rates are going up.

This is coming at a delicate time, because the US administration are seeking to pass an extension to the 2017 Trump tax cuts, which are currently due to expire at the end of 2025. My CoTD showed that the CBO believe that the US federal debt held by the public will surge to 220% by 2055 if the tax cuts are extended, with the deficit reaching 12% of GDP. Again feel free to vote in the CoTD flash poll if you want to express a view as to whether something happens way before we get to these type of levels or whether we will take it in our strides like every other debt / deficit landmark in recent years.

In terms of that bond move in more detail, the selloff was initially very aggressive, with the 30yr yield reaching 5.035% and on track for its highest close since 2023 and actually higher for only six business days since 2007. However, that was then pared back, and it actually ended the day -4.1bps lower at 4.90%. Similarly, the 10yr yield hit an intraday high of 4.56%, but eventually closed -3.0bps lower at 4.45%. So the initial fears of the day ultimately didn’t materialise as US buyers stepped in, and at the front end, the 2yr yield fell -2.4bps to 3.98%. Overnight, yields are moving less than a basis point across the curve.

Similarly to the rates move, the S&P 500 rallied from more than -1% down at the open to +0.09% by the close, marking its sixth consecutive gain. Defensive sectors including healthcare (+0.96%) and consumer staples (+0.42%) posted the strongest advances. By contrast, tech stocks didn't fully recover, with the Magnificent 7 down -0.25% after its best weekly performance in over two years. The small cap Russell 2000 (-0.42%) also lost ground. And reflecting the pick up in volatility, the VIX index rose (+0.90pts) rose from Friday’s seven-week low to 18.14pts.

Whilst the US fiscal news dominated attention, in the geopolitical space we had President Trump holding a call with President Putin, but this delivered little new on resolving the war in Ukraine. Trump posted following the call that Ukraine and Russia would “immediately start negotiations”. However, Trump’s comments did not repeat earlier threats of new sanctions against Russia or put immediate pressure on Moscow to deliver a ceasefire and his post suggested that the US might now take more of a backseat in the talks. Meanwhile, Putin was rather vague on the upcoming talks, again referring to the “need to eliminate the root causes of this crisis.”

Otherwise yesterday, several Fed officials signalled they weren’t in a hurry to cut rates. For instance, Vice Chair Jefferson said “I believe that it is appropriate that we wait and see how the policies evolve over time and their impact”. Similarly, Atlanta Fed President Bostic said “I think we’ll have to wait three to six months to start to see where this settles out” and reiterated his expectation of only one more rate cut this year. Meanwhile, New York Fed President Williams said “It’s not going to be that in June we’re going to understand what’s happening here, or in July”. And Minneapolis Fed President Kashkari noted “It’s really just wait and see until we get more information.” So it was little surprise that investors continue to see a near-term rate cut as unlikely, with only a 35% chance of a cut priced by the July meeting.

Earlier in Europe, markets had put in a much steadier performance, with the STOXX 600 (+0.13%) just about posting a small gain. That was echoed on the rates side too, where yields on 10yr bunds (-0.2bps), OATs (-0.4bps) and BTPs (+0.1bps) all saw little change. In the meantime, the UK and the EU also reached an agreement that deepened ties between the two after Brexit. Among others, the UK agreed an extension of EU fishing rights, in return for the removal of most border checks on farm exports. That came alongside a defence and security agreement, along with a potential youth mobility scheme, although the latter will be subject to further discussion. Our UK economists looked at the deal yesterday (link here), and their estimates show the long-run benefits to be around 0.5% of GDP by 2040.

For those of us in the UK fed up by not being able to use e-gates in the EU the deal only refers to the "potential use of eGates where appropriate". I've been in so many long queues in the last couple of years when eGates have been empty.
In Asia risk sentiment has been helped after China’s central bank announced cuts to key lending rates for the first time since October reinforcing expectations of looser monetary policy to support the country’s economy (more below). Across the region, the Hang Seng (+1.29%) is leading gains while the CSI (+0.62%) and the Shanghai Composite (+0.38%) are also edging higher. Elsewhere, the Nikkei (+0.26%), the S&P/ASX 200 (+0.54%) are gaining but with the KOSPI (+0.05%) slipping back towards flat. S&P 500 (-0.29%) and NASDAQ 100 (-0.43%) futures are giving back some of yesterday's recovery from the lows.

Coming back to China, the PBOC cut the 1-year loan prime rate (LPR), the reference rate for pricing all new loans and outstanding floating rate loans, to 3.0% from 3.1% and the 5-year LPR to 3.5% from 3.6%. Meanwhile the RBA have just cut rates 25bps (as expected) as I finish this off with the presser ongoing. So far it leans dovishly.

To the day ahead now, and data releases include Canada’s CPI and German PPI for April, along with the European Commission’s preliminary consumer confidence indicator for May for the Euro Area. From central banks, we’ll hear from the Fed’s Bostic, Barkin, Collins, Musalem, Kugler, Hammack and Daly, the ECB’s Wunsch, Knot and Cipollone, and the BoE’s Pill. Finally, earnings releases include Home Depot.

New customs data from China shows that smartphone shipments to the U.S. collapsed 72% in April to below $700 million—the lowest level since 2011. The plunge coincided with the peak of the U.S.-China trade war, as the Trump administration imposed up to 145% tariffs on Chinese goods, disrupting tech supply chains. However, those levies have since been significantly scaled back to 30% as of May.

Using data from China's General Administration of Customs, Bloomberg reported that the 72% plunge in smartphone shipments to the U.S. far outpaced the 21% decline in overall exports to the U.S.

China's export data showed that handsets and laptops suffered the largest shipping declines in April.

April marked the peak of the trade war, with President Trump imposing tariffs of up to 145% on Chinese goods and Beijing retaliating with 125% tariffs on U.S. products. By mid-May, trade tensions had eased, with U.S. tariffs on Chinese goods reduced to 30% and China's tariffs on U.S. goods lowered to 10%.

However, the so-called "breakthrough" trade deal between the U.S. and China last week has Goldman analyst Philip Sun forecasting a surge in imports for U.S. ports. This has abruptly reversed the "empty ports" and "empty shelves" narratives; now, U.S. importers expect to pull forward.

Goldman's Sun explained: "China's exports will be RED HOT in the next 90 days. Frontrunning would be the keyword."

Meanwhile, Apple accelerated a shift of iPhone production to India in anticipation of the trade war. 

Last week, President Trump, on his Gulf States tour, publicly called out Apple CEO Tim Cook for the massive expansion of iPhone production in India. Trump said after his conversation about 'Made in America', the CEO would be "upping their production in the United States." 

Wedbush Securities recently estimated that a fully American-made iPhone could cost as much as $3,500, compared to the current average price of around $1,000. There are reports the next model could see the first price hike since the 2017 debut of the iPhone X.

Next lineup of iPhone...

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