US stocks were mixed with Wall St pulling back from record highs as participants digested data, developments in Capitol Hill and central bank rhetoric - Newsquawk Asia-Pac Market Open

• US stocks finished mixed and underperformance was seen in the tech-heavy NDX with Technology and Communication Services the only sectors in the red amid weakness in mega-cap names, although the Russell 2000 and Dow Jones both saw gains of around 1% as participants digested several moving parts including data with a very solid JOLTS report and ISM Mfg. PMI slightly beat. The attention was also on the Senate which narrowly passed President Trump's sweeping tax and spending bill after VP Vance casted the tie-breaking vote, while there were also a slew of comments from central bank officials at the Sintra Forum including from Fed Chair Powell who did not rule out a July rate cut as he stated that he wouldn't take any meeting off the table or put it directly on the table.
• USD was ultimately little changed amid the choppy risk sentiment with US data, comments from Fed Chair Powell and developments on Capitol Hill the main highlights. Today's data releases included a stronger-than-expected JOLTS report which helped the greenback rebound off lows and ISM Manufacturing PMI also topped forecasts with an increase in Prices Paid although Construction Spending contracted by more than expected. In terms of the Fed, Chair Powell's tone was in fitting with his testimonies to Congress and kept an open mind into the July meeting, as well as noted that they went on hold when they saw the size of the tariffs, while the attention was also on the Senate which passed President Trump's tax bill.
• Looking ahead, highlights include South Korean CPI, Australian AIG Manufacturing & Construction Indexes, Building Approvals & Retail Sales.

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LOOKING AHEAD

• Highlights include South Korean CPI, Australian AIG Manufacturing & Construction Indexes, Building Approvals & Retail Sales.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks finished mixed and underperformance was seen in the tech-heavy NDX with Technology and Communication Services the only sectors in the red amid weakness in mega-cap names, although the Russell 2000 and Dow Jones both saw gains of around 1% as participants digested several moving parts including data with a very solid JOLTS report and ISM Mfg. PMI slightly beat. The attention was also on the Senate which narrowly passed President Trump's sweeping tax and spending bill after VP Vance casted the tie-breaking vote, while there were also a slew of comments from central bank officials at the Sintra Forum including from Fed Chair Powell who did not rule out a July rate cut as he stated that he wouldn't take any meeting off the table or put it directly on the table.
• SPX -0.11% at 6,198, NDX -0.89% at 22,478, DJI +0.91% at 44,495, RUT +0.94% at 2,195.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said regarding the July 9th deadline that they are not thinking about extending it and doubts they'll have a deal with Japan but will possibly have a deal with India. Furthermore, Trump suggested Japan could pay 30% or 35% tariffs, while it was separately reported that the US is to handle Japan later in tariff talks and prioritising India, according to Nikkei.
• White House CEA Chair Miran said he is optimistic about a trade deal with the EU and "we are in crunch time".
• EU reportedly seeks immediate relief from tariffs in key sectors as part of any trade deal with the US and wants immediate relief as soon as an initial agreement is reached, rather than waiting weeks or months for a final accord, while many EU members said a deal without this is unacceptable. It was later reported that the EU toughened its stance on US President Trump's tariffs as the deadline looms, according to FT.
• RTE News understands that EU ambassadors were informed that the ongoing Section 232 investigation into the pharmaceutical sector would continue and would lead to measures "one way or another". It is understood the EU's own drive for simplification of rules is being offered as a concession, as well as plans to increase purchases of LNG and AI technology.
• China’s Foreign Minister said China and the EU should enhance communication, understanding and consolidate mutual trust, while he added that both sides should safeguard multilateralism and the free trade system.
• Germany's Economy Minister said European steel production is disadvantaged through unfair subsidised trade from China.

NOTABLE HEADLINES

• Fed Chair Powell said the US economy is in a pretty good position and inflation has come down close to target, as well as noted the economy is healthy overall and that they went on hold when they saw the size of the tariffs. Powell said the debt path is not sustainable and needs to be addressed sooner or later, while he also noted that he has around 10 months left in his role as Chair and wants to hand over to his successor an economy which is in good shape. Furthermore, Fed Chair Powell said a solid majority of FOMC participants think it will be appropriate to reducing rates later this year and they are carefully watching the labour market, while Powell said he can't say if July is too soon to cut rates and that he wouldn't take any meeting off the table, as well as repeated a data dependant approach.
• WSJ's Nick Timiraos said "Powell dodged a pointed question about July, declining to rule anything out four weeks before a policy meeting. His overall comments offered little to suggest there's any effort to set the stage for a cut this month."
• US President Trump said they have 2 or 3 top choices for Fed Chair.
• US Senate passed President Trump's tax bill after VP Vance broke the tie to pass the Trump tax bill.
• US House GOP leaders in a statement said the House will consider the bill immediately for final passage and put it on President Trump’s desk by the Fourth of July, according to Politico.

DATA RECAP

• US S&P Global Manufacturing PMI Final (Jun) 52.9 (Prev. 52.0)
• US ISM Manufacturing PMI (Jun) 49.0 vs. Exp. 48.