Fed to release stress test results

EU mid-market update: Risk appetite finds more tailwinds as trade concerns ease; Nike turnaround helps European sports retailers; Fed to release stress test results.

Notes/observations

- Easing concerns over the global trade war as U.S.-China deal moves forward; China Commerce Ministry (MOFCOM) confirmed framework details based on Geneva/London consensus and said that US to cancel restrictive measures against China.

- Israel-Iran conflict continues to hold but the situation remains uncertain; Iran's Foreign Minister Araghchi said overnight there is no agreement for resuming nuclear talks.

- Federal Reserve set to announce its 2025 stress-test results for 22 major U.S. banks around 16:30ET (20:30 GMT) today; Because this year’s “severely adverse” scenario is milder than 2024—featuring a 10 % unemployment peak and smaller declines in house and commercial-real-estate prices—analysts widely expect every bank to clear the hurdle.

- Nike expects Q1 FY26 revenue to dip mid-single digits and gross margin to compress 350-425 bps—roughly a $1 B tariff hit, classic-shoe clearance and a pivot to full-price digital weighing hardest in H1. To claw back margin and reignite growth, it is shifting supply chains, plans raising select prices, realigning into “sport-offense” teams and leaning on a strengthening product pipeline plus rising wholesale demand.

- Tokyo Electron’s CEO told that the company’s semiconductor-equipment technology edge over Chinese rivals is not only intact but poised to widen, even as Beijing pours billions of dollars into its own chip-tool makers. Comments followed press reports that DeepSeek progress has been stalled by US export controls, which may delay China's adoption of DeepSeek's next model, R2.

Asia

- Japan Jun Tokyo CPI Y/Y: 3.1% v 3.3%e; CPI Ex-Fresh Food Y/Y: 3.1% v 3.3%e.

- Japan May Retail Sales M/M: -0.2% v +0.3%e; Y/Y: 2.2% v 2.5%e.

- Japan May Jobless Rate: 2.5% v 2.5%e.

- China May Industrial Profits Y/Y: -9.1% v +3.0% prior (lowest since Oct 2024).

- New Zealand Jun ANZ Consumer Confidence Index: 98.8 v 92.9 prior.

Europe

- BOE said to be facing growing calls to scale back its bond-selling program as it risks pushing up borrowing costs further thus putting pressure on a weakening UK economy.

Americas

- US Treasury Sec Bessent asked Congress to remove Section 899 from tax bill after G7 deal. OECD Pillar 2 taxes would not apply to US companies.

- Fed's Kashkari (non-voter) noted that needed to go slow until we know what is happening with tariff-related inflation.

- Fed's Collins (voter): July probably too early for rate cut; Baseline outcome is to resume cutting later this year.

- Fed's Barr (voter): Tariffs to put upward pressure on inflation; Reiterates monetary policy well positioned.

- Mexico Central Bank (Banxico) cut Overnight Rate by 50bps to 8.00% (as expected) for its 8th straight cut under the current phase of its easing cycle. Decision to cut by 50bps was not unanimous and Statement removed guidance on magnitude of next rate cuts. To take all factors of inflation into account.

Trade

- EU said to consider lowering tariffs on US imports to entice Pres Trump.

- US Commerce Sec Lutnick stated that would announce a 'bunch' of trade deals in the next week or so; Had become optimistic about a European deal; Confirmed some details of China deal.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.90% at 542.34, FTSE +0.52% at 8,780.88, DAX +0.89% at 23,841.36, CAC-40 +1.30% at 7,655.73, IBEX-35 +0.53% at 13,893.20, FTSE MIB +0.15% at 39,412.00, SMI +0.90% at 11,991.61, S&P 500 Futures +0.27%].

Market focal points/key themes: European indices open higher across the board and remained upbeat through the early part of the session; progress on trade negotiations seen supporting risk appetite; among sectors leading the way higher are industrials can communication services; lagging sectors include utilities and real estate; reportedly Unilever to acquire Dr Squatch; RTL to buy Sky Deutschland; Azko Nobel to sell stake in its India unit to JSW; reportedly Centrica to take a stake in Sizewell C nuclear project; focus on the release of US PCE price index later in the day; no major events expected in the upcoming Americas session.

Equities

- Consumer discretionary: JD Sports Fashion [JD.UK] +6.0%, Adidas [ADS.DE] +4.0%, Puma [PUM.DE] +5.5% (Nike results and guidance), Kering [KER.FR] +4.0% (EU said to consider lowering tariffs on US imports to entice Pres Trump - WSJ), RTL Group [RTL.BE] +12.0% (acquisition).

- Healthcare: Novo Nordisk [NOVOB.DK] +2.5% (collaboration with WeightWatchers), UCB [UCB.BE] +2.0% (trial data) - Industrials: Knorr-Bremse [KBX.DE] -5.5% (analyst downgrade).

-Materials: Akzo Nobel [AKZA.NL] +1.5% (divestment).

Speakers

- ECB's Knot (Netherlands): ECB might well need to keep rates on hold for some time, but can't exclude another rate cut.

- ECB de Guindos (Spain) stated that ECB was on track to achieve the 2% inflation target.

- German minimum wage commission to rise hourly minimum wage from €12.82 to €14.60 by 2027 in two set.

- China issued statement on trade framework with US which confirmed framework details on Geneva consensus; US to cancel restrictive measures against China. Would review eligible application of export control items and approve qualified applications for goods of export control.

- China Foreign Min Wang Yi to visit Europe during Jun 30 thru July 6th for high level strategic dialogue.

Currencies/fixed income

- USD remained on soft footing hampered by slowing US economic growth and near 3-year lows against a basket of currencies. Greenback was already wobbling after reports circulated on Thurs that President Trump was considering selecting a replacement for Fed Chair Powell early.

- EUR/USD hovering around the 1.17 area during the session and appeared to be within a new 1.15-1.20 trading range. Various EU inflation data showing that CPI was not a threat at this time to stay above the ECB target. Various ECB officials believing that its target will be achieved.

- GBP/USD in the mid-1.37 neighborhood with focus on upcoming monthly GDP data next week.

- USD/JPY at 144.35 as BOJ concedes the challenges of both resetting inflation expectations and trying to precisely measure underlying inflation.

- 10-year German Bund yield at 2.58% and 10-year Gilt yield at 4.48%. 10-year Treasury yield: 4.27%.

Economic data

- (NL) Netherlands Jun Producer Confidence: -5.0 v -3.9 prior.

- (FI) Finland Jun Consumer Confidence: -8.6 v -8.4 prior; Business Confidence: -9 v -11 prior.

- (SE) Sweden May PPI M/M: -0.5% v -1.6% prior; Y/Y: -2.8% v -2.4% prior.

- (NO) Norway May Retail Sales (w/auto fuel) M/M: 0.0% v 0.6% prior.

- (NO) Norway Jun Unemployment Rate: 2.0% v 2.0% prior; Unemployment Rate (seasonally adj): % v 2.1% prior.

- (FI) Finland Apr Final Trade Balance: -€0.1B v -€0.1B prelim.

- (DK) Denmark May Retail Sales M/M: 1.0% v 0.5% prior; Y/Y: 4.0% v 4.7% prior.

- (HU) Hungary May Unemployment Rate: 4.3% v 4.4%e.

- (FR) France Jun Preliminary CPI M/M: 0.3% v 0.1%e; Y/Y: 0.9% v 0.8%e.

- (FR) France Jun Preliminary CPI EU Harmonized M/M: 0.4% v 0.2%e; Y/Y: 0.8% v 0.7%e.

- (FR) France May PPI M/M: -0.8% v -4.2% prior; Y/Y: +0.2% v -0.7% prior.

- (FR) France May Consumer Spending M/M: 0.2% v 0.1%e; Y/Y: -0.5% v +0.2% prior.

- (ES) Spain Jun Preliminary CPI M/M: 0.6% v 0.4%e; Y/Y: 2.2% v 2.1%e; CPI Core Y/Y: 2.2% v 2.2%e.

- (ES) Spain Jun Preliminary CPI EU Harmonized M/M: 0.6% v 0.6%e; Y/Y: 2.2% v 2.2%e.

- (ES) Spain May Adjusted Retail Sales Y/Y: 4.8% v 4.20e; Retail Sales (unadj) Y/Y: 5.0% v 3.7% prior.

- (CZ) Czech Q1 Final GDP Q/Q: 0.7% v 0.8% prelim; Y/Y: 2.4% v 2.2% prelim.

- (TR) Turkey Jun Economic Confidence: 96.7 v 96.7 prior.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 81.6K v 100.8K tons prior.

- (TH) Thailand May Foreign Reserves w/e June 20th: $258.4B v $259.9B prior.

- (IT) Italy Jun Consumer Confidence: 96.1 v 97.0e; Manufacturing Confidence: 87.3 v 87.0e; Economic Sentiment: 93.9 v 93.1 prior.

- (RU) Russia Narrow Money Supply w/e Jun 20th (RUB): 18.33T v 18.29T prior.

- (TW) Taiwan May Monitoring Leading Indicator: 31 v 33 prior.

- (PT) Portugal Jun Consumer Confidence: -17.6 v -18.2 prior; Economic Climate Indicator: 2.6 v 2.3 prior.

- (EU) Euro Zone Jun Economic Confidence: 94.0 v 94.8e; Industrial Confidence: -12.0 v -10.0e; Services Confidence: 2.9 v 1.6e; Consumer Confidence (final): -15.3 v -15.3 advance.

- (IT) Italy Apr Industrial Sales M/M: +1.5% v -1.6% prior; Y/Y: +1.1% v -1.2% prior.

- (IS) Iceland Jun CPI M/M: 0.8% v 0.2% prior; Y/Y: 4.2% v 3.8% prior.

Fixed income issuance

- (IN) India sold total INR360B vs. INR360B indicated in 2028 and 2035 bonds.

- (IT) Italy Debt Agency (Tesoro) sold total €6.5B vs. €5.5-6.5B indicated range in 5-year and 10-year BTP bonds.

- Sold €1.5B vs. €1.25-1.5B indicated range in 2.7% Oct 2030 BTP bonds; Avg Yield: 2.74%; Bid-to-cover: 1.80x (syndicated on Jun 4th 2025).

- Sold €1.5B vs. €1.25-1.5B indicated range in 2.95% July 2030 BTP bonds; Avg Yield: 2.68% v 2.73% prior; Bid-to-cover: 1.79x v 1.52x prior.

- Sold €3.5B vs. €3.0-3.5B indicated range in 3.60% Oct 2035 BTP bonds; Avg Yield: 3.48% v 3.57% prior; bid-to-cover: 1.51x v 1.52x prior.

- (IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated range in 2034 Floating Rate Notes (CCTeu); Real Yield: 3.16% v 3.28% prior; bid-to-cover 1.56x v 1.52x prior.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (BE) Belgium Jun CPI M/M: No est v -0.2% prior; Y/Y: No est v 2.0% prior.

- 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2031, 2038 and 2050 Bonds.

- 06:00 (UK) DMO to sell £5.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.5B and £3.0B respectively).

- 06:00 (IT) Italy May PPI M/M: No est v -3.0% prior; Y/Y: No est v 3.8% prior.

- 06:30 (IN) India May Industrial Production Y/Y: No est v 2.7% prior.

- 07:00 (BR) Brazil Jun FGV Inflation IGPM M/M: -1.0%e v -0.5% prior; Y/Y: 5.2%e v 7.0% prior.

- 07:00 (FI) ECB’s Rehn (Finland).

- 07:30 (BR) Brazil May Total Outstanding Loans: No est v 6.597T prior; M/M: No est v 0.7% prior; Personal Loan Default Rate: No est v 5.9% prior.

- 07:30 (IN) India Forex Reserve w/e June 20th: No est v $690.0B prior.

- 07:30 (US) Fed’s Williams.

- 08:00 (BR) Brazil May National Unemployment Rate: No est v 6.6% prior.

- 08:00 (MX) Mexico May Unemployment Rate: 2.6%e v 2.5% prior; Unemployment Rate (seasonally adj): No est v 2.6% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (FI) ECB’s Rehn (Finland).

- 08:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming issuance (if any).

- 08:00 (IN) India announces upcoming bill issuance (held on Wed).

- 08:30 (US) May Personal Income: 0.3%e v 0.8% prior; Personal Spending: 0.1%e v 0.2% prior; Real Personal Spending (PCE): 0.0%e v 0.1% prior.

- 08:30 (US) May PCE Price Index M/M: 0.1%e v 0.1% prior; Y/Y: 2.3%e v 2.1% prior.

- 08:30 (US) May Core PCE Price Index M/M: 0.1%e v 0.1% prior; Y/Y: 2.6%e v 2.5% prior.

- 08:30 (CA) Canada Apr GDP M/M: 0.0%e v 0.1% prior; Y/Y: 1.3%e v 1.7% prior.

- 09:15 (US) Fed’s Hammack.

- 10:00 (US) Jun Final University of Michigan Confidence: 63.2e v 60.5 prelim.

- 11:00 (US) Jun Kansas City Fed Services Activity: No est v 11 prior.

- 11:00 (CO) Colombia May National Unemployment Rate: No est v 8.8% prior; Urban Unemployment Rate: 8.9%e v 8.7% prior.

- 11:00 (EU) Potential sovereign ratings after European close.

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 14:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to leave Lending Rate unchanged at 9.25%.