2026-05-29 Friday
23:31:40
[EU to Unfreeze €16.4 Billion in EU Funds for Hungary] European Commission President Ursula von der Leyen announced on the 29th that the EU will unfreeze €16.4 billion in EU funds belonging to Hungary. Speaking at a joint press conference following talks with Hungarian Prime Minister Péter Majol, von der Leyen said the €16.4 billion includes €10 billion from the "Next Generation EU" program, €4.2 billion related to the conditions of the cohesion fund, and €2.2 billion released due to progress made by Hungary in university autonomy. Von der Leyen said the new Hungarian government and the European Commission have reached an agreement on addressing corruption and the rule of law. Hungary has decided to join the European Prosecutor's Office to ensure the security of EU funds and has agreed to strengthen the powers of anti-corruption agencies and revise public procurement laws. Majol stated that this funding, equivalent to approximately 13% of the Hungarian government's annual budget, will be used to support SMEs, transportation, healthcare, education, energy infrastructure, and digital technology development. (Xinhua)
21:53:33
[The pound is consolidating, awaiting direction; support below 1.34 and resistance at 1.35 form a range-bound pattern] ⑴ The pound is likely to remain within a narrow range in the near term, as bears have repeatedly failed to hold momentum below the psychological level of 1.3400, while bulls have been unable to break through the resistance level above 1.35, resulting in a lack of clear directional catalysts. ⑵ The pound weakened slightly after Bank of England Governor Bailey made dovish comments, stating that policymakers do not feel an immediate urgency to raise interest rates. However, optimism surrounding the extension of the US-Iran ceasefire agreement, which is currently awaiting approval, provided some support for the pound. ⑶ Thursday's US PCE data was slightly lower than expected, moderated expectations of a hawkish Fed policy, and added a less favorable factor for the dollar to the macroeconomic backdrop. This may prompt pound bulls to refocus on the 1.35 level. (4) From a technical perspective, the pound is supported by the 200-day moving average at 1.3423 and the recent trend low at 1.3380. More important support is located at the lower Bollinger Band on the 30-day chart at 1.3352. The upside resistance is located at the top of the daily Ichimoku Cloud at 1.3451, followed by the Fibonacci level at 1.3481. The high of this week between 1.3504 and 1.3509 forms the upper resistance.
20:51:51
[AI Chip Demand Ignites Tech Stocks, Global Equity Funds See Net Inflows of $458 Million, Bond Funds See Eight Consecutive Weeks of Net Inflows] ⑴ In the week ending May 27, global investors made net purchases of $458 million in equity funds, reversing the previous week's net outflow of $6.56 billion. Rising AI-related stocks boosted demand, but cautious sentiment stemming from US-Iran talks limited buying. ⑵ The MSCI World Index hit a new intraday high of 1129.06 points on Friday. US equity funds saw net inflows of $1.97 billion, European funds saw net inflows of $678 million, but Asian funds saw net outflows of $3.92 billion. Sector funds as a whole saw net inflows of $5.14 billion, with the technology and financial sectors attracting $4.98 billion and $1.05 billion respectively. ⑶ Global bond funds saw net inflows for the eighth consecutive week, reaching $18.15 billion. Short-term bond funds, euro-denominated bond funds, and corporate bond funds led the gains, with net inflows of $3.67 billion, $3.16 billion, and $1.4 billion respectively. (4) Money market funds saw net outflows of $4.46 billion, reversing the previous week's net inflows of $18.12 billion. Precious metals funds, including gold, experienced net outflows of $584 million, marking the fourth weekly outflow in five weeks. (5) Emerging market equity funds saw outflows for the fifth consecutive week, totaling $4.45 billion, while bond funds saw net inflows of $1.08 billion.
19:49:08
[Energy Price Surge Impacts Local Currencies, Indonesia and India Intervene] (1) On Friday, Indonesia and India intervened to support their currencies as soaring energy prices put downward pressure on both countries' currencies. (2) Despite authorities selling foreign exchange, the Indonesian rupiah fell 0.5% against the US dollar, depreciating 7% year-to-date, leading the decline among emerging markets. The Indonesian central bank stated that it would achieve “all-weather, global” exchange rate stability for the rupiah through spot market intervention, non-deliverable forward operations, and the purchase of government bonds. (3) The Indian rupee rose 0.7% on Friday, ending a two-day losing streak, and has depreciated 5.7% year-to-date. According to informed traders, the Reserve Bank of India has been intervening in the past few days by selling US dollars in both offshore and onshore markets to support the rupee.
