China’s industrial profits surged 24.7% in April from a year earlier, the highest growth since November 2023, driven by rising energy prices and strong gains in electronics and mining sectors. Profits in the petroleum processing industry nearly doubled in the January-April period, while computing and electronics earnings more than doubled year on year. The recovery remains uneven however, with automobile profits still down 16.8% and furniture manufacturing profits falling 54.4%, as weak retail sales and a deepening property slump continue to weigh on broader economic momentum.

Goldman Sachs raised its S&P 500 year-end target to 8,000 from 7,600, citing strong corporate earnings growth, with earnings-per-share forecasts lifted to $340 for 2026, implying 24% year-on-year growth, and $385 for 2027. AI infrastructure beneficiaries are expected to drive around half of the index’s earnings growth this year, with Goldman noting semiconductor stocks have recently outpaced their forward earnings. The upgrade adds to a growing wave of bullish broker calls, with UBS last week also raising its outlook citing robust AI-driven earnings offsetting inflationary pressures and Iran-related supply risks.

Europe is weighing measures to curb U.S. Big Tech dominance, with a Cloud and AI Development Act due June 3 expected to restrict but not block Amazon, Microsoft and Google from EU public procurement tenders, where the three firms hold a combined 63% of the global cloud market. A separate decision on mobile satellite spectrum will reserve the bulk of frequencies for European firms, though Starlink and Amazon’s Leo service are likely to retain some access. Internal divisions however temper the ambition, with EU tech chief Virkkunen favouring clear rules over outright exclusion, and analysts warning Europe faces a €1 trillion investment gap versus the United States.

The 6M Euribor decreased with 3 basis points to 2.52% compared to previous business day. The 10Y Swap increased with 2 basis points to 3.01% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.

European Central Bank (ECB) board member Isabel Schnabel has called for a rate hike in June, arguing that persistently high energy prices are spilling over into the broader economy. Eurozone inflation reached 3% last month, well above the ECB’s 2% target. Schnabel stated that even a peace deal with Iran would not remove the need for action, as energy infrastructure damage and supply chain disruptions are already entrenched. Markets have fully priced in two hikes, while economists expect two hikes followed by a cut in mid-2027. Economic growth remains fragile, with the European Commission forecasting just 0.9% expansion in 2026.

Negotiations between the United States and Iran over a ceasefire extension remain stalled, primarily over Iran’s nuclear programme and access to frozen Iranian assets abroad. A 60-day truce extension is under discussion, during which Iran would gradually reopen the Strait of Hormuz in exchange for the US lifting its naval blockade. Despite earlier optimism from President Trump, key issues remain unresolved. Markets responded positively to hopes of a deal, while oil prices fell in anticipation of the strait reopening.

US bond markets are signalling that interest rates may not be high enough. The 2-year Treasury yield rose above 4.1%, well above the Federal Reserve’s target range of 3.50% to 3.75%, while the 10-year yield approached 4.7%. Wholesale prices surged 6% in April, driven by energy costs linked to the Iran war. Markets now price in a 57% chance of at least one rate hike by December. New Fed Chair Kevin Warsh faces a challenging inflation environment as he takes office.

The 6M Euribor decreased with 5 basis points to 2.55% compared to previous business day. The 10Y Swap decreased with 9 basis points to 2.99% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.

Upcoming listings from SpaceX, OpenAI and Anthropic are expected to trigger major passive investment flows due to new fast-track index inclusion rules. With potential valuations of $1.75tn to $2tn, inclusion could force roughly $95bn of rebalancing out of existing large-cap stocks, particularly in the US tech sector. Limited free float, in some cases around 5 percent, may drive short-term price spikes and volatility as index-tracking funds are required to buy at prevailing market valuations.

US lawmakers are pushing to tighten oversight of a $219bn stabilization fund used to provide dollar liquidity to foreign economies, highlighting concerns about transparency and political use of public resources. Recent interventions included a $20bn facility for Argentina, of which $2.5bn was drawn and quickly repaid, and discussions of additional support for countries affected by geopolitical tensions. The proposal would require prior congressional notification and detailed reporting, reflecting broader tensions over fiscal governance and the role of the US in global financial stability.

Options-based income funds are rapidly expanding in Europe as investors search for higher yields, with assets rising from $320mn to $7.8bn in two years and UK trading volumes increasing from £110,000 in 2022 to £1.15bn last year. These funds typically generate income through covered call strategies, offering yields around 10 percent but limiting upside and exposing investors to capital losses. The trend reflects weaker dividend yields and uncertainty in bond markets, though very high yields above 20 percent may indicate unsustainable returns and potential erosion of capital.

The 6M Euribor decreased with 2 basis points to 2.60% compared to previous business day. The 10Y Swap is unchanged at 3.13% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.

