US stocks were choppy and ultimately closed mostly lower to snap the recent six-day win streak - Newsquawk Asia-Pac Market Open

• US stocks were choppy and ultimately closed mostly lower to snap a six-day win streak on Wall St, with the majority of sectors in the red while defensives outperformed. As there was a lack of US data, the focus was on US President Trump's tax bill talks in which he attempted to get Republicans on board with his tax bill, but it appears there is more work to do and House Freedom Caucus Chair suggested they would eventually get there albeit with uncertainty regarding the timing. Furthermore, there weren't any major trade-related developments, although reports noted that Japan is mulling accepting a US tariff reduction instead of an exemption and that its top negotiator will visit the US for a third round of discussions this Friday.
• USD extended on its recent declines which saw the DXY test the 100.00 level to the downside with few fresh catalysts and in the absence of any data releases stateside, while the focus remained on trade and Trump's tax bill although there were no major breaking developments on either front and the latest Fed rhetoric also provided little to shift the dial.
• Looking ahead, highlights include New Zealand & Japanese Trade Data, Australian MI Leading Index, Comments from Fed's Kugler & Daly, Supply from Australia.

More Newsquawk in 2 steps:

1. Subscribe to the free premarket movers reports

2. Trial Newsquawk’s premium real-time audio news squawk box for 7 days

LOOKING AHEAD

• Highlights include New Zealand & Japanese Trade Data, Australian MI Leading Index, Comments from Fed's Kugler & Daly, Supply from Australia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were choppy and ultimately closed mostly lower to snap a six-day win streak on Wall St, with the majority of sectors in the red while defensives outperformed. As there was a lack of US data, the focus was on US President Trump's tax bill talks in which he attempted to get Republicans on board with his tax bill, but it appears there is more work to do and House Freedom Caucus Chair suggested they would eventually get there albeit with uncertainty regarding the timing. Furthermore, there weren't any major trade-related developments, although reports noted that Japan is mulling accepting a US tariff reduction instead of an exemption and that its top negotiator will visit the US for a third round of discussions this Friday.
• SPX -0.39% at 5,940, NDX -0.37% at 21,367, DJI -0.27% at 42,677, RUT +0.05% at 2,106.
• Click here for a detailed summary.

TARIFFS/TRADE

• Japan is reportedly mulling the acceptance of a US tariff reduction, not an exemption, according to Kyodo. It was also reported that Japan’s Economy Minister Akazawa, who is the country’s top tariff negotiator, is to visit the US for the third time on Friday and a fourth visit to the US this month is also a possibility, according to Nikkei.
• FBN's Gasparino posted that the state of the tariff talks between the US and Japan provides a window into just how difficult constructing even trade frameworks has become with Japan now posturing by demanding US concessions as talks are set to begin, while both sides still need to position on specific issues, according to sources. Furthermore, the US is also demanding more so-called burden sharing from Japan on paying for the US military in the country and region.
• EU is reportedly considering imposing a EUR 2 handling fee on small packages ordered online, primarily from China, according to FT.

