Newsquawk Rundown, Daily Podcast

US Market Open: Brent pulls back from $112/bbl as Trump warns Iran, USTs hit fresh contract low, Equites lower

* US President Trump warned that the clock is ticking for Iran, though he declined to give a specific deadline. Situation room meeting due Tuesday. * Pakistan shared a revised Iranian proposal to end the war with the US on Sunday night, according to Pakistani sources. * European bourses broadly in the red, but off lows as reports tout a sharing of US-Iran proposals. * DXY reverses earlier gains, GBP helped by technicals & JPY lags on budget fears. * Fixed income benchmarks rebound, in synchrony with energy downside.  * Crude futures lifted following punchy Trump rhetoric, gold/silver supported by tighter Indian import restrictions. * Looking ahead, highlights include US NAHB Housing Market Index (May), Canadian Victoria Day holiday, Supply from the EU. [https://newsquawk.com/uploads/ckeditor_wave/ck_images/7a5663dd-ffef-4e86-9f9a-78f175a2d99c.jpg] IRAN CONFLICT * US President Trump warned on Truth Social that the clock is ticking for Iran and that they better get moving fast, or there won’t be anything left for them, and that time is of the essence. * US President Trump declined to give a specific deadline for negotiations with Iran and will hold a Situation Room meeting with his national security team on Tuesday to discuss possible options for military action, while he spoke with Israeli PM Netanyahu about the situation in Iran, according to Axios. Trump also stated that he still thinks Iran wants a deal and he is waiting for an updated Iranian proposal, which he hopes will be better than the prior offer. Furthermore, Axios’s Ravid reported that Trump threatened that attacks would resume with greater intensity if the Iranian regime does not come up with a better proposal, while Channel 12’s Kraus posted that President Trump said in a phone call that he thinks the Iranians should be afraid of what’s going on right now. * Pakistan shared revised Iranian proposal to end the war with the US on Sunday night, according to Pakistani sources. The course added that "we don't have much time", adding that both countries "keep changing their goalposts". * Western sources say the new Iranian proposal includes a commitment of unclear value not to produce nuclear weapons but no mention of uranium or Hormuz, according to Journalist Segal. * Iranian Foreign Ministry Spokesperson Baghaei said talks with the US continue through Pakistani mediation. The spokesperson added that they have made great efforts for safe movement and protection of the Strait of Hormuz and are in constant contact with Oman to develop a mechanism. On Uranium, Baghaei said Tehran does not need any party to recognize its right to uranium enrichment and will not discuss during negotiations with the US. * Iranian Defence Ministry spokesman Brigadier General Reza Talaei-Nik warned of a regretful response to enemies and said that Iranian armed forces are fully prepared to confront any potential attack by the US and Israeli regime, according to IRNA. * Iranian Major General Rezaei said Iran is serious about diplomacy and negotiations, but is more serious about dealing with the aggressor, while he added that the US must now prove its good intentions and that Iranian armed forces are on the trigger as diplomatic efforts continue. * Iran said transit through the Strait of Hormuz would flow again once its conflict with the US and Israel is over, although the sides remain far from resolving their differences, according to Bloomberg. In relevant news, three cargo-empty, US-sanctioned tankers reportedly slipped through the US naval blockade in recent days, according to TankerTrackers.com [http://tankertrackers.com/]. * Israel said it carried out a Gaza strike targeting the de facto head of Hamas's armed wing, while Israel also conducted an airstrike on the towns of Froun, Kfar Hounah and Zawtar al-Sharqiya in southern Lebanon. Furthermore, an Israeli air strike targeted Baalbek, Lebanon and killed an Islamic Jihad commander and his daughter. * UAE officials said a drone attack set off a fire near the UAE’s nuclear power station, while it was still investigating the source of the attack. * Saudi Defence Ministry said it intercepted three drones launched from Iraq after entering the kingdom’s airspace. EUROPEAN TRADE EQUITIES * European bourses (STOXX 600 -0.2%) opened entirely in the red this morning, given the lack of US-Iran progress, and further punchy rhetoric from President Trump. Over the weekend, he stated that the clock is ticking for Iran, though he declined to give a specific deadline. Since then, bourses have clambered off lows amidst positive geopolitical updates; notably, Iran’s Baghaei suggesting that talks with the US continue through Pakistani mediation. Moreover, Pakistani sources suggested that Pakistan shared a revised Iranian proposal to end the war with the US on Sunday night. * European sectors opened with a clear negative bias, but this picture is now a little more mixed. Energy takes pole position, benefiting from higher underlying crude prices; Media and Utilities complete the top three. At the bottom of the pile reside cyclical sectors, such as Autos and Travel & Leisure. The latter has been pressured by post-earning losses in Ryanair after reporting in-line metrics, but warned that flat fares may put pressure on profits. * US equity futures (ES -0.3% NQ -0.1% RTY -0.3%) are entirely in the red, albeit modestly so. In terms of key stories this morning, Samsung Electronics (+4% in Korean trade) moved higher after reporting that Samsung and the union held talks to avert a strike; elsewhere, a South Korean court granted the company an injunction that could limit the scope of the planned strike. Elsewhere, Reuters reported that Tesla (-0.8% pre-market) raised US prices for its Model Y car, but did not provide a reason. * Click for the sessions European pre-market equity newsflow [https://www.newsquawk.com/headlines/newsquawk-daily-european-equity-opening-news-18th-may-2026-18-05-2026] * Click for the additional news [https://www.newsquawk.com/headlines/additional-european-equity-news-18-05-2026] FX * FX shows a risk-on bias with high-beta outperforming and DXY in the red. * DXY firmed at the Asia reopen and rose to a 99.40 peak as participants digested US President Trump’s remarks over the weekend, “the clock is ticking for Iran.” However, with Brent crude falling from its USD 112/bbl peak (curr. 110/bbl), the index now trades modestly in the red, a touch above 99.00 where its 50 DMA lies. Nothing notable scheduled today, though the rest of the week sees weekly ADP jobs on Tuesday, FOMC Minutes + NVIDIA earnings Wednesday, Jobless Claims and PMIs Thursday and UoM on Friday. * GBP is one of the best G10 performers, likely a factor of technical factors than political reprieve with newsflow light heading into the likely June 18th by-election. EUR/GBP reversed from 0.8730, and Cable bounced from 1.33. On domestic politics, PM potential candidates Streeting and Burnham were on the wires talking up the importance of rejoining the EU. On the Fiscal/Consumer front, the Times reported Chancellor Reeves has plans to retain the cut on fuel duty from September amid fuel price concerns, while separately drawing up plans for a targeted intervention on energy bills - both potentially factors helping the Pound today. The week ahead sees Jobs on Tuesday, CPI on Wednesday and PSNB on Friday, the former which ING says is expected to be mild because of base effects. * JPY is the only G10 currency that trades lower against the buck amid: a) a weak 5yr JGB auction, b) reports that the Japanese government is to start compiling a supplementary budget, c) lack of Iran progress, and d) surging energy prices. (See Fixed Income 09:35 BST for more). USD/JPY +0.1%, up a touch despite earlier gains which were capped by the 159 mark. FIXED INCOME * A bearish start to the week as US President Trump's escalatory language on Iran and the associated energy move, with Brent peaking at USD 112/bbl overnight. * Amidst this, fixed benchmarks spent the APAC session in the red. Note, JGBs derived pressure from this alongside a weak 5yr outing and reports around the compiling of a supplementary Japanese budget, see 09:35 BST for more details. * USTs hit a 108-30 trough, a fresh contract low, in the early hours. Since, and particularly after remarks from the Iranian Foreign Ministry spokesperson, energy benchmarks have eased off, which has allowed fixed to lift, taking USTs to a 109-08 high with gains of one tick on the session. Today's US docket is quiet, but the week is busy with Nvidia due before the FOMC Minutes and a 20yr auction. From the Minutes, the last with Powell as Chair, BofA expects the account to "reinforce the Fed's recent hawkish tone", showing that Warsh will inherit a Fed with "little appetite to cut". * Bunds in-fitting with the above, hit a 123.74 base, which is also a new contract low. Given the discussed energy moves, the benchmark has pared much of its 53 ticks of downside and is now lower by a more modest c. 15 ticks, just off a 124.20 peak. Newsflow has been relatively limited, we had remarks from but no move to ECB's Lagarde, who essentially noted that she is watching the yield space. On yields, the German 10yr hit a 3.19% peak overnight, a new high for the year and the highest since 2011's 3.49% best. Furthermore, the energy moves continue to be reflected in near-term policy expectations, with 21bps of ECB tightening implied for June and 75bps by end-2026. * Gilts opened near-enough flat, as the bearish leads from overnight had already begun to moderate, in addition to the lack of significant weekend development on the fate of PM Starmer. Furthermore, the complex is perhaps deriving some support from a revival of coverage that contenders Burnham and Streeting would like to rejoin the EU at some point; albeit, Burnham did somewhat distance himself from this over the weekend, concerning the upcoming by-election campaigning at least. As it stands, Gilts are holding at highs of 85.53 with gains