US stocks, treasuries and the dollar were pressured amid "sell US" impulse and with losses exacerbated by a weak 20yr auction - Newsquawk Asia-Pac Market Open

• US stocks declined on what was a "sell US" day in which all major indices posted notable losses and Treasuries were sold across the curve. The focus has largely been on Trump's tax bill with an agreement made on the SALT deductions, although some Republican hardliners are still worried that not enough spending cuts are included in the bill, while the CBO estimated the bill would add USD 2.3tln to deficits over the next decade, raising fiscal fears. Furthermore, the selling was later exacerbated in the aftermath of a weak 20-year bond auction, which saw a chunky 1.2bps tail and soft bid-to-cover.
• USD continued to weaken despite the actual sparse headline newsflow amid a lack of US data and Fed speak, although USD-denominated assets were seemingly hit after a poor US 20yr bond auction and with some concerns regarding the ramifications of the US tax bill on the deficit.
• Looking ahead, highlights include Australian, Japanese & Indian Flash PMIs, Japanese Machinery Orders, Singapore GDP, New Zealand Budget, Comments from BoJ Board Member Noguchi, Supply from Australia & Japan.

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LOOKING AHEAD

• Highlights include Australian, Japanese & Indian Flash PMIs, Japanese Machinery Orders, Singapore GDP, New Zealand Budget, Comments from BoJ Board Member Noguchi, Supply from Australia & Japan.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks declined on what was a "sell US" day in which all major indices posted notable losses and Treasuries were sold across the curve. The focus has largely been on Trump's tax bill with an agreement made on the SALT deductions, although some Republican hardliners are still worried that not enough spending cuts are included in the bill, while the CBO estimated the bill would add USD 2.3tln to deficits over the next decade, raising fiscal fears. Furthermore, the selling was later exacerbated in the aftermath of a weak 20-year bond auction, which saw a chunky 1.2bps tail and soft bid-to-cover.
• SPX -1.61% at 5,845, NDX -1.34% at 21,080, DJI -1.91% at 41,860, RUT -2.8% at 2,047.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said he is doing big deals with India and Pakistan, while he separately commented that we will see if he can help on some things in South Africa.
• South African President Ramaphosa said South Africa and the US are longstanding trading partners and want to reset the relationship, as well as advance trade. Furthermore, Ramaphosa said they will discuss geopolitical issues and have critical minerals issues to discuss.
• US Secretary of State Rubio may travel to Mexico in the next few weeks with other Trump admin officials to discuss areas of cooperation.
• EU reportedly prepares a trade proposal for the US to steer momentum into talks, according to Bloomberg sources.
• German Chancellor Merz said there are signs the US could be interested in a deal with the EU regarding tariffs. It was also reported that German Finance Minister Klingbeil met with US Treasury Secretary Bessent for a bilateral conversation and both agreed to meet again in Washington.
• China’s statement to the WTO noted that US trade talks are an important step to bridge gaps but multilateralism is needed to find a way out from the global trade turmoil.

NOTABLE HEADLINES

• US President Trump said he is feeling very good about the bill in Congress.
• US House Speaker Johnson said an agreement on USD 40k SALT reduction was reached, while Johnson later commented that they are trying to meet their deadline to vote on the tax bill.
• US House Majority Leader Scalise said the House will vote on the tax bill today.
• US House Freedom Caucus Chair Harris earlier said they are encouraged by progress in the last 24 hours but does not think it can be done today, while he said there is a pathway forward and is not even sure it can be done this week, but is confident it can be done in 10 days.
• US Republican Rep. Lawler said they made great progress on the tax bill and he is feeling much better about the tax bill now.
• US HHS Secretary's widely anticipated “Make America Healthy Again” report is expected to criticise food additives, lobbyists and vaccines, but go easier than expected on pesticides in farming, according to WSJ citing sources.

FX

• USD continued to weaken despite the actual sparse headline newsflow amid a lack of US data and Fed speak, although USD-denominated assets were seemingly hit after a poor US 20yr bond auction and with some concerns regarding the ramifications of the US tax bill on the deficit.
• EUR took advantage of the dollar weakness from early on, but with gains capped and price action choppy during US trade.
• GBP mildly strengthened on the day as the CPI-triggered surge to a multi-year peak, ultimately lost steam.
• JPY remained firmer alongside the dollar's demise and as the risk-off mood spurred haven appeal.

FIXED INCOME

• T-notes were sold and the curve steepened as participants await tax bill updates and following a weak US 20yr bond auction.

COMMODITIES

• Oil prices were initially buoyed by Iran/Israel headlines overnight but then retreated as sentiment soured and on bearish inventory data.
• US EIA Weekly Crude Stocks w/e 1.328M vs. Exp. -1.277M (Prev. 3.454M).

GEOPOLITICAL

MIDDLE EAST

• Israeli PM Netanyahu said Israel probably killed Hamas leader Sinwar and Iran still poses a serious threat to Israel, while he added that in the end, all parts of Gaza will be under Israeli control.
• US has been talking with Hamas via an American intermediary in Doha this week in hopes of brokering an Israel-Gaza ceasefire agreement, according to CNN.
• Iran’s Foreign Minister said they are considering whether or not to participate in the next round of negotiations with the US and are still examining whether productive talks can take place on that date, while he added that enrichment will continue, with or without a deal, according to Iran Nuances via social media platform X. However, it was later reported that Oman's Foreign Minister announced the fifth round of Iran-US nuclear talks will take place in Rome on May 23rd.

RUSSIA-UKRAINE

• Ukrainian White Paper showed Kyiv will ask the EU for tougher sanctions on Russia, including secondary oil sanctions as the US steps back, according to Reuters citing sources.
• Russia's Kremlin said a lot of work on a possible Ukraine peace is going on behind closed doors and the timing of a possible US-Russia prisoner exchange is still unknown.
• Finland’s President told broadcaster YLE it is likely that Russia and Ukraine will hold technical-level talks next week.
• Chinese Foreign Ministry said regarding EU sanctions against Russia that China will take necessary measures to protect its legitimate rights and interests.

OTHER

• UK Cyber Centre and allies revealed that Russia's military intelligence has been running a campaign of malicious cyber activity against Western logistics and tech entities.

ASIA-PAC

NOTABLE HEADLINES

• China’s gaming regulator granted licenses for 130 domestic and 14 imported online games in May including from NetEase (9999 HK).
• LVMH (MC FP) reportedly warns of continued luxury weakness amid China woes.
• South Korean Finance Ministry said they are currently in working-level talks on FX rates although details are yet to be finalised, when questioned on the report of US demands for a stronger KRW.

EU/UK

NOTABLE HEADLINES

• UK PM Starmer confirmed they will "look at" ensuring greater eligibility for Winter Fuel payments as part of the June spending review and any change is to be announced in the Autumn Budget.
• ECB's Centeno said the ECB may need to lower its key interest rate below the neutral level of 1.5%-2% to prevent inflation from declining beneath the 2% goal in a frail economic setting.
• ECB's de Guindos said equity valuations are high and credit spreads are out of sync with risk, while he added that EZ bond yields have decoupled from US and spreads are contained.
• ECB's Escriva said the Euro's recent appreciation was a surprise and it is more difficult to predict how tariffs impact inflation.

DATA RECAP

• UK CPI YY (Apr) 3.5% vs. Exp. 3.3% (Prev. 2.6%)
• UK Core CPI YY (Apr) 3.8% vs. Exp. 3.6% (Prev. 3.4%)