NOTABLE HEADLINES

• Fed's Musalem (2025 Voter) said monetary policy is currently well-positioned, while a balanced response to higher inflation and unemployment is feasible if inflation expectations stay anchored. Musalem stated that if inflation expectations become de-anchored, the Fed policy should prioritise price stability and noted that the US economy has underlying strength, the labour market is stable and inflation has eased but is above the 2% goal.
• Fed's Hammack (2026 voter) gave three scenarios on tariffs, as the traditional approach to projecting the economy with a baseline scenario may not be the best way to think of the outlook right now. Hammack said the first scenario is that tariffs have a one-off price effect, but economic growth takes a hit from policy uncertainty, while the second scenario is that the labor market holds up, but tariffs are inflationary, and the third is a stagflationary outcome where the economy slows alongside higher inflation which she sees as most likely.
• Fed's Bostic (2027 voter) said further instability in the Treasury market would add to uncertainty and noted the current US tariff level is better than it was as initially proposed, but still high enough that it is difficult to assess what will happen. Bostic added the Fed needs to be more certain about the outlook to be comfortable about how monetary policy should shift.
• US President Trump this party is united regarding the tax bill and it is not a question of holdouts, while he added the economy is roaring and if the bill is passed, there will be the largest tax cuts in history and if not, there will be a 68% tax increase. Trump said they will cut three things, waste, fraud and abuse, and are not changing Medicaid, Medicare or social security.
• US President Trump said he had a great meeting with Republicans and it is ok if the Senate makes some changes to the bill. In relevant news, White House correspondent Datoc said President Trump's message to House Republicans is "enough squabbling… pass the bill" and he wants every Republican to vote yes, while Punchbowl’s Sherman posted that President Trump "told House Republicans to lay off Medicaid".
• US House Freedom Caucus Chair Harris, when leaving the meeting with President Trump, said “We're still a long ways away, but we can get there. maybe not by tomorrow, but we can get there, according to WSJ's Beavers.
• WSJ's Timiraos posted that "April core PCE is projected at around 0.13%. Upward revisions to March could hold YoY at 2.6%".

FX

• USD extended on its recent declines which saw the DXY test the 100.00 level to the downside with few fresh catalysts and in the absence of any data releases stateside, while the focus remained on trade and Trump's tax bill although there were no major breaking developments on either front and the latest Fed rhetoric also provided little to shift the dial.
• EUR benefitted from the weaker buck but saw a bout of choppiness, while there were several comments from ECB officials including Knot who noted that the mid-term inflation outlook is too uncertain to say whether a rate cut is needed in June.
• GBP marginally strengthened against the dollar but with upside capped by resistance just shy of the 1.3400 handle ahead of UK CPI data.
• JPY was firmer against the dollar with USD/JPY languishing beneath the 145.00 level owing to the pressure in the greenback and amid the risk-off mood.
• Canadian CPI Inflation YY (Apr) 1.7% vs. Exp. 1.6% (Prev. 2.3%)

FIXED INCOME

• T-notes settled marginally higher with mild curve steepening seen with focus on Trump tax bill updates.

COMMODITIES

• Oil prices were choppy and settled little changed as the initial Iran-induced upside faded.
• Ukraine’s Foreign Minister said the price cap on Russian oil should be lowered to USD 30/bbl.
• EU is likely to propose a quota as the mechanism to enforce a bloc-wide import ban on Russian gas by end of 2027, which officials say should provide companies with a legal basis to terminate long-term purchase contracts, according to Bloomberg.
• Qatar Energy Minister said capex for full energy expansion requires maintaining 70-80%, while he added that Chinese and Indian energy buyers are negotiating additional supply volumes.
• Kazakhstan's oil production is up 2% so far in May at 1.86mln bpd, including 932k bpd at Tengiz Field, according to Reuters citing sources.

GEOPOLITICAL

MIDDLE EAST

• US President Trump has been frustrated by the war in Gaza and told aides to tell Israeli PM Netanyahu he wants him to "wrap it up", according to Axios. However, an Israeli official told Axios that Netanyahu doesn't currently feel strong pressure from Trump.
• Israeli PM Netanyahu reportedly held discussions on the question of whether or not to return the Israeli delegation from Doha, due to the fact that there has been no advance, according to journalist Stein.
• Israeli PM Netanyahu said the "Gaza war could end "tomorrow" if hostages return and Hamas leaders lay down their arms", according to Sky News Arabia.
• Israeli military head said Israel will expand manoeuvres in Gaza and capture additional territory, according to Reuters.
• UK Foreign Secretary is set to announce a pause of the free trade agreement with Israel effective immediately.
• Iranian Supreme Leader Khamenei said he doesn’t think nuclear talks with the US will be successful, while he also commented that the US’s demand that Iran not be allowed to enrich uranium is excessive and outrageous.
• Iran received a proposal for the next round of indirect negotiations with the US, according to Iran International. Iran’s Foreign Minister said a date has been proposed for the next round of negotiations with the US but have not yet approved it, according to Sky News Arabia.
• US Secretary of State Rubio said coming to a nuclear agreement with Iran will not be easy.