of c. 25 ticks. A bounce from the 84.96 base this morning, another contract low. * Japan sells JPY 1.9tln 5yr JGBs; b/c 3.22x (prev. 3.58x), average yield 2.024% (prev. 1.826%), Lowest accepted price 99.85 (prev. 99.84), Weighted average price 99.89 (prev. 99.88), Tail in price 0.05 (prev. 0.04). COMMODITIES * Crude futures surged at the start of Asia-Pac trade, with WTI making a new contract high of USD 104.37/bbl while Brent peaked at USD 112.00/bbl. Punchy rhetoric over the weekend by US President Trump, warning Iran that the “clock is ticking” and that “they better get moving, fast, or there won’t be anything left of them" initially spurred the upside in energy prices. However, benchmarks have pulled back as European trade gets underway, with WTI and Brent now trading at the lower end of its USD 101.59-104.37/bbl and USD 109.56-112/bbl range, respectively. More recently, according to Pakistani sources, Pakistan shared a revised Iranian proposal to end the war with the US on Sunday night. * Spot gold briefly dipped below USD 4,500/oz amid higher energy prices as trade got underway but has since regained the handle and currently trading at the upper end of its USD 4481-4560/oz range. Jewellers in India have reported higher demand for the yellow metal, ahead of the wedding season, after Indian authorities hiked gold import tariffs and then later curbed the amount of gold that can be imported. Silver has also faced restrictions with tightening rules for imports, describing imports as now “restricted” rather than “free”. Spot silver is currently in a USD 73.71-76.76/oz range, consolidating following Friday’s selloff. * 3M LME Copper has started Monday’s trade on the backfoot, slipping back below USD 13.5k/t and falling closer towards last week’s trough of USD 13.4k/t. China’s growth slowed in April, with investment contracting while retail sales printed essentially flat Y/Y. TRADE/TARIFFS * USTR Greer said President Trump will be presented with options for action on China if US investigations determine that industrial overcapacity is influencing Chinese exports. * White House released a Fact Sheet on Sunday following last week’s Trump-Xi summit, which stated that China will purchase at least USD 17bln in US agricultural products annually for 2026, 2027 and 2028. * EU is drawing up plans to force European companies to purchase critical components from at least three different suppliers, in an effort to lower the bloc’s reliance on China, according to FT. * France wants Stellantis (STLAM IM/STLAP FP) and Renault (RNO FP) to favour local parts suppliers to protect jobs and keep know-how in the region as Europe’s automakers deepen ties with manufacturers from China. * China flagged that Australian beef imports are approaching the safeguard threshold and are at the 80% of the annual quota, which caps imports at current tariff rates, while additional imports would be subject to 55% tariffs on top of existing tariffs three days after shipments reach 100% of the quota. NOTABLE EUROPEAN HEADLINES * UK PM Starmer has decided not to announce a departure timetable unless and until Andy Burnham wins the Makerfield by-election, ITV's Peston reported. * UK Deputy PM Lammy said PM Starmer will not be announcing a timetable for departure, speaking to Sky News. * UK PM Starmer was reportedly mulling whether he would bring more government stability by announcing a timetable for his departure and a leadership election, according to ITV. * Former UK Health Secretary Streeting vowed to stand in any Labour Party leadership contest to oust UK PM Starmer. In relevant news, Streeting said he would battle Manchester Mayor Burnham for the Labour leadership and called for the UK to rejoin the EU, while Burnham played down rejoining the EU. * UK Chancellor Reeves is reportedly to lay out more details in the week ahead regarding proposals to ease bank regulations that were imposed to prevent a repeat of the 2008 GFC. * Fitch affirmed Germany's sovereign rating at AAA; Outlook Stable, while DBRS maintained Portugal at A (high), Outlook Raised to Positive. NOTABLE EUROPEAN DATA RECAP * UK Rightmove House Prices MM (May) 1.2% (Prev. 0.8%). * UK Rightmove House Prices YY (May) -0.3% (Prev. -0.9%). * Swiss GDP Growth Rate QoQ Flash (Q1) Q/Q 0.5% (Prev. 0.2%). CENTRAL BANKS * BoE's Greene said some of the global economic resilience to the Iran war is due to inventories while second round effects of the energy price shock will not show up for another year. Should not be looking through negative supply shocks. * BoE's Breeden said the central bank should not be ‘trigger happy’ on rates, while she warned of a hit to business from political uncertainty, according to FT. NOTABLE US HEADLINES * US President Trump told Fortune he thinks US could sell Intel (INTC) shares slowly over time without tanking the stock market. He added that "Intel should be the biggest company in the world right now... If I had been president when all these companies started sending their chips in from China, I would have put a tariff on that would have protected Intel." * Over 60 allies of US President Trump have urged him to test and approve the most powerful AI models before its released, Axios reported citing sources. GEOPOLITICS RUSSIA-UKRAINE * Ukraine upped the pressure on Russia with the biggest strike on Moscow in over a year involving dozens of drones on Sunday, according to WSJ. * Russian drones hit Odessa and damaged residential homes, according to Interfax. * Ukrainian manufacturers and officials warned the EU’s plan to slash steel imports would hurt Ukraine. OTHER * Intelligence claimed that Cuba has acquired more than 300 military drones and recently began discussing plans to use them to attack the US base at Guantanamo Bay, US military vessels and possibly Key West, Florida, according to Axios, which added that the intelligence could become a pretext for US military action and shows the degree to which the Trump administration sees Cuba as a threat. * Taiwan’s President Lai said on Sunday that Taiwan will never be sacrificed or traded, after US President Trump recently described a planned USD 14bln arms sale to Taipei as a bargaining chip with China. CRYPTO * Bitcoin continued to pull back and slipped back below USD 77k. APAC TRADE * APAC stocks were mostly in the red after last Friday's losses on Wall St, and with risk sentiment sapped as oil prices and yields extended higher after US President Trump warned the clock was ticking on Iran, heading into a meeting on Tuesday with his national security team to discuss possible options for military action, while participants in the region also digest disappointing Chinese activity data. * ASX 200 was dragged lower amid losses across nearly all sectors aside from energy, and with sentiment not helped by disappointing data from Australia's largest trading partner. * Nikkei 225 resumed its pullback from last week's record highs amid higher oil prices and the anticipation of the BoJ to resume rate normalisation next month. * KOSPI was volatile as the index initially suffered heavy losses and the Korea Exchange triggered a sidecar after KOSPI 200 futures dropped 5.0% with jitters seen as Samsung Electronics faces an 18-day strike involving nearly 45,000 of Samsung’s unionised workers starting on May 21st. The index then staged a firm rebound alongside Samsung shares after the union said it would engage in government-mediated pay talks, and a court was said to partially accept an injunction request against the union's planned strike, although the union later announced that it would proceed with the strike as planned. * Hang Seng and Shanghai Comp were pressured following the disappointing activity data in which Industrial Production, Retail Sales and Fixed Assets Ex-Rural Investment all missed forecasts, with the latter showing a surprise contraction, while the stats bureau noted the external situation is complex and that China's economic foundation still needs to be consolidated. NOTABLE ASIA-PAC HEADLINES * China State Council said it will leverage national venture capital guidance fund to increase support for entrepreneurship in tech innovation. * Chinese MIIT Minister Li Lecheng said China should upgrade “outdated” industries, and not scrap them, because manufacturing remains the backbone of the economy. * China’s State Administration for Market Regulation set 34 priorities for this year to support private sector growth, with a focus on fair competition, legal protections and efficient regulation. * China's stats bureau said the external situation is complex and China's economic foundation still needs to be consolidated, while it added that China is to continue to optimise supply and that the domestic supply-demand imbalance remains prominent. China's stats bureau said China will continue to expand the domestic demand and should implement more active fiscal policies and moderately loose monetary policies. Furthermore, it said the international situation remains grim and complicated as of April, and the world economic recovery is facing greater headwinds, as well as stated that the will and capacity of people to spend needs improving. * Japan is likely to issue fresh debt as part of funding for a planned extra budget to soften the blow from the Middle East conflict, according to sources cited by Reuters. A separate report confirmed that Japanese PM Takaichi was set to announce an extra Japan budget. However, conflicting comments by Japanese Finance Minister Katayama followed, stating that they are not yet at a stage to talk about the specifics of an extra budget. * Japanese Chief Cabinet Secretary Kihara said they are watching market moves with a high sense of urgency, including long-term rates. No comment on FX intervention. NOTABLE APAC DATA RECAP * Chinese Industrial Production YoY (Apr) Y/Y 4.1% (Prev. 5.7%). * Chinese Retail Sales YoY (Apr) Y/Y 0.2% vs Exp. 2.0% (Prev. 1.7%). * Chinese Fixed Asset Investment (YTD) YoY (Apr) Y/Y -1.6% vs. Exp. 1.7% (Prev. 1.7%). * Chinese House Price Index MoM (Apr) M/M -0.1% (Prev. -0.2%). * Chinese House Price Index YoY (Apr) Y/Y -3.5% (Prev. -3.4%).