19:29:12
[Buy the rumor, sell the fact: ECB and BOJ rate hikes in June usher in a new tightening cycle; US Treasury yields unlikely to have peaked] ⑴ The market faces the risk of buying the rumor and selling the fact. The progress towards a 60-day framework between the US and Iran appears more like a tactical move to buy time than a final solution. The key issue of Iran's highly enriched uranium stockpile means that crude oil prices may be anchored in the $80-$90 range or higher. ⑵ Accelerated European defense spending, massive sovereign bond issuance, and continued tightening by the ECB and BOJ should keep global yields high. Combined with persistent inflationary pressures and core inflation indicators far above the Fed's target path, this supports further increases in US Treasury yields and reinforces the belief that the Fed under Warsh will favor tightening rather than returning to easing. ⑶ The ECB's June rate hike was widely anticipated, but more importantly, Eurozone inflation is far above target and fiscal policy is shifting towards expansion. Trillions of euros in new spending will push up German and broader Eurozone government bond yields. The BOJ faces similar pressure, with continued wage growth and sticky inflation supporting further tightening after the June rate hike. (4) The Bank of England will find it increasingly difficult to remain on hold as interest rates continue to rise at the hands of the ECB and the Bank of Japan, facing pressure from higher imported inflation and energy costs. Canada also faces the challenge of strong commodity prices and inflation that is more persistent than expected. (5) The three-month and six-month annualized core PCE trends are 3.7% and 3.3% respectively, 1% higher than the Fed's year-end inflation target. In the current environment, a timely return to the target is mathematically impossible. The global interest rate environment will be less accommodative in the coming quarters, with a gradual acknowledgment that policy rates may need to remain restrictive for a much longer period than the market expects. (6) The Kansas City Fed President warned that the Iranian oil shock will not be temporary, and that inflation is overheated and has been above target for too long. It cannot be assumed that the recent price increases are transitional within an acceptable timeframe, and the Fed must continue to signal its commitment to price stability. (7) On Friday, attention will be focused on the April advance economic indicators report released at 20:30 Beijing time. The impact of the Iranian war on international commodity trade and inventories may trigger significant volatility. Also pay attention to the Chicago PMI and speeches by several Fed officials. Trading is biased towards range trading, but with a preference for selling on rallies.
19:14:29
[Iran Conflict Pushes Up Prices, Eurozone Inflation Has Not Yet Peaked, ECB Rate Hike Almost a Certainty] ⑴ Preliminary data released on Friday showed that inflation in the four major Eurozone economies exceeded the European Central Bank's 2% target for the third consecutive month in May, with rising fuel costs triggered by the Iran conflict beginning to spread to other commodity prices. ⑵ French inflation rose from 2.5% to 2.8%, Italian inflation rose from 2.7% to 3.2%, Spanish inflation remained stable at 3.2%, while data from most German states that have reported inflation declined. Germany implemented fuel discounts in May and June to mitigate the impact of rising gasoline prices. ⑶ Spain and Italy both reported significant increases in transportation and entertainment prices, likely a chain reaction of rising fuel costs. Fresh food prices in France jumped 4.1%, and service sector inflation rose slightly. ⑷ Institutions expect the Eurozone's overall data to be released on Tuesday to show a 3.3% overall inflation rate in May, and a 2.4% core inflation rate excluding energy, food, alcohol, and tobacco. Core inflation indicators in both Italy and Spain have risen. (5) Economists say inflation has not yet peaked and expect Eurozone inflation to rise until August, with its future largely dependent on the situation in the Middle East. The baseline scenario is that the situation will normalize by the end of June. (6) Since the end of April, hopes for a ceasefire agreement between the US and Iran have driven oil prices down sharply, with Brent crude falling from $118 to $92 per barrel, but still well above the pre-war level of around $70. Continued deflation in French manufacturing suggests that this round of inflationary shocks should be smaller than those in 2022.