RUSSIA-UKRAINE

• Ukrainian President Zelensky said Russia is playing for time to continue the war and there is no doubt that the war has to end at the negotiating table, while he added there must be a clear and realistic proposal on the table.
• Russian Foreign Ministry said Russia is ready to continue talks with Ukraine and it is up to Kyiv to decide, while it stated Russia proposed work on a memorandum on a future peace accord and commented that Russia never responds to ultimatums regarding EU sanctions.
• EU Foreign Affairs Representative Kallas announced the EU approved its 17th sanction package against Russia which targets nearly 200 shadow fleet ships and stated that more sanctions on Russia are in the works. EU's Kallas separately commented that the most important is the oil price cap regarding the new sanctions on Russia.
• EU Commission President von der Leyen said regarding the latest Russian sanctions that "An 18th package is being prepared with further hard-hitting sanctions" and "It’s time to intensify the pressure on Russia to bring about the ceasefire".
• German Foreign Minister said they expect US allies not to tolerate the fact that Russia did not impose an immediate ceasefire, while he added that as long as Russian President Putin is not serious about negotiations, Europeans will be ready to impose further sanctions on Russia and noted there is a great readiness in the US to consider additional sanctions on Russia.
• US President Trump said we'll see when asked whether the US will impose Russia sanctions after the EU. However, it was later reported that Secretary of State Rubio said the US will impose new sanctions on Russia if there is no progress on a peace deal, according to FT.

ASIA-PAC

NOTABLE HEADLINES

• Chinese President Xi said they must strengthen confidence and handle their own affairs in the face of a complex external environment and should focus on stabilising the market and expectations, according to Xinhua.
• PBoC reiterated to implement moderately loose monetary policy and meet the financing needs of the economy, while it will make good use of incremental policies and resolutely safeguard financial security. Furthermore, it is to support economic restructuring and transformation, as well as support the private economy and stabilise foreign trade.
• US Republican financial officers from multiple states asked the SEC Chair to investigate Chinese firms listed on US exchanges, and determine if they should be delisted for failing to safeguard US investors, according to FT.
• Hong Kong pension fund managers are reportedly sounding the alarm of potential forced selling of US Treasury holdings following Moody's downgrade of the US rating, according to Bloomberg sources.
• BoJ released briefing material used at a meeting with bond market participants which noted some members said JGB market functionality is improving as a trend due to the BoJ taper.

EU/UK

NOTABLE HEADLINES

• BoE's Pill said his "dissenting vote stems from a concern that the pace of withdrawal of monetary policy restriction since last summer – quarterly cuts of 25bp – is too rapid given the balance of risks to price stability". Pill also stated "we should not be dependent on how the data turns out" and cannot assume that the inflation "pain" of new economic shocks will dissipate quickly.
• ECB's Escriva said the global environment is defined by geopolitical, trade tensions and the unpredictable policies from the US administration, while he added that these factors pose risks to the financial system's stability.
• ECB's Knot said the mid-term inflation outlook is too uncertain to say whether a rate cut is needed in June, while he added that projections will likely show lower inflation in 2025 and 2026 with the longer-term outlook uncertain.
• ECB's Schnabel said disinflation is on track, though new shocks could pose new challenges and tariffs could be disinflationary in the short run but result in upside risk over the medium term.
• ECB's Wunsch said rates may need to be mildly supportive and market pricing is reasonable.

DATA RECAP

• German Producer Prices MM (Apr) -0.6% vs. Exp. -0.3% (Prev. -0.7%)
• German Producer Prices YY (Apr) -0.9% vs. Exp. -0.6% (Prev. -0.2%)
• EU Consumer Confidence Flash (May) -15.2 vs. Exp. -16.0 (Prev. -16.7)