US Market Open: Stocks hit as Yields/Energy firm on renewed fears of US-Iran conflict resumption

* US President Trump said it's just a question of time regarding Iran, but added that he is not going to be much more patient with Iran. * US President Trump said he made fantastic trade deals with China, and it was an incredible visit, while they've settled a lot of different problems, and the relationship is a very strong one. * Global equities hit, led by Tech and Basic Resources amid a number of factors: 1) Central bank repricing, 2) Tech sell-off driven by higher yields and strikes at Samsung Electronics, 3) Surging energy prices. * DXY bid amid higher energy, GBP knocked by the potential of a Burnham premiership. * Global yields jump amidst central bank repricing and higher energy prices. * Crude grinds higher heading into the weekend as Trump returns from China and refocuses on Iran. * Looking ahead, highlights include Canadian Wholesale Sales (Mar), US Industrial Production (Apr) and Credit Ratings Updates including Fitch on Germany, S&P on Italy, Morningstar DBRS on Portugal and the UK, Scope Ratings on Poland. [https://newsquawk.com/uploads/ckeditor_wave/ck_images/34bc3018-2ecf-49d3-a07a-8a850de5104a.jpg] EUROPEAN TRADE EQUITIES * European bourses (STOXX 600 -1.4%) are entirely in the red, with sentiment hit for a multitude of factors: 1) Central bank repricing, 2) Tech sell-off driven by higher yields and strikes at Samsung Electronics, 3) Surging energy prices. * European sectors confirm the negative bias, with only Health Care posting solid gains. Basic Resources and Tech sit at the bottom of the pile. Metal prices have slumped (XAU/USD -1.8%, XAG/USD -6%), as markets price in further rate hikes across the globe. In addition, South Korea’s KOSPI closed with losses of over 6%, adding to the pressure on silver prices as it highlights silver’s high-beta characteristics (as it stands, KOSPI-Silver correlation is c. +0.7). * US equity futures fall as the global risk tone sours, with bond markets selling off. The surge to ATHs across the US equity space has been on a rocky footing anyway, as the market breadth fails to confirm the bid higher. One point to note, a record 30 S&P 500 stocks hit one-year lows on Wednesday. * Click for the sessions European pre-market equity newsflow [https://www.newsquawk.com/headlines/newsquawk-daily-european-equity-opening-news-15th-may-2026-15-05-2026] * Click for the additional news [https://www.newsquawk.com/headlines/additional-european-equity-news-15-05-2026] FX * G10s showing a risk-off bias as the Buck in tandem with Crude prices. Antipodeans are the underperformers, while EUR and GBP also lag amid energy/political related headwinds. * DXY continues to perform well, vaulting 50,100 and 200 DMAs over the past two sessions amid a mix of hot US inflation data, resilient jobs data/retail sales and exponentially firm oil prices. The session ahead is absent of major data/speakers, and as such, the Greenback will likely be dictated by incoming geopolitical headlines. As a reminder, Warsh today officially takes the title of Fed Chair, while Powell becomes governor and Miran steps down. MUFG in its morning note said "This week has seen the rolling correlation between DXY and the 2-year US-DXY rates spread strengthen notably, which points to scope for US dollar strength to extend further if rate hike pricing momentum continues”. * Once again, the centre of attention continues to be UK political developments, as markets increasingly price in the possibility of a left-leaning Burnham premiership after he announced his running in an engineered Makerfield by-election. (See 07:35 BST analysis). Sterling has weakened since the announcement on Thursday evening, but losses are somewhat limited given the continued uncertainty about whether the Manchester Mayor would be able to 1) Succeed in winning the by-election, 2) Beat incumbent Starmer in a leadership challenge. Elsewhere, keep an eye on a potential announcement on a support package for bills next week, after Housing Secretary Steve Reed touted it this morning. GBP/USD fell to a 1.3328 low where it found support. FIXED INCOME * Global benchmarks are down, dragged lower early in the week as markets digested hotter-than-expected CPI/PPI, the prolonged Iran conflict (higher energy prices), with fears also exacerbated by the turmoil in the UK’s Labour Party. Markets remain on tenterhooks given the mentioned factors, and this has been reflected in market pricing across several major central banks. Traders now assign a 70% chance of a 25bps hike by year-end and fully priced in for July 2027. * USTs are currently down by 16+ ticks, and trading at the bottom end of a 109-16 to 109-29+ range. Attention over the past day has been on the Trump-Xi meeting, where initial commentary suggested positive developments; President Trump stated that many problems with China were “settled”. Focus now shifts from China, and back to Iran, where no progress has been made. Some reports have touted that Trump may look to immediately strike Iran after his China visit, to force Iran into a deal. If enacted, there is a risk that Iran chooses to restart strikes on US allies in the Middle East, leading to another spike in energy prices, hence filtering through into US yields. * Bunds follow the negative action seen across peers, and trade at the bottom end of a 124.58 to 125.03 range. Whilst yields are firmer across the curve today, levels remain within familiar levels; 10yr holds around 3.108% vs a near-term high of 3.133%. As it stands, the belly of the curve is outperforming; however, traders may soon begin to factor in weaker economic growth across the EZ, which may see medium-term yields begin turning lower. * Gilts underperform vs peers and are currently off by 137 ticks; holding at the bottom of an 85.44-85.85, a trough amongst the contract low. Ultimately, following peers, but the move also exacerbated by domestic politics. A full review is on the Newsquawk feed at 07:35 BST, but in brief: Labour MP for Makerfield announce he is willing to stand aside and spark a by-election, to allow current Greater Manchester Mayor Burnham to run and then, if successful, to challenge for the Labour leadership and, by association, the role of Prime Minister. For reference, Burnham was touted as the “least” market-friendly outcome by a recent FT fund manager survey. * Australia sells AUD 1bln 1.00% December 2030 bonds b/c 3.69, avg yield 4.7049%. COMMODITIES * Geopolitical risk has heightened as US President Trump returns from his trip to Beijing and refocuses on the Iran situation. As a reminder, reports yesterday via Axios suggested US President Trump's team is now discussing options for military escalation to break the deadlock. Axios added that US officials said Trump could make his next move immediately after his trip to China. Options reportedly include 1) resumption of "Project Freedom," with the Navy attempting to break the logjam in the Strait of Hormuz, 2) the launch of a new bombing campaign focusing on Iranian infrastructure. Meanwhile, Israeli officials cited by Axios said they'll be on high alert this weekend in case Trump decides to resume the war. * In terms of more recent updates, Trump warned it is “just a question of time” regarding Iran and said he will not be “much more patient” with Tehran, while reiterating that the US is monitoring Iran’s enriched uranium and could strike again if necessary, although he would prefer a diplomatic outcome. Trump added that he discussed Iran with Chinese President Xi and both sides agreed the war should end, with China later confirming the leaders reached new consensuses and calling for a comprehensive and lasting ceasefire alongside dialogue on Tehran’s nuclear programme. However, reports suggested that Washington informed Israel that Trump could still authorise fresh strikes inside Iran, while the Tehran Times reported the US formally rejected Iran’s 14-point proposal and maintained its hardline nuclear stance. * In the European morning, an uptick in crude and a leg lower in sentiment coincided with comments from Iranian Foreign Minister Araghchi, who noted contradictory messages from the US remain the main issue. On the supply side, it’s also worth noting that the UAE announces accelerated pipeline construction to bypass the Strait of Hormuz. Nonetheless, WTI Jul rose above USD 100/bbl to currently trade towards the top end of a USD 97.23-100.93/bbl range, while its Brent Jul counterpart resides at the upper end of a 106.26-109.68/bbl parameter. Dutch TTF front-month trades higher by just shy of 3% at the time of writing, north of EUR 49.MWh, vs an earlier low of around EUR 47.60/MWh. * Precious and base metals are softer across the board, given the energy-induced strength in the USD. Spot gold trades in a USD 4,532-4,665/oz, while Spot silver sees deep losses for a second straight session as it continues to recoil from a recent rally, with prices hitting a USD 77.66/oz low vs USD 83.88/oz intraday high, and after hitting a USD 89.37/oz peak on Wednesday. 3M LME copper continues to pull back from record levels, dipping under USD 14,000/t to trade in a current USD 13,586.00- 13,961.03/t range. * UAE is to complete the construction of a new West-East pipeline project in 2027, Bloomberg reported. The ADNOC Chairman later said they are reviewing progress on the new West-East Pipeline (c. 1.5mln BPD, when complete), set to double the co.'s export capacity via Fujairah. * Abu Dhabi backs USD 13bln US gas plant as Middle East supplies falter, according to FT. * Japan's METI met and confirmed that, at the next meeting, they will deepen consideration on the diversification of oil procurement sources and improve the domestic supply system and future oil reserves, Nikkei reported. TRADE/TARIFFS * US President Trump said they have gotten along well with Chinese President Xi and have a very good relationship with China, while he added Xi is a tremendous and strong leader, and that he would like to see US companies do more business in China. Trump said he spoke to Xi strongly about trade and intellectual property, as well as noted that China will open the country in stages and that it would be good for US companies. Furthermore, Trump said China is going to be buying a lot of farm products, as well as stated that he asked China about using Visa (V), and maybe the China Visa ban will come off. * Chinese President Xi said the US and China agreed to enhance talks on regional issues, Chinese State media reported. The two sides reached an important consensus and agreed to stabilise trade relations. * China's Foreign Ministry said US President Trump and Chinese President Xi reached a series of new consensuses, while it added that the war should not continue and that China is to contribute to Middle East peace. It also said a comprehensive and lasting ceasefire should be reached as soon as possible, and urged solving the Iranian nuclear issue through dialogue. * US President Trump posted that Chinese President Xi congratulated him on so many tremendous successes in such a short period of time, while Trump added that the US was in