More than 37 European banks have backed a single euro stablecoin project led by Amsterdam-based Qivalis, reflecting growing concern over US dollar dominance in crypto markets. Supporters include BNP Paribas, ING, UniCredit, ABN Amro and Rabobank. The initiative aims to improve cross-border payments and settlement efficiency. Policymakers, including Christine Lagarde, the European Central Bank President, have warned that dollar stablecoins risk increasing Europe’s dependency on the US currency.

Minutes from the Federal Reserve’s April meeting show many policymakers wanted to remove language signalling a bias towards future rate cuts. Rising inflation driven by higher fuel prices linked to the Iran war increased concern about easing policy too soon. While rates were held at 3.5 to 3.75 per cent, several officials dissented over the guidance. The divisions mark the most significant split among policymakers since 1992.

Foreign selling of Asian equities accelerated in May as investors grew more cautious about war-driven inflation and rising borrowing costs squeezing corporate margins. Net outflows totalled $24.75bn month to date, including a record $17.27bn sold in the past week across several regional markets. A rise in the 30-year US Treasury yield to its highest since 2007 added valuation pressure, especially in growth-heavy markets. Indonesia and Thailand still recorded modest inflows.

The 6M Euribor increased with 3 basis points to 2.62% compared to previous business day. The 10Y Swap decreased with 9 basis points to 3.13% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.

Accelerating inflation has pushed the U.S. real fed funds rate below zero for the first time in three years, leaving the Fed and other major central banks facing deeply negative inflation-adjusted policy rates amid one of the largest energy shocks in history. The ECB’s real policy rate stands at negative 1%, while financial conditions in the U.S. are the loosest in four years according to Goldman Sachs, with the Philadelphia Fed forecasting headline CPI of 6% this quarter. Incoming Fed Chair Kevin Warsh faces a difficult task, with the bond market increasingly signalling that rate hikes can no longer be deferred.

Taiwan and South Korea have surged past several long-established Western bourses in global stock market rankings, with Taiwan overtaking Canada to become the world’s sixth-largest market at $4.7 trillion and South Korea leapfrogging the U.K. into eighth place at $4.4 trillion, driven by AI-linked semiconductor demand. TSMC alone accounts for more than 40% of Taiwan’s market capitalisation, while Samsung and SK Hynix together make up a record 42.2% of South Korea’s Kospi, effectively turning both indices into AI and semiconductor proxies. The concentration raises risks however, with foreign investors recently dumping roughly $13 billion in South Korean stocks, prompting warnings of growing concentration risk across Asian portfolios.

Over 47,000 Samsung Electronics workers will strike from Thursday after wage talks collapsed, sending shares 3% lower, with the dispute centred on demands for performance bonuses equivalent to 15% of operating profit and the removal of bonus payout caps. Samsung rejected a mediation proposal from South Korea’s National Labor Relations Commission, citing “excessive demands” that would undermine fundamental management principles. The South Korean government signalled it may invoke emergency powers to suspend the strike for 30 days if disruption escalates, as the action threatens output at one of the world’s leading semiconductor producers.

The 6M Euribor increased with 3 basis points to 2.59% compared to previous business day. The 10Y Swap increased with 4 basis points to 3.22% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.

The Reserve Bank of India (RBI) is expected to transfer a record surplus of nearly 3 trillion rupees ($31.2 billion) to the government this week, surpassing last fiscal year’s 2.7 trillion rupees. The payout provides a key buffer as escalating energy prices from the Iran war inflate India’s import bill and widen its current account deficit. The 10-year benchmark yield has risen around 50 basis points this year to 7.10%, while the rupee has weakened nearly 7%.

Around three-quarters of Americans report that their incomes are failing to keep pace with inflation, according to a CBS News poll conducted in May. In April, U.S. inflation rose 3.8% annually while wage growth reached only 3.6%, marking the first time since 2023 that consumer prices outpaced earnings. Energy prices drove 40% of the April inflation spike, with gasoline costs up over 28% year-on-year. Economists warn that sustained pressure on household budgets could ultimately dampen consumer spending, which accounts for roughly two-thirds of U.S. economic activity.

The International Monetary Fund (IMF) raised its growth forecast for the United Kingdom to 1.0% for 2026, up from 0.8%, citing stronger-than-expected pre-war economic momentum. However, the IMF cautioned that domestic political uncertainty could dampen consumption and investment. Inflation is projected to approach 4% by year-end, though the Bank of England (BoE) is expected to reach its 2% target by end-2027 without raising rates, provided energy prices decline as markets anticipate.

The 6M Euribor increased with 1 basis point to 2.56% compared to previous business day. The 10Y Swap decreased with 2 basis points to 3.18% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.

Global government bond yields surged as fears of an inflationary shock from the Iran war intensified. The 30-year United States Treasury yield ended last week at 5.12 percent, the highest since 2007, while long-dated yields in Japan and the United Kingdom also hit record or multi-decade highs. High inflation data, rising oil prices and expectations of tighter Federal Reserve policy pressured bonds and equities, with major stock indices falling.