18:27:07
[Non-Farm Payrolls Report Tests US Stock Market Rally: Expected 96,000 New Jobs, Over 150,000 Could Trigger Overheating Concerns] ⑴ The US May non-farm payrolls report will be released on June 5th, with the market expecting an unemployment rate of 4.3% and 96,000 new jobs. Investors are increasingly concerned that persistently high inflation and potential interest rate hikes could hinder the upward momentum of US stocks. The S&P 500 has risen more than 10% this year, with technology stocks leading the market driven by the AI boom. ⑵ Data released on Thursday showed that the PCE price index rose 3.8% year-on-year in April, driven by rising energy prices during the Iran war, the largest increase since May 2023. A strong jobs report accompanied by rising inflation will continue to change the Fed's policy outlook; a weaker-than-expected report could alleviate concerns about the Fed shifting to tightening. ⑶ More than 150,000 new jobs could exacerbate concerns about an "overheated" economy and push up US Treasury yields, which would be detrimental to the stock market. The Atlanta Fed's GDPNow model tracks a 3.8% growth rate in the second quarter, and with strong corporate earnings in the first quarter, the market should focus more on overheating rather than recession risks. (4) Broadcom will release its earnings report on Wednesday, posing a test for AI trading and semiconductor stocks. The Philadelphia Semiconductor Index has risen approximately 80% since its low on March 30. The 10-year US Treasury yield of approximately 4.46% remains a key risk to the stock market; a significant and sustained rise in interest rates would be most unsettling for investors.
18:17:26
[Bessant: US-Iran "may have reached a preliminary agreement," 2s-10s yield spread holds steady at 42.7 basis points] ⑴ US Treasury Secretary Bessant stated that the US and Iran "may have reached a preliminary agreement." The agreement still requires Trump's approval and includes provisions for the gradual reopening of the Strait of Hormuz and Iran's commitment to reduce some of its nuclear programs. The Wall Street Journal reported that the gap between corporate profits and worker wages has hit a record high, with the labor share falling to a historic low. ⑵ Chevron's CEO warned that oil prices will jump this summer as supply decreases. The Strait of Hormuz blockade has removed up to 13 million barrels of supply per day from the global market and depleted its "shock absorbers." On Thursday, the 2s-10s US Treasury yield spread ranged from 42.8 to 41.2 basis points, last quoted at 42.7 basis points; the 5s-30s spread was last quoted at 82.3 basis points. (3) The latest yields for 2-year and 5-year maturities were 4.02%, 4.153%, 4.451%, and 4.977%, respectively. TYU26 trading volume reached 348,000 lots, higher than the average. Friday's economic data includes the April trade deficit (expected -$86.5 billion) and the May Chicago PMI (expected 50.5). Federal Reserve Vice Chairman Bowman and Philadelphia Fed President Paulson will deliver speeches.
18:10:25
[Capturing Value with Forex Options: Premiums are Relatively Low When Implied Volatility Approaches Actual Volatility] ⑴ Forex options rely on volatility and rapid directional movements, but the forex market has recently lacked both. Implied volatility across all maturities is generally low, making paying premiums seem like a losing proposition. ⑵ Taking the AUD/USD pair as an example, the one-month implied volatility in mid-May was 7.7, while the historical actual volatility over the past month was 7.5, almost sufficient to support the implied level. If the spot market repeats its recent performance, holders can almost cover the premium; this narrow gap provides real value. ⑶ When the AUD/USD pair falls sharply, actual volatility surges, pulling implied volatility up from 7.7 to 8.8. Option holders profit not only from the directional movement but also from the volatility expansion itself. Both subsequently fall back to 7.7, returning to their starting point. ⑷ In a low-volatility environment, the threshold for profit may be lower than it appears. When implied volatility approaches actual volatility, option costs are relatively low, and a moderate recovery in the spot market is enough for holders to be profitable.