decline two years ago, but is now the hottest nation. * USTR Greer said they had a lot of successes in rebalancing trade with China and expect to see an agreement for double-digit billions of dollars of agricultural sales to China coming out of the summit. Greer said China is fulfilling its promises on soybean purchases and that China knows there is going to be a certain level of US tariffs on Chinese goods. Furthermore, he cannot commit to a given rate of tariff on Chinese goods and will release findings of trade investigations in weeks, while he stated purchases of NVIDIA H200 chips will be a sovereign decision by China, and that chip export controls were not a major topic in the meeting. NOTABLE EUROPEAN HEADLINES * UK Labour NEC decision on allowing Burnham to run in the Makerfield by-election is not as clear cut as many are reporting, according to GB News' Harwood. The vote is said to be on a "knife edge", sources say "everyone is wavering". * German Economic Ministry said current indicators suggest a significant slowdown in Q2 GDP growth. NOTABLE EUROPEAN DATA RECAP * Italian Inflation Rate YoY Final (Apr) Y/Y 2.7% vs. Exp. 2.8% (Prev. 1.7%). * Italian Inflation Rate MoM Final (Apr) M/M 1.1% vs. Exp. 1.2% (Prev. 0.5%). CENTRAL BANKS * Fed's Barr (voter) said smaller Fed balance sheets would likely increase Fed interventions and that reducing liquidity rules to shrink the Fed balance sheet is not a good idea. Barr stated that lowering the liquidity requirement would simply increase stability risks, and if anything, the liquidity requirement should go up, not down. Furthermore, he said they are not in a recession, but there's been little job creation, while he hasn't decided on what to do at the June FOMC meeting. * Fed's Williams (voter) said Fed independence delivers better economic outcomes, and it is not time to worry about Fed independence, with staff focused on the mission. Williams said the context matters for inflation given its persistence above target, while he is not surprised to see near-term inflation expectations rise and is seeing pretty stable longer-term inflation expectations. Williams noted there is a lot of uncertainty around energy price outlook and that the job market is not "hot" but also not slowing dramatically, while he added that monetary policy is mildly restrictive and he doesn't see any reason to hike or cut rates right now. NOTABLE US HEADLINES * BofA weekly flow data shows USD 20.5bln into stocks, USD 28.1bln into bonds, USD 5.8bln into cash, USD 2.0bln into gold and USD 1.3bln out of crypto. Bull & Bear Indicator rose to 7.6 (from 7.2). GEOPOLITICS MIDDLE EAST * US President Trump said it's just a question of time regarding Iran, while he also stated that current Iranian leaders are more reasonable and Iran has a lot of inner turmoil, but added that he is not going to be much more patient with Iran, according to a Fox News Interview. Trump also stated that Iran's enriched uranium could be entombed, but would rather get it, as well as stated that they have their eyes on Iran's enriched uranium and could bomb it again, but he would rather get it. Trump separately commented that he discussed Iran with Chinese President Xi, and they feel very similar about how they want to end the Iran war. * US has rejected Iran's 14-point proposal, Tehran Time reported citing sources. According to the information, the US government has responded to Iran's written proposal regarding the end of the war. * "Perhaps another of the Confidence Building Measures (CBM) between US and Iran is in the play", Pakistani Journalist Mallick posted. * Iranian Foreign Minister Araghchi said contradictory messages from the US remain the main issue. He added that there is no military solution, and thinks the US needs to understand that fact. They have tested us at least twice and have now concluded that there is no military solution. * Iranian Foreign Minister Araghchi said at the BRICS meeting that the US empire is in decline and Iran will never bow to pressure, according to Press TV. * Iranian Foreign Minister Araghchi said evidence shows that the UAE made American bases available for operations against Iran, provided its airspace and territory for those operations * Iranian Parliamentary Speaker Ghalibaf warned that US efforts at sustaining military escalation near the Strait of Hormuz could trigger a fresh global financial crisis at a time when US national debt already stands at a whopping USD 39tln. * Iran's Ambassador to Belarus criticised the US negotiation stance and said US President Trump's excessive ambitions hinder US-Iran talks, according to TASS. * UAE attempted to get Saudi Arabia and Qatar to coordinate on a military response to Iran's airstrikes, Bloomberg reported citing sources. * Qatar's Foreign Ministry told Al Arabiya it had shot down several Iranian drones near its airspace, while it stressed the need to open the Strait of Hormuz in its contacts with the Islamic Republic. * Israel has commenced strikes on Hezbollah in the Tyre region of Lebanon. * Israeli army detected rocket launches from Lebanon towards Israeli territory, while Israeli artillery shelling was reported on the town of Nabatieh al-Fawqa in southern Lebanon. RUSSIA-UKRAINE * Commander of Ukrainian drone forces said drones struck Russian oil refinery in the Ryazan region. OTHER * US Secretary of State Rubio said China's preference is probably to get Taiwan willingly and that there will be some agricultural purchases from China, while Rubio hoped to get a positive response from China regarding the case of Jimmy Lai and others. * CIA Director delivered a message from US President Trump that the US is prepared to engage on economic and security issues if Cuba makes fundamental changes, according to a CIA official. CRYPTO * Bitcoin pulled back below USD 81k amid sour risk tone. APAC TRADE * APAC stocks were mostly subdued after failing to sustain the early momentum that was spurred by the gains on Wall St, where tech outperformed, and sentiment was underpinned amid constructive headlines from the Trump-Xi summit, while the souring of risk sentiment coincided with higher oil prices and yields amid risk that the geopolitical situation in Iran could escalate when US President Trump returns from Beijing. * ASX 200 lacked direction as strength in tech and financials was offset by losses in mining, materials, resources and utilities. * Nikkei 225 swung between gains and losses but ultimately continued its pullback from the recent peak amid oil-related headwinds and after hot PPI data further supported the case for a rate hike at next month's BoJ meeting. * Hang Seng and Shanghai Comp were mixed despite the recent constructive headlines from the Trump-Xi summit, while the leaders are meeting again today in a restricted working lunch session prior to US President Trump's return to the US. Furthermore, sentiment was not helped by recent disappointing lending and aggregate financing data from China for April, which showed a surprise contraction in loans. NOTABLE ASIA-PAC HEADLINES * Japan's Minister for Economy, Trade and Industry Akazawa said they can tap FY26 budget reserves if the Middle East impact lasts. However, it was also reported that Japanese Finance Minister Katayama said they are not in a situation where an extra budget is needed, while she stated they have JPY 1tln in reserve funds in the FY26 budget, but added there's no immediate need for an extra budget. NOTABLE APAC DATA RECAP * Japanese PPI MM (Apr) 2.3% vs Exp. 0.7% (Prev. 0.8%, Rev. 1.0%). * Japanese PPI YY (Apr) 4.9% vs. Exp. 3.0% (Prev. 2.6%, Rev. 2.9%).

EU Market Open: Risk sentiment hit on US/Iran conflict resumption fears, DXY bid, Antipodeans and Sterling lag

* US President Trump said it's just a question of time regarding Iran, but added that he is not going to be much more patient with Iran. * US President Trump said he made fantastic trade deals with China, and it was an incredible visit, while they've settled a lot of different problems, and the relationship is a very strong one. * Crude futures gradually edged higher amid risks of geopolitical escalation when US President Trump returns from his Beijing trip. * APAC stocks were mostly subdued; European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 1.3%. * UK's Manchester Mayor Andy Burnham will be requesting to stand in the Makerfield by-election after MP Josh Simons stepped down. * Looking ahead, highlights include Italian HICP Final (Apr), Canadian Wholesale Sales (Mar), US Industrial Production (Apr), Comments from Fed's Barr, Credit Ratings Updates including Fitch on Germany, S&P on Italy, Morningstar DBRS on Portugal and the UK, Scope Ratings on Poland. SNAPSHOT [https://newsquawk.com/uploads/ckeditor_wave/ck_images/5963e222-551e-4616-b42c-9e2495953da0.jpg] * Click for the Newsquawk Week Ahead. [https://www.newsquawk.com/headlines/newsquawk-week-in-focus-11-15th-may-2026-highlights-include-us-inflation-and-retail-sales-chinese-inflation-boj-soo-and-trump-xi-meeting-08-05-2026] IRAN CONFLICT * US President Trump said it's just a question of time regarding Iran, while he also stated that current Iranian leaders are more reasonable and Iran has a lot of inner turmoil, but added that he is not going to be much more patient with Iran, according to a Fox News Interview. Trump also stated that Iran's enriched uranium could be entombed, but would rather get it, as well as stated that they have their eyes on Iran's enriched uranium and could bomb it again, but he would rather get it. Trump separately commented that he discussed Iran with Chinese President Xi, and they feel very similar about how they want to end the Iran war. * China's Foreign Ministry said US President Trump and Chinese President Xi reached a series of new consensuses, while it added that the war should not continue and that China is to contribute to Middle East peace. It also said a comprehensive and lasting ceasefire should be reached as soon as possible, and urged solving the Iranian nuclear issue through dialogue. * Washington informed Tel Aviv of the possibility that President Trump could order strikes inside Iran, according to Al Hadath. * US State Department said Israel and Lebanese officials had a full day of productive and positive talks. However, a separate report stated that the atmosphere surrounding the third round of Lebanese-Israeli negotiations is not encouraging and there are no indications of any serious breakthrough in the negotiations between Lebanon and Israel. * US House narrowly rejected the Iran war powers resolution with a 212-212 tie vote. * Iranian Foreign Minister Araghchi said at the BRICS meeting that the US empire is in decline and Iran will never bow to pressure, according to Press TV. * Iranian Parliamentary Speaker Ghalibaf warned that US efforts at sustaining military escalation near the Strait of Hormuz could trigger a fresh global financial crisis at a time when US national debt already stands at a whopping USD 39tln. * Iran's Ambassador to Belarus criticised the US negotiation stance and said US President Trump's excessive ambitions hinder US-Iran talks, according to TASS. * Former IRGC commander Jafari said "If the enemy does not accept Iran's preconditions, there will be no negotiations." Jafari added that if the war starts again, they will strike harder blows at the enemy than ever before. * Qatar's Foreign Ministry told Al Arabiya it had shot down several Iranian drones near its airspace, while it stressed the need to open the Strait of Hormuz in its contacts with the Islamic Republic. * Israeli army detected rocket launches from Lebanon towards Israeli territory, while Israeli artillery shelling was reported on the town of Nabatieh al-Fawqa in southern Lebanon. * Saudi Arabia reportedly conducted secretive strikes on Iran after Tehran attacked Saudi energy facilities and civilian infrastructure in March, according to WSJ citing US and Gulf officials familiar with the attacks. Saudi air force reportedly carried out strikes on Iranian drone and missile launch sites, as well as struck targets in Iraq linked to Iranian-backed militias, according to sources cited by WSJ. US-CHINA * US President Trump said they have gotten along well with Chinese President Xi and have a very good relationship with China, while he added Xi is a tremendous and strong leader, and that he would like to see US companies do more business in China. Trump said he spoke to Xi strongly about trade and intellectual property, as well as noted that China will open the country in stages and that it would be good for US companies. Furthermore, Trump said China is going to be buying a lot of farm products, as well as stated that he asked China about using Visa (V), and maybe the China Visa ban will come off. * US President Trump said he made fantastic trade deals with China and it was an incredible visit, while they've settled a lot of different problems and the relationship is a very strong one, with a lot of good coming from the trip. Trump added that they will have further discussions and Xi's visit will be reciprocal. * US President Trump said Chinese President Xi had agreed to buy 200 Boeing (BA) aircraft and reiterated that Xi wanted an agreement on Iran, while refusing to provide military equipment to Tehran. Trump added that Xi wanted to continue buying Iranian oil and opposed Iran charging Hormuz tolls. Trump further stated that “Boeing wanted 150, they’ve got 200 big ones”. * US President Trump posted that Chinese President Xi congratulated him on so many tremendous successes in such a short period of time, while Trump added that the US was in decline two years ago, but is now the hottest nation. * USTR Greer said they had a lot of successes in rebalancing trade with China and expect to see an agreement for double-digit billions of dollars of agricultural sales to China coming out of the summit. Greer said China is fulfilling its promises on soybean purchases and that China knows there is going to be a certain level of US tariffs on Chinese goods. Furthermore, he cannot commit to a given rate of tariff on Chinese goods and will release findings of trade investigations in weeks, while he stated purchases of NVIDIA H200 chips will be a sovereign decision by China, and that chip export controls were not a major topic in the meeting. US TRADE EQUITIES * US stocks continued to rally, with tech leading the gains once again, as NVIDIA was boosted after the US and China announced the company would be allowed to resume chip sales to China, sending shares more than 4% higher. Cisco (CSCO) also surged following earnings and a restructuring announcement, while Cerebras (CBRS) nearly doubled from its IPO price, reinforcing ongoing optimism surrounding AI demand. * Focus remained on the US/China summit, which appeared constructive overall as agreements involving NVIDIA and Boeing (BA) were announced, although China's reported 200 Boeing jet order fell short of the previously touted 500 aircraft figure, while Treasury Secretary Bessent commented that “soybeans are all taken care of”, weighing on soybean futures. * SPX +0.76% at 7,501, NDX +0.73% at 29,580, DJI +0.75% at 50,063, RUT +0.67% at 2,863. * Click here for a detailed summary. [https://www.newsquawk.com/headlines/newsquawk-us-market-wrap-tech-sends-equities-higher-as-trump-xi-summit-appears-constructive-14-05-2026] NOTABLE HEADLINES * Fed's Barr (voter) said smaller Fed balance sheets would likely increase Fed interventions and that reducing liquidity rules to shrink the Fed balance sheet is not a good idea. Barr stated that lowering the liquidity requirement would simply increase stability risks, and if anything, the liquidity requirement should go up, not down. Furthermore, he said they are not in a recession, but there's been little job creation, while he hasn't decided on what to do at the June FOMC meeting. * Fed's Williams (voter) said Fed independence delivers better economic outcomes, and it is not time to worry about Fed independence, with staff focused on the mission. Williams said the context matters for inflation given its persistence above target, while he is not surprised to see near-term inflation expectations rise and is seeing pretty stable longer-term inflation expectations. Williams noted there is a lot of uncertainty around energy price outlook and that the job market is not "hot" but also not slowing dramatically, while he added that monetary policy is mildly restrictive and he doesn't see any reason to hike or cut rates right now. * Fed’s Hammack (2026 voter) said central bank independence remained critical to effective monetary policymaking. * Fed’s Miran submitted his resignation from the Federal Reserve Board, effective on or shortly before Kevin Warsh’s swearing-in as Chair. APAC TRADE EQUITIES * APAC stocks were mostly subdued after failing to sustain the early momentum that was spurred by the gains on Wall Street, where tech outperformed, and sentiment was underpinned amid constructive headlines from the Trump-Xi summit, while the souring of risk sentiment coincided with higher oil prices and yields amid risk that the geopolitical situation in Iran could escalate when US President Trump returns from Beijing. * ASX 200 lacked direction as strength in tech and financials was offset by losses in mining, materials, resources and utilities. * Nikkei 225 swung between gains and losses but ultimately continued its pullback from the recent peak amid oil-related headwinds and after hot PPI data further supported the case for a rate hike at next month's BoJ meeting. * Hang Seng and Shanghai Comp were mixed despite the recent constructive headlines from the Trump-Xi summit, while the leaders are meeting again today in a restricted working lunch session prior to US President Trump's return to the US. Furthermore, sentiment was not helped by recent disappointing lending and aggregate financing data from China for April, which showed a surprise contraction in loans. * US equity futures pulled back as risk sentiment soured overnight amid higher oil prices and yields, as well as Trump's comments on Iran. * European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 1.3% after the cash market closed with gains of 1.3% on Thursday. FX * DXY mildly strengthened as risk sentiment waned overnight alongside higher oil prices and yields, while there were several comments from US President Trump in a Fox News interview in which he stated that he is not going to be much more patient on Iran and suggested they could bomb it again, but he would rather get it regarding Iran's enriched uranium. * EUR/USD languished beneath the 1.1700 handle after recent declines and with little fresh catalysts from the bloc. * GBP/USD remained subdued after underperforming yesterday despite better-than-expected GDP data, with the pound weighed on by UK political turmoil surrounding PM Starmer after potential leadership challenger, Streeting, resigned from his post as Health Secretary, while Manchester Mayor Burnham will be requesting to stand in the Makerfield by-election after MP Josh Simons confirmed he is to step down. * USD/JPY gradually extended its footing at the 158.00 territory amid a firmer buck and higher oil prices, but with upside capped after an acceleration in Japanese PPI data. * Antipodeans resumed the prior day's retreat amid headwinds from the decline in metal prices and as risk sentiment waned. * PBoC set USD/CNY mid-point at 6.8415 vs exp. 6.7976 (prev. 6.8401) FIXED INCOME * 10yr UST futures were pressured and printed a fresh contract low, with selling exacerbated as prices breached through Wednesday's trough and as oil prices steadily climbed. * Bund futures resumed the prior day's intraday pullback and returned to sub-125.00 territory. * 10yr JGB futures followed suit to the downside in global peers, with demand also not helped by firmer-than-expected Japanese PPI data, which showed the fastest pace of increase since late 2022. COMMODITIES * Crude futures gradually edged higher amid risks of geopolitical escalation when US President Trump returns from his Beijing trip, as a report noted that Washington informed Tel Aviv of the possibility that Trump could order strikes inside Iran, while Israeli officials were said to remain on high alert this weekend in case Trump decided to resume the war. Furthermore, Trump said in an interview on Fox News that it's just a question of time regarding Iran and that he is not going to be much more patient on Iran. * Spot gold retreated amid higher yields and a firmer buck, while the downside also coincided with firm losses in silver, which briefly breached below the USD 81/oz level. * Copper futures declined as the overnight risk sentiment deteriorated, despite the recent constructive headlines from the Trump-Xi summit. CRYPTO * Bitcoin traded indecisively and on both sides of the USD 81,000 level. NOTABLE ASIA-PAC HEADLINES * Japan's Minister for Economy, Trade and Industry Akazawa said they can tap FY26 budget reserves if the Middle East impact lasts. However, it was also reported that Japanese Finance Minister Katayama said they are not in a situation where an extra budget is needed, while she stated they have JPY 1tln in reserve funds in the FY26 budget, but added there's no immediate need for an extra budget. DATA RECAP * Japanese PPI MM (Apr) 2.3% vs Exp. 0.7% (Prev. 0.8%, Rev. 1.0%) * Japanese PPI YY (Apr) 4.9% vs. Exp. 3.0% (Prev. 2.6%, Rev. 2.9%) GEOPOLITICS OTHER * US Secretary of State Rubio said China's preference is probably to get Taiwan willingly and that there will be some agricultural purchases from China, while Rubio hoped to get a positive response from China regarding the case of Jimmy Lai and others. * US Pentagon cancelled the planned deployment of 4,000 troops to Poland. * CIA Director delivered a message from US President Trump that the US is prepared to engage on economic and security issues if Cuba makes fundamental changes, according to a CIA official. EU/UK NOTABLE HEADLINES * UK's Manchester Mayor Andy Burnham will be requesting to stand in the Makerfield by-election after MP Josh Simons stepped down. It was separately reported that PM Starmer will not seek to block Andy Burnham from becoming Labour candidate in Makerfield, paving his way for a return to Parliament and a leadership bid, according to The Guardian.