The European Union plans to cut steel import quotas by 47 percent from July 1 and impose a 50 percent tariff on volumes above the quota, a move Ukrainian officials warn could severely damage Ukraine’s economy. Ukraine exported 2.65 million tonnes of steel to the EU last year, and the proposed limits could reduce exports by around 70 percent, costing up to €1 billion in revenue.

The UK government is expected to postpone a planned fuel duty increase due in September, extending a temporary tax cut first introduced in 2022. Letting the cut expire would raise petrol prices by 5 pence per litre. The move comes as oil prices have risen about 60 percent since the Iran war began and as ministers prioritise cost of living pressures. Fuel duty raised £24 billion last year and freezing it could widen future budget shortfalls.

The 6M Euribor is unchanged at 2.55% compared to previous business day. The 10Y Swap increased with 13 basis points to 3.20% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.

Sterling weakened as the UK political crisis deepened following the resignation of the health minister, increasing pressure on the prime minister after heavy local election losses. The pound fell about 0.2 percent against the dollar and eased versus the euro, while government bond prices held gains. Markets are focused on rising uncertainty over the future direction of fiscal policy, even as UK equities edged higher.

Investors expect US Treasury yields to remain elevated as persistent inflation, driven largely by higher oil prices linked to the Middle East conflict, weighs on markets. Long-dated yields have risen sharply, lifting borrowing costs across the economy. Uncertainty about the policy approach of the incoming Federal Reserve chair adds to expectations of a steeper yield curve, with markets sceptical that inflation can be eased quickly through interest rate policy alone.

A Bank of Japan board member signalled support for an early interest rate hike, saying rates should rise as soon as possible if there are no clear signs of an economic downturn. The comments increase the likelihood of a June move, as inflation pressures intensify due to higher energy costs linked to the Middle East conflict. Markets now see a high probability of a near-term hike, with concerns growing over negative real interest rates.

The 6M Euribor increased with 6 basis points to 2.55% compared to previous business day. The 10Y Swap decreased with 4 basis points to 3.07% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.

Asia-Pacific markets traded mixed as investors weighed higher than expected U.S. inflation against renewed Middle East tensions, with Trump describing the month-old ceasefire with Iran as “unbelievably weak” and rejecting Tehran’s latest counterproposal. Oil futures extended losses, with WTI falling 1.18% to $100.97 per barrel and Brent down 1.16% to $106.52. Markets also follow the upcoming Trump-Xi meeting, where trade is expected to dominate discussions.

Emerging market portfolio flows rebounded to $58.3 billion in April, reversing most of the $66.2 billion outflow recorded in March when the Iran war rattled markets, according to IIF data. The recovery was led by fixed income, with emerging market debt drawing $51.9 billion, while ex-China debt inflows reached nearly $50 billion. The IIF cautioned however that the rebound did not signal a full return to pre-crisis optimism, warning that “immediate funding stress has eased” but “the underlying shock has not been absorbed.”

Spot gold fell 0.3% as stronger-than-expected U.S. inflation data dimmed hopes for Fed rate cuts, with markets now pricing a 30% chance of a rate hike by December according to CME FedWatch. Traders largely priced out rate cuts this year. India’s decision to raise gold and silver import tariffs to 15% from 6% pushed domestic futures higher, adding a further headwind to global gold demand.

The 6M Euribor increased with 2 basis points to 2.49% compared to previous business day. The 10Y Swap increased with 6 basis points to 3.13% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.

Norway’s core inflation rose to 3.2% year-on-year in April, up from 3.0% in March, matching both analyst forecasts and the projection of Norges Bank. The figure remains well above the central bank’s 2.0% target, driven by rising wages and high energy prices. Norges Bank responded by raising its policy rate by 25 basis points to 4.25%, ahead of analyst expectations. Analysts do not foresee another hike in June but expect one later in the year.

Peace negotiations between the US and Iran are deteriorating after both sides rejected each other’s latest proposals. Iran offered to transfer part of its highly enriched uranium stockpile to a third country but ruled out dismantling its nuclear facilities, while also demanding war reparations, lifting of sanctions, and control over the Strait of Hormuz. President Trump dismissed the offer as “totally unacceptable.” The standoff keeps the strait effectively closed, pushing Brent crude up 3.5% to near $105 per barrel, while the 10-week conflict has killed thousands and upended global energy markets.

The Bank of Japan (BOJ) has signalled a possible rate hike as early as its June 16 meeting, with traders pricing in a 77% probability of a rate hike. The April board meeting ended in an unusually divided 6-3 vote to hold rates at 0.75%, the lowest among major economies. Several board members flagged upside inflation risks linked to the Middle East conflict, arguing that rates may need to rise toward the neutral level sooner than previously anticipated.

The 6M Euribor decreased with 5 basis points to 2.47% compared to previous business day. The 10Y Swap increased with 4 basis points to 3.07% compared to previous business day.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented.