Market drivers and catalysts
Equities: Trade optimism; tech leads; Europe banks hit; UK housebuilders rally
Volatility: VIX slips below 17; market nerves calm; Fed in focus
Digital assets: Bitcoin steady; ETH ETF inflows; IBIT, ETHA outperform
Fixed Income: Yield sideways ahead of US CPI, 10-year US Treasury auction today
Currencies: USD sideways ahead of US CPI. Sterling weaker after weak May jobs data
Commodities: Crude struggles near resistance; Gold up ahead of inflation print
Macro events: US May CPI & 10-year Notes auction
Macro data and headlines
US and China reached a preliminary agreement on implementing the Geneva consensus on trade relations, with US negotiators confident that the rare earth minerals and magnets issues will be resolved. Delegations will present the proposal to their leaders for approval and subsequent implementation. The London talks aimed to solidify China's pledge to ease rare earth shipments, made during last month's Geneva discussions.
The World Bank cut its 2025 global growth forecast to 2.3%, the weakest in 17 years outside of recessions, and the 2026 forecast was lowered to 2.4%. Growth is hindered by trade barriers and uncertain policies. Halving tariffs by May 2025 could boost growth by 0.2 percentage points in 2025 and 2026.
US and Mexico are negotiating to reduce or eliminate Trump's 50% steel tariffs on imports. A likely outcome is a quota allowing a certain volume from Mexico to enter duty-free or at a reduced rate, with excess imports facing the full tariff.
According to the US Energy Information Administration, US oil production is set to decline next year for the first time since the pandemic, edging lower to 13.3 million barrels per day from 13.5 million barrels this year, largely as lower prices discourage new well completions.
Macro calendar highlights (times in GMT)
1230 – US May CPI
1430 – EIA's Weekly Crude and Fuel Stock Report
1700 – US to Sell USD 39 billion 10-year Notes
1800 – US May Federal Budget Balance
Earnings events
Today: Oracle, Inditex
Thursday: Adobe, Kroger
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
US: US stocks extended their winning streak as optimism about US-China trade talks lifted markets. The S&P 500 (+0.55%) and Nasdaq (+0.63%) posted a third day of gains, powered by Tesla (+5.7%), Meta (+1.2%), and Alphabet (+1.3%). Most sectors advanced, led by energy and tech, as investors awaited fresh inflation data. Commerce Secretary Lutnick suggested trade discussions were progressing well, but traders remained cautious ahead of the CPI release. The bond market is bracing for volatility as key Treasury auctions and inflation data may shift expectations for Fed policy.
Europe: European markets were mixed as trade talk optimism was offset by banking sector weakness. The STOXX 50 fell 0.4%, with sharp losses in UBS (-7%) after new capital requirements spooked investors. Other major banks like Societe Generale, BNP Paribas, and Santander all declined. Novo Nordisk outperformed (+2%) after activist fund Parvus took a stake. The DAX dropped 0.77% on weak performance from Siemens Energy and Rheinmetall, while France’s CAC 40 edged up 0.2% on trade deal hopes and strength in Stellantis (+5.1%).
UK: UK markets edged toward record highs, with the FTSE 100 up 0.2%. Softer labour data (unemployment rose to 4.6%) boosted expectations for a September Bank of England rate cut, supporting housebuilders like Bellway (+7.9%) and Persimmon (+6%). Energy stocks tracked higher oil prices, but precious metals miners lagged. Sterling weakened as wage growth cooled. Investors focused on the outcome of US-China talks and potential UK government housing sector support.
Asia: Asian stocks rose as China and the US reached a preliminary trade framework, pushing the Hang Seng (+0.9%) to a near three-month high and lifting Chinese mainland markets. Japan’s Nikkei gained 0.5%, helped by easing inflation concerns, while South Korea’s KOSPI hit an 11-month high on chipmaker strength. However, the lack of concrete details from trade talks kept broader gains in check, and caution prevailed ahead of US inflation data.
Volatility
Market volatility remains subdued. The VIX slipped to 16.95, its lowest since March, and short-term VIX1D eased back toward the mid-teens after recent CPI-related jitters. Futures signal only modest concern ahead of next week’s Fed meeting, and options activity has rotated from broad index hedges to single-stock tech calls. Overall, investors appear cautiously optimistic, expecting manageable swings rather than sharp shocks.
Digital Assets
Bitcoin held steady just below $110,000, up ~60% year-to-date, while BlackRock’s IBIT ETF closed at a record $62.29, with assets surpassing $69 billion. Ethereum climbed to $2,796 (+7% for ETHA), buoyed by strong ETF inflows and surging derivatives volume, now exceeding Bitcoin’s. Long-term investors are driving real-money inflows, with Ethereum’s growing DeFi and ETF activity a standout. Crypto-related stocks saw mixed moves, with MARA (+1.35%) and IBIT (+0.84%) outperforming.
Fixed Income
US Treasury yields have traded in a tight range since the strong reaction to the Friday jobs report, with a slight rally in longer-dated treasuries yesterday neutralized ahead of today’s important US May CPI number. The US treasury will also be auction 10-year notes late today.
UK 2-year Gilt yields fell some eight basis points yesterday on weak May UK payrolls numbers as the market priced in more BoE easing for this year, with two full 25 basis point rate cuts price through the December BoE meeting.
Commodities
Crude prices ended lower on Tuesday as profit-taking emerged in Brent ahead of key resistance above USD 68, while WTI struggled to gain a foothold above USD 65. While US–China trade detente remains a key focus, traders also digested an update from the EIA predicting a small drop in US crude production next year, peak summer demand ahead of an OPEC+-led glut later in the year, and the EU’s proposal for a tougher Russian fuel ban.
Gold trades higher despite the US and China agreeing to ease trade tensions, with focus on today’s US inflation print, investor appetite for US 10-year notes being auctioned today, continued central bank demand, and ongoing demand for investment metals as seen through the recent rallies in platinum and silver.
Currencies
The US dollar traded sideways yesterday as EURUSD failed in a bid to rise above local resistance above 1.1440 yesterday, while USDJPY poked slightlyabove the pivotal145.00 area without any follow through momentum. USD traders are likely eyeing today’s US May CPI number for direction.
Sterling weakened yesterday on a weak May payrolls number, with EURGBP vaulting above 0.8460 for the first time in nearly a month as UK short yields dipped sharply. GBPUSD slipped below 1.3500 and posted its lowest closing level in eight days.