US Market Open: Constructive US/China summit boosts ES and NQ, US said to approve some H200 chip sales, NVDA +2%; US data/Fed speak ahead

* US President Trump had a good meeting with Chinese President Xi, in which the two sides discussed ways to enhance economic cooperation. The two sides agreed that the Strait must remain open and that Iran can never have a nuclear weapon. However, Taiwan was not mentioned. * US President Trump's team is now discussing options for military escalation to break the deadlock, Axios reported. Options include resuming Project Freedom or striking Iranian infrastructure.  * European bourses continue to rebound; NVDA gains after the US reportedly approved around 10 Chinese firms to buy H200 chip. * DXY flat, GBP immediately pared post-GDP gains as politics remains in focus. * USTs attempt to bounce back from recent losses; Gilts eye a potential leadership challenge. * Crude holds a mild upward bias but wanes off its best levels as US and Iran prefer diplomacy. * Looking ahead, highlights include Trump-Xi Summit (14th-15th May); US Retail Sales (Apr), Export/Import Prices (Apr), Jobless Claims (May 9), Atlanta Fed GDP. Speakers include BoE’s Pill, Fed’s Bowman, Miran, Logan, Schmid, Hammack & Williams. * Holiday: Ascension Day Holiday (Closures in Switzerland, Sweden, Norway, Finland, Denmark). [https://newsquawk.com/uploads/ckeditor_wave/ck_images/eb886891-83cc-425e-8e62-1c2fbeb60346.jpg] TRUMP-XI SUMMIT * In the White House official statement, it stated that US President Trump had a good meeting with Chinese President Xi, in which the two sides discussed ways to enhance economic cooperation. On the Iran conflict, the two sides agreed that the Strait must remain open and that Iran can never have a nuclear weapon. However, Taiwan was not mentioned. * US President Trump told Chinese President Xi that they've had a fantastic relationship, and they are going to have a fantastic future together, while he added that he has such respect for China and that he tells everybody Xi is a great leader. Trump also stated that the relationship between the US and China will be better than before, with trade to be totally reciprocal on their behalf and he looks forward to doing business with China. * Chinese President Xi said to US CEOs that China's door will only open wider, adds China welcomes US to strengthen reciprocal cooperation in China, according to Xinhua. * Chinese President Xi told US President Trump it is a pleasure to meet him in Beijing, while he has always believed that the common interests between China and the US outweigh the differences. Xi stated that the success of China and the US is an opportunity for each other, and he looks forward to discussions with US President Trump. * Chinese President Xi said talks are the only right way to resolve disputes and that there are no winners in a trade war, while he also commented that the Taiwan issue is the most important in US-China ties, and if the issue is not handled well, the two countries will clash, according to Xinhua. * China People's Republic Chair Qiang said the US and China should focus on cooperation, and continue to be friends. * Click here for more analysis [https://www.newsquawk.com/headlines/analysis-trump-xi-summit-leaders-strike-positive-tone-as-trade-taiwan-and-tech-discussions-continue-14-05-2026] EUROPEAN TRADE EQUITIES * A broadly positive start for European bourses (STOXX 600 +0.5%) to begin Thursday’s session. The DAX 40 (+1.4%) is the clear outperformer, supported by Infineon and Rheinmetall while the FTSE 100 (+0.2%) underperforms, as 3i Group slumps after its FY total return missed estimates. * European sectors hold a positive bias. Tech tops the sector pile while Financial Services lies at the bottom. Newsflow surrounding European tech has been light, but gains in US-listed Cisco after-hours seem to have passed through to the broader tech area. A Reuters report suggesting that the US approved H200 chip sales to Chinese companies also helped to lift sentiment. * US equity futures gain pre-market, further extending on ATHs. Initial upside in NQ futures came following reports that the US have approved around 10 Chinese firms to buy Nvidia H200 chips, and Nvidia shares have risen 2.0% pre-market as a result. Packed session ahead with Fed speak and US data, including Retail sales, Jobless claims and Import/Export prices slated. * US approved around 10 Chinese firms to buy NVIDIA (NVDA) H200 chips, according to Reuters sources. Chinese buyers include Alibaba (BABA/ 9988 HK), ByteDance, Tencent (TCEHY/0700 HK), JD.com [http://jd.com/] (JD/ 9618 HK). * Click for the sessions European pre-market equity newsflow [https://www.newsquawk.com/headlines/newsquawk-daily-european-equity-opening-news-14th-may-2026-14-05-2026] * Click for the additional news [https://www.newsquawk.com/headlines/additional-european-equity-news-14-05-2026] FX * DXY continues higher into of a packed session of US data and Fed speak. Today's focus, aside from the scheduled data/speakers, will be on the US/China summit, where we recently saw a positive US readout with no mention of Taiwan and agreement that the Strait of Hormuz must remain open. So far, the Buck has yet to move significantly to the aforementioned updates and resides within narrow 98.41-98.55 parameters. * In terms of notable news overnight, the US Senate confirmed Kevin Warsh to Fed Chair - to remind, Powell's term officially terminates tomorrow. In terms of some analyst commentary on the Greenback, MUFG wrote this morning that the "Buck could strengthen if there is any indication that the Fed’s tolerance for looking through higher inflation is diminishing", while ING wrote "face‑to‑face summits involving the US President have tended to generate a slew of conciliatory headlines, which can bolster risk assets". * USD/JPY continues to chop with a c. 45 pip move lower this morning, seen on hawkish remarks from BoJ's Masu, who said the central bank needed to raise rates "at the earliest stage possible". Masu, at the last BoJ confab, was not one of the three hawkish dissenters, meaning the vote split could theoretically be 5-4 should former dissenters maintain their votes. Markets are reluctant to fully price a June meeting hike, with just 15bps of tightening expected. The move seen on Masu's remarks has since been faded as oil prices remain high. * GBP trades with mild losses, with a strong regional GDP report ultimately overlooked by ongoing political unrest. Latest UK political updates suggest former Deputy PM Rayner may put herself forward in a leadership race after HMRC cleared her tax case. Rayner has indicated she favours supporting Manchester Mayor Burnham, which potentially strengthens his bid. Burnham, however, still needs to find an MP willing to step aside to spark a by-election and give Burnham a route to Parliament; reports and denials on the seat in question continue. Some analysts are circulating a survey from Survation, which indicates that soft-left Burnham is the most popular candidate amongst Labour members by a margin. Cable finds support at the round 1.3500 mark. * Click for NY OpEx Details [https://www.newsquawk.com/headlines/notable-fx-option-expiries-for-today-s-ny-cut-large-eur-usd-near-the-money-clips-14-05-2026] FIXED INCOME * Global fixed benchmarks are firmer this morning, attempting to clamber off recent lows, as energy prices remain stable in today’s session. Geopolitical updates overnight were lacking, but attention this morning was on reports that a vessel off the coast of the UAE has been taken by unauthorised personnel. Later reports by Axios stating that US President Trump's team is now discussing options for military escalation to break the deadlock failed to move benchmarks. * USTs are firmer by 5 ticks, and currently trading within a 110-02 to 110-06+ range. Strength, which appears to be a bounce-back from the lows seen on Wednesday, following a hotter-than-expected PPI report. Oxford Economics outlined that following both CPI and PPI, its PCE “nowcast points to a 3.8% y/y rise in headline prices. * Bunds are stronger by c. 30 ticks, and trades within a 124.80 to 125.03 range. Price action has followed the above, with a lack of fundamental European drivers this morning. It is also worth noting that today is Ascension Day, celebrated across parts of Europe, so lower volumes are possible. From a policy perspective, ECB’s Chief Economist Lane stated on Wednesday that the surge in energy prices may require the Bank to deliver hikes. He continued his hawkish remarks by suggesting that an increase in selling price expectations suggests input cost pressures will map into higher output prices in the coming months. * Gilts are performing in-line with peers, and trade within an 86.14 to 86.48 range. A strong GDP report this morning is having little follow-through on price action. ING opines that it does not change much for the BoE, which is “singularly focused on the impending inflation spike”. UK traders also eye the domestic political situation, with reports on Wednesday suggesting that Health Minister Streeting is preparing to resign as soon as today. Close allies suggest he has more than the required 81 MPs to launch a leadership contest, though others question these claims. Another growing risk is Former Deputy PM Rayner being cleared of any tax wrongdoing by the HMRC, which gives her better credibility should she decide to launch a challenge. * JGBs underperform vs peers, following hawkish commentary from BoJ’s Masu, who stated that there is a need to raise rates at the earliest stage possible. The 10yr now resides at levels not seen since 1997. Elsewhere, the 30yr auction overnight gave an indication that demand remains strong at these elevated yields, as the b/c rose to 3.49x (prev. 3.12x). However, the wider tail suggests that some buyers are potentially holding out for a 4% yield. * Japan sells JPY 454.4bln 30-yr JGBs; b/c 3.49x (prev. 3.12x), and average yield 3.842% (prev. 3.697%). COMMODITIES * In geopolitics, the US and Iran both signalled a preference for diplomacy. US VP Vance said Washington is making progress in talks and remains focused on a diplomatic path “for now”, reiterating that Tehran must not obtain nuclear weapons. Iranian Foreign Minister Araghchi also said Iran does not seek war. However, tensions remain elevated: Tehran warned that new confrontations with the US are possible, said its forces are ready to deliver a “crushing” response if attacked, and confirmed it is preparing new navigation laws for the Strait of Hormuz. Separately, Iran accused Kuwait of unlawfully attacking an Iranian boat and detaining four Iranian citizens near an island allegedly linked to US operations. Shipping risks also rose after UKMTO reported that a vessel northeast of Fujairah was taken by unauthorised personnel and moved toward Iranian waters. * Crude markets are holding a mild positive bias but trade off best levels following the diplomacy-first approach by the US and Iran, whilst the positive US-China commentary could also be underpinning the benchmarks. Some mild pressure was seen in energy benchmarks after a WH statement outlined that the US and China agreed that the Strait of Hormuz must remain open. WTI July resides in a 95.48-98.13/bbl range while Brent July sits in a USD 104.57-107.13/bbl range. Sticking with energy, Dutch TTF meanwhile is choppy but posts mild gains (+0.2%) above EUR 47/MWh at the time of writing. * In terms of metals, spot gold is choppy within a narrow range, and largely within yesterday’s parameters after finding support near yesterday’s trough (4,669.53/oz). Newsflow has remained somewhat light this morning with no real macro drivers. Spot gold resides in a USD 4,669-4,719/oz while spot silver consolidates with modest losses above USD 87/oz after gaining for yet another session yesterday, bringing the win streak to seven straight sessions. HSBC raised its average silver price forecasts to USD 75/oz in 2026 and USD 68/oz in 2027. * Copper futures pulled back from record levels despite the broadly positive risk sentiment, with 3M LME copper briefly dipping under USD 14,000/t to trade in a current USD 13,887.50- 14,132.78/t range. * Cuba's Energy and Mines Minister said Cuba has run out of diesel and fuel oil amid the US oil blockade. * India has asked the US to extend its waiver on Russian