18:03:31
[Next Week's Focus: Non-Farm Payrolls Report: Expected 96,000 New Jobs, Exceeding 150,000 Could Trigger Overheating Concerns and Pressure the Stock Market] ⑴ The US May non-farm payrolls report will be released on June 5th. The market expects 96,000 new jobs, with the unemployment rate projected at 4.3%. Investors remain wary of persistently high inflation and potential interest rate hikes that could hinder stock market gains. ⑵ If the jobs report shows more than 150,000 new jobs, it could exacerbate concerns about an "overheated" economy and push up US Treasury yields, which would be detrimental to the stock market; conversely, if it is weaker than expected, it could alleviate concerns about the Federal Reserve shifting to a tightening stance. Thursday's data showed that the PCE price index rose 3.8% year-on-year in April, the largest increase since May 2023. ⑶ Broadcom will release its quarterly earnings report on Wednesday, posing a test for AI-related transactions and semiconductor stocks. The Philadelphia Semiconductor Index has risen about 80% since its year-to-date low on March 30th, while the S&P 500 has risen 19% over the same period. The market expects a higher probability of interest rate hikes this year than rate cuts, and the 10-year US Treasury yield of approximately 4.46% remains a key risk factor for the stock market.
18:00:26
[Global Bond Markets Experience Dramatic Volatility in May: US 30-Year Yield Surges to 5.2% Before Falling Back as Market Shifts from Rate Hike Expectations to Economic Slowdown] ⑴ The May conflict with Iran impacted global bond markets. The yield on the US 30-year Treasury note surged to approximately 5.2% on May 20, its highest level since 2007. The yield on the UK 30-year gilt rose to 5.87%, its highest since 1998; the yield on the German 10-year gilt reached its highest level since 2011; and some Japanese government bond yields hit record highs. ⑵ As the US and Iran announced progress in negotiations and weak economic data weakened the case for a rate hike, borrowing costs fell along with oil prices. Between April 30 and May 29, the yield on the US 10-year Treasury note rose by 6 basis points, while the yield on the German 10-year gilt fell by 6 basis points, and the yield on the UK 10-year gilt fell by approximately 21 basis points. ⑶ Traders have completely withdrawn their bets on a Fed rate cut this year and at one point fully priced in a 25 basis point rate hike in December. The U.S. PCE price index rose 3.8% in April, the largest increase since May 2023. (4) Franklin Templeton's head of European fixed income stated that the market is concerned that inflation will persist longer than expected. Bank of America analysts believe the key driver of the U.S. Treasury sell-off is "deteriorating fiscal dynamics," while some investors' doubts about the independence of the new Federal Reserve Chairman, Warsh, are also a factor.
16:18:42
[Pound Sterling Falls Over 1% in May Amid Political Uncertainty and Economic Challenges] ⑴ The pound traded around 1.342 at the end of May, having fallen more than 1% against the dollar during the month. ⑵ This decline comes amid rising political uncertainty in the UK (the Prime Minister's Labour Party suffered setbacks in local elections) and ongoing negotiations between the US and Iran to end a three-month conflict, which exacerbated global inflationary pressures. A preliminary agreement to extend the ceasefire for 60 days is still pending approval. ⑶ Challenges facing the UK economy, including a lack of tech stocks, heavy reliance on oil, and a pessimistic overall growth outlook, coupled with its vulnerability to energy shocks, have exacerbated the pound's woes. ⑷ In terms of monetary policy, with oil prices retreating from four-year highs and recent UK data showing a cooling labor market, lower-than-expected inflation, and signs of slowing economic activity, investors have slightly lowered their expectations for further interest rate hikes by the Bank of England this year.
14:56:32
[French Inflation Rises to 2.8% in May, a More Than Two-Year High] ⑴ Driven by the conflict with Iran, rising energy prices have led to France's inflation rate climbing to its highest level in over two years this month, raising expectations that the European Central Bank will raise interest rates for the first time since 2023 at its June meeting. ⑵ Prior to the end of last year, year-on-year inflation rates in several major Eurozone economies had been declining, with France's year-on-year inflation rate falling to 0.4% in January. However, after the closure of the Strait of Hormuz led to higher oil and gas prices, inflation surged in March. ⑶ According to harmonized EU data released by the French National Institute of Statistics and Economic Studies (INSEE) on Friday, French consumer prices rose 2.8% year-on-year in May, accelerating from 2.5% in April. This is the highest level since February 2024, further deviating from the European Central Bank's 2% target. ⑷ INSEE stated that year-on-year energy inflation rose to 16.8% from 14.3% in April, while service price increases accelerated slightly. (5) Before prices accelerated, Insee’s consumer confidence index fell to a three-year low in May, and business sentiment in France also declined.
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