oil, Bloomberg sources reported. * India banned sugar exports until September 30th this year, according to a government notice. * HSBC raises average silver price forecasts to USD 75/oz in 2026 and USD 68/oz in 2027. TRADE/TARIFFS * China renewed export licenses for more than 400 US beef plants, according to customs data. * EU officials said they are open to collaboration with the UK, but the UK will need to relax its trade and economic integration stance in order to progress towards a more ambitious deal, Politico reported. NOTABLE EUROPEAN HEADLINES * Former UK Deputy PM Rayner is prepared to put her herself forward in any leadership race if required, Sky News' Rigby reported citing sources. * Former UK Deputy PM Rayner said she's been cleared of any tax wrongdoing by HMRC. * Afzal Khan told Sky News he has no plans to give up his seat for Manchester Mayor Burnham. This is a denial of earlier reports. * Leadership candidates are considering making an early statement that Chancellor Reeves would actually be retained as Chancellor to secure market stability in the event of a longer leadership contest, according to Mail on Sunday's Hodges citing UK MPs. * BoE is set to water down stablecoin rules after industry pressure, with Deputy Governor Breeden stating that initial plans may have been ‘overly conservative’ and the central bank is ‘looking very hard’ at alternatives, according to FT. * British Chambers of Commerce warned UK manufacturers and construction groups will be hit by significant financial and logistical problems as a result of ministers' plans to double tariffs on steel imports from July 1st, according to FT. NOTABLE EUROPEAN DATA RECAP * UK GDP 3-Month Avg (Mar, Q1) 0.6% vs. Exp. 0.5% (Prev. 0.5%, Low. 0.5%, High. 0.6%). * UK GDP Growth Rate QoQ Prel (Q1) Q/Q 0.6% vs. Exp. 0.6% (Prev. 0.1%). * UK GDP Growth Rate YoY Prel (Q1) Y/Y 1.1% vs. Exp. 0.8% (Prev. 1%, Low. 0.6%, High. 0.7%). * UK GDP MoM (Mar) M/M 0.3% vs. Exp. -0.2% (Prev. 0.5%, Low. -0.3%, High. 0%). * UK Balance of Trade (Mar) -9.658B vs. Exp. -3.4B (Prev. -0.720B). * UK RICS House Price Balance (Apr) -34% vs. Exp. -25% (Prev. -23%). * Spanish Inflation Rate MoM Final (Apr) M/M 0.4% vs. Exp. 0.4% (Prev. 1.2%). * Spanish Inflation Rate YoY Final (Apr) Y/Y 3.2% vs. Exp. 3.2% (Prev. 3.4%). CENTRAL BANKS * BoJ's Masu said they need to raise the rate at the earliest stage possible, and due attention should be paid to whether inflation triggered by the yen's depreciation may raise people's inflation expectations and, in turn, affect underlying inflation. Masu said the BoJ will continue to raise rates in response to economic, price, and financial developments, as well as noted that Japan has clearly entered an inflationary phase. Masu said there were mixed views among policy board members at the April meeting on whether to raise the policy interest rate immediately, while he judged at the April MPM that the situation did not warrant a hasty policy rate hike. Masu also commented that he is convinced the BoJ needs to raise the policy interest rate further, so that it falls solidly within the estimated range of neutral interest rate, and warned that if inflation is not contained at an appropriate level, this could lead to a vicious cycle in which firms have to further raise wages to retain workers. Furthermore, he noted that given Japan is no longer in a deflationary period, negative real rates should be addressed as soon as possible. * Fed’s Collins (2028 voter) said she expected the Federal Reserve would need to maintain restrictive policy for some time but hoped the economy would eventually permit more rate cuts later this year. Collins stated that further rate hikes could become necessary to cool inflation pressures and said current Fed policy remained “well positioned” to address risks. It was later reported by WSJ that Collins said she is watching the extent to which tariffs continue to pass through the price chain and that the Fed may need to raise rates if inflation pressures broaden in the coming months, but sees inflation pressures from the Iran war eventually subsiding. * ECB's Kazaks said can't yet see full impact of Iran war on inflation, and the situation is a bit worse than the ECB's baseline scenario. NOTABLE US HEADLINES * US President Trump's proposals are reportedly facing opposition in Congress, Semafor reported. These include a gas tax holiday and federal funding for a new ballroom in the White House. * US Pentagon has not signed new contracts to replenish its munitions supplies, NBC reported. GEOPOLITICS MIDDLE EAST * US President Trump's team is now discussing options for military escalation to break the deadlock, Axios reported. US officials don't expect Trump to take any dramatic steps during his trip but think he could make his next move immediately afterward. One option is to resume "Project Freedom," while another is to launch a new bombing campaign focusing on Iranian infrastructure. * Pakistan Foreign Ministry said the peace process is intact, its holding on, we remain engaged and hopeful, Journalist Mallick reported. * Iranian Foreign Minister Araghchi said although Iranian forces are ready to "deliver a crushing and devastating response to foreign aggressors, we do not seek war." * US Secretary of State Rubio said US hopes to convince China to play a more active role in persuading Iran to back down on its actions in the Gulf, according to Reuters. * US intelligence report emphasised that China acted to maximise its advantage and achievements against the US following the war in Iran on the diplomatic, military, economic and intelligence levels, according to WaPo. * UKMTO reports an incident 38NM northeast of Fujairah, UAE. The vessel has been taken by unauthorised personnel whilst at anchor and now bound for Iranian territorial waters. * Israel is to inform the Lebanese delegation that its strategy that it will not be committing to a comprehensive ceasefire, Al Hadath reported citing sources. Israel may offer to avoid bombing northern Bekaa and Beirut * Iraqi sources reported hearing the sound of several explosions in Erbil, Iraq, while a drone strike hit an Iranian opposition camp north of Iraq's Erbil, according to Fars. It was also reported shortly after that a second drone strike hit an Iranian opposition camp north of Erbil, according to security sources. * Israeli raid was reported on the town of Arnoun in the district of Nabatieh in southern Lebanon, while Hezbollah said it targeted a Merkava tank with a guided missile in Tel Nahas on the outskirts of the town of Kafr Kila and achieved a confirmed hit, according to Al Jazeera. It was also reported that Hezbollah conducted 17 operations against Israeli forces on Wednesday. * Israeli PM Netanyahu reportedly made a secret visit to the UAE in the midst of the Iran operation, where he met with UAE President Mohamed bin Zayed Al Nahyan, while the visit resulted in a historic breakthrough in relations between Israel and the UAE. However, the UAE later denied the report of a visit. RUSSIA-UKRAINE * Russia fired at least 800 drones in a massive daytime barrage on about 20 regions of Ukraine on Wednesday, according to NBC * Ukraine's capital Kyiv was under Russian attack early on Thursday with explosions sounding in the city, according to reports citing its mayor Klitschko. OTHERS * Russia's Kremlin said President Putin's trip to China will happen very soon with preparations complete. CRYPTO * Bitcoin found support at the 20-SMA and nears the USD 80k handle. APAC TRADE * APAC stocks traded mixed following the mostly positive lead from Wall St, where markets were choppy and gradually brushed aside the firmer-than-expected PPI data amid strength in tech and communications, while the focus turns to the Trump-Xi summit, which has begun in Beijing, although it has provided very little so far to excite markets. * ASX 200 was lacklustre as weakness in consumer staples, tech, health care and energy counterbalanced the resilience in the top-weighted financials sector, while a lack of tier-1 data added to the humdrum mood. * Nikkei 225 initially climbed to a fresh record high, before fading the gains amid quiet catalysts. * Hang Seng and Shanghai Comp were mixed as participants digested earnings releases, including from the likes of Alibaba and Tencent, which both beat on the bottom line but disappointed on sales, while participants now await any concrete outcomes from the Trump-Xi summit. NOTABLE ASIA-PAC HEADLINES * Japan considers drafting an extra budget, according to Kyodo. However, Japanese Chief Cabinet Secretary Kihara said no immediate need for a supplementary budget.

EU Market Open: Europe set for a positive open as US said to approve some NVIDIA H200 sales to China; eyes on UK politics

* US President Trump told Chinese President Xi that they've had a fantastic relationship and they are going to have a fantastic future together. * Chinese President Xi told US President Trump it is a pleasure to meet him in Beijing, while he has always believed that the common interests between China and the US outweigh the differences. * US Secretary of State Rubio said the US hopes to convince China to play a more active role in persuading Iran to back down on its actions in the Gulf. * An Iranian NSC spokesperson said new confrontations with the US are possible, and they are preparing a law regarding navigation in the Strait of Hormuz. * APAC stocks traded mixed; European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.7%. * Looking ahead, highlights include Trump-Xi Summit (14th-15th May); UK GDP (Mar/Q1), Industrial Production (Mar), Spanish HICP Final (Apr), US Retail Sales (Apr), Export/Import Prices (Apr), Jobless Claims (May 9), Atlanta Fed GDP. Speakers include ECB’s Lagarde, BoE’s Pill, Fed’s Logan, Schmid, Hammack & Williams. Earnings from Telefonica, Burberry & National Grid. * Holiday: Ascension Day Holiday (Closures in Switzerland, Sweden, Norway, Finland, Denmark). SNAPSHOT [https://newsquawk.com/uploads/ckeditor_wave/ck_images/4883f24e-5571-40b3-83c2-9095d00f009d.jpg] * Click for the Newsquawk Week Ahead. [https://www.newsquawk.com/headlines/newsquawk-week-in-focus-11-15th-may-2026-highlights-include-us-inflation-and-retail-sales-chinese-inflation-boj-soo-and-trump-xi-meeting-08-05-2026] IRAN CONFLICT * US VP Vance said on Iran talks that he thinks they are making progress and are focused on a diplomatic pathway for now, while he agrees with the President that Iran should not possess nuclear weapons. * US Secretary of State Rubio said the US hopes to convince China to play a more active role in persuading Iran to back down on its actions in the Gulf, according to Reuters. * Iran’s Foreign Minister said that in a clear attempt to sow discord, Kuwait unlawfully attacked an Iranian boat and detained 4 Iranian citizens in the Persian Gulf, which took place near an island used by the US to attack Iran, while they demand the immediate release of their nationals and reserve the right to respond. * Iranian NSC spokesperson said new confrontations with the US are possible and they are preparing a law regarding navigation in the Strait of Hormuz, while the spokesperson said they forced the US to back down, and it is responsible for the escalation. * Iran is using the Caspian Sea, highways and a railroad to China to bypass the US blockade of Hormuz. * US intelligence report emphasised that China acted to maximise its advantage and achievements against the US following the war in Iran on the diplomatic, military, economic and intelligence levels, according to WaPo. * Chinese companies have been discussing arms sales with Iran, plotting to send the weapons through other countries to mask the origins of the military aid, according to NYT citing US officials. * Iraqi sources reported hearing the sound of several explosions in Erbil, Iraq, while a drone strike hit an Iranian opposition camp north of Iraq's Erbil, according to Fars. It was also reported shortly after that a second drone strike hit an Iranian opposition camp north of Erbil, according to security sources. * Israeli raid was reported on the town of Arnoun in the district of Nabatieh in southern Lebanon, while Hezbollah said it targeted a Merkava tank with a guided missile in Tel Nahas on the outskirts of the town of Kafr Kila and achieved a confirmed hit, according to Al Jazeera. It was also reported that Hezbollah conducted 17 operations against Israeli forces on Wednesday. * Israeli PM Netanyahu reportedly made a secret visit to the UAE in the midst of the Iran operation, where he met with UAE President Mohamed bin Zayed Al Nahyan, while the visit resulted in a historic breakthrough in relations between Israel and the UAE. However, the UAE later denied the report of a visit. * US State Department official said Lebanon added its former ambassador to the US, Simon Karam, to the next round of talks with Israel, while the Israeli delegation will include its ambassador to Washington and the deputy national security adviser. * Saudi warplanes reportedly struck Iran-backed militia sites in Iraq during the war. TRUMP-XI SUMMIT * US President Trump told Chinese President Xi that they've had a fantastic relationship and they are going to have a fantastic future together, while he added that he has such respect for China and that he tells everybody Xi is a great leader. Trump also stated that the relationship between the US and China will be better than before, with trade to be totally reciprocal on their behalf and he looks forward to doing business with China. * Chinese President Xi told US President Trump it is a pleasure to meet him in Beijing, while he has always believed that the common interests between China and the US outweigh the differences. Xi stated that the success of China and the US is an opportunity for each other, and he looks forward to discussions with US President Trump. * Chinese President Xi said to US CEOs that China's door will only open wider, adds China welcomes US to strengthen reciprocal cooperation in China, according to Xinhua. * Chinese President Xi said talks are the only right way to resolve disputes and that there are no winners in a trade war, while he also commented that the Taiwan issue is the most important in US-China ties, and if the issue is not handled well, the two countries will clash, according to Xinhua. * China renewed export licenses for more than 400 US beef plants, according to customs data. US TRADE EQUITIES * US stocks closed with an upward bias as the Nasdaq 100 outperformed, buoyed by strength in Mag-7 (ex-MSFT), with NVDA and MU being particularly strong as their CEOs accompany President Trump on his trip to China, while Micron also saw a chunky BofA PT lift. As such, both the S&P 500 and NDX printed fresh record highs, while the focus resided around the Trump/Xi summit and the Middle East situation, albeit with little incrementally new, although VP Vance thinks they are making progress on Iran talks and is focused on a diplomatic pathway for now. * Furthermore, US PPI data spurred an initial hawkish reaction, as it was much hotter than expected, which saw US indices and treasuries fall, while the dollar rose as the data pointed to broader price pressures beyond energy. However, the early pressure in stocks was reversed, and sectors were predominantly firmer, with Communications and Tech sitting atop the pile, while Utilities and Financials lagged. * SPX +0.58% at 7,444, NDX +1.04% at 29,367, DJI -0.14% at 49,698, RUT +0.04% at 2,844. * Click here for a detailed summary. [https://www.newsquawk.com/headlines/newsquawk-us-market-wrap-tech-strength-leads-equities-higher-as-trump-xi-summit-awaits-13-05-2026] NOTABLE HEADLINES * US Senate confirmed Kevin Warsh as Fed Chair. * Fed’s Collins (2028 voter) said she expected the Federal Reserve would need to maintain restrictive policy for some time but hoped the economy would eventually permit more rate cuts later this year. Collins stated that further rate hikes could become necessary to cool inflation pressures and said current Fed policy remained “well positioned” to address risks. It was later reported by WSJ that Collins said she is watching the extent to which tariffs continue to pass through the price chain and that the Fed may need to raise rates if inflation pressures broaden in the coming months, but sees inflation pressures from the Iran war eventually subsiding. * Fed's Kashkari (2026 voter) said inflation is too high, while he commented that there is a huge question mark about how long the Hormuz Strait will be closed and that will have a big effect on inflation. * NY Fed said the desk plans to conduct ~USD 16.3bln in reinvestment purchases between May 14th and June 11th, while it plans an additional ~USD 10bln in reserve management purchases over the same period. * US House Financial Services Committee took up legislation that would amend the Federal Reserve Act to eliminate the Fed’s dual mandate and focus solely on price stability. The bill proposed replacing the phrase “maximum employment, stable prices” with “stable prices” in Section 2A of the Federal Reserve Act. APAC TRADE EQUITIES * APAC stocks traded mixed following the mostly positive lead from Wall Street, where markets were choppy and gradually brushed aside the firmer-than-expected PPI data amid strength in tech and communications, while the focus turns to the Trump-Xi summit, which has begun in Beijing, although it has provided very little so far to excite markets. * ASX 200 was lacklustre as weakness in consumer staples, tech, health care and energy counterbalanced the resilience in the top-weighted financials sector, while a lack of tier-1 data added to the humdrum mood. * Nikkei 225 initially climbed to a fresh record high, before fading the gains amid quiet catalysts. * Hang Seng and Shanghai Comp were mixed as participants digested earnings releases, including from the likes of Alibaba and Tencent, which both beat on the bottom line but disappointed on sales, while participants now await any concrete outcomes from the Trump-Xi summit. * US equity futures took a breather after the prior day's rebound and as markets look to any developments in Beijing. * European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.7% after the cash market closed with gains of 0.9% on Wednesday. FX * DXY traded flat overnight and held on to the prior day's gains after strengthening on another hot inflation report in which PPI accelerated and spurred a hawkish reaction across markets, with the jump in prices driven by final demand for services, although the components that feed into PCE were more mixed. Nonetheless, price action in FX was muted overnight with little reaction during the ceremony and opening remarks from the Trump-Xi summit, while the dollar was also unmoved by the US Senate confirmation of Warsh as Fed chair. * EUR/USD paused after returning from a brief dip to sub-1.1700 territory, and with little impact from a slew of recent ECB rhetoric, including from Lane, who stated that the global oil shock from the Iran war may require rate hikes, and that an increase in selling price expectations suggests input cost pressures will map into higher output prices in the coming months. * GBP/USD lacked direction after recent two-way price action, while participants await quarterly GDP data from the UK and whether Health Secretary Streeting triggers a leadership contest. * USD/JPY approached the 158.00 level with early weakness seen in the Japanese currency amid a lack of tier-1 data releases and some speculation regarding a potential extra budget, although there was a bout of volatility seen late in the session with USD/JPY briefly wobbling on hawkish comments from BoJ's Masu who said that they need to raise rates at the earliest stage possible, but noted that he judged at the April meeting that the situation did not warrant a hasty policy rate hike. * Antipodeans conformed to the predominantly humdrum mood across currencies amid a light Asia-Pac calendar and in the absence of any major fresh FX-related catalysts. * PBoC set USD/CNY mid-point at 6.8401 vs exp. 6.7888 (prev. 6.8431) * BoC Minutes stated that Governors felt the situation could change quickly and rates might have to go up to guard against persistent inflation, while GC members agreed they had scope to be patient ahead of the April 29th rate announcement. FIXED INCOME * 10yr UST futures kept afloat after the prior day's rebound, in which the pullback in oil prices helped treasuries claw back the initial losses that were triggered by hotter-than-expected PPI data. * Bund futures moved back towards the 125.00 level as some of the energy-related pressures dissipated, and despite comments from ECB's Lane that the global oil shock from the Iran war may require hikes. * 10yr JGB futures were indecisive amid the lack of tier-1 data from Japan and as participants digested the mixed results from the latest 30yr JGB auction. COMMODITIES * Crude futures were rangebound following the prior day's choppy performance and as focus turned to the Trump-Xi summit, while on the geopolitical front, there were reports of drone strikes that hit the Iranian opposition camp north of Iraq's Erbil, but had little lasting impact on oil prices. * Libya's NOC Chairman expects the Ras Lanuf refinery to restart in six months to one year. * Cuba's Energy and Mines Minister said Cuba has run out of diesel and fuel oil amid the US oil blockade. * Spot gold saw two-way trade and fluctuated through the USD 4,700/oz level after recent oil price swings and despite the firmer-than-expected PPI data stateside. * Copper futures pulled back from record levels with price action not helped by the mixed risk sentiment, and as the attention was centred on the Trump-Xi summit. * India banned sugar exports until September 30th this year, according to a government notice. CRYPTO * Bitcoin traded indecisively and ultimately returned to flat territory. NOTABLE ASIA-PAC HEADLINES * BoJ's Masu said they need to raise the rate at the earliest stage possible, and due attention should be paid to whether inflation triggered by the yen's depreciation may raise people's inflation expectations and, in turn, affect underlying inflation. Masu said the BoJ will continue to raise rates in response to economic, price, and financial developments, as well as noted that Japan has clearly entered an inflationary phase. Masu said there were mixed views among policy board members at the April meeting on whether to raise the policy interest rate immediately, while he judged at the April MPM that the situation did not warrant a hasty policy rate hike. Masu also commented that he is convinced the BoJ needs to raise the policy interest rate further, so that it falls solidly within the estimated range of neutral interest rate, and warned that if inflation is not contained at an appropriate level, this could lead to a vicious cycle in which firms have to further raise wages to retain workers. Furthermore, he noted that given Japan is no longer in a deflationary period, negative real rates should be addressed as soon as possible. * Japan considers drafting an extra budget, according to Kyodo. However, Japanese Chief Cabinet Secretary Kihara said no immediate need for a supplementary budget. GEOPOLITICS RUSSIA-UKRAINE * Russia fired at least 800 drones in a massive daytime barrage on about 20 regions of Ukraine on Wednesday, according to NBC * Ukraine's capital Kyiv was under Russian attack early on Thursday with explosions sounding in the city, according to reports citing its mayor Klitschko. EU/UK NOTABLE HEADLINES * UK PM Starmer has made clear to allies that he will stand and fight if Wes Streeting succeeds in triggering a leadership contest, according to The Times. * Former UK Deputy PM Rayner said she's been cleared of any tax wrongdoing by HMRC. * Manchester Rusholme MP Afzal Khan is understood to be prepared to give up his Westminster seat so Burnham can try to return to parliament and be a leadership contender, the Times reported. * BoE is set to water down stablecoin rules after industry pressure, with Deputy Governor Breeden stating that initial plans may have been ‘overly conservative’ and the central bank is ‘looking very hard’ at alternatives, according to FT. * British Chambers of Commerce warned UK manufacturers and construction groups will be hit by significant financial and logistical problems as a result of ministers' plans to double tariffs on steel imports from July 1st, according to FT. * ECB's Lane said global oil shock from the Iran war may require ECB hikes, while he stated that an increase in selling price expectations suggests input cost pressures will map into higher output prices in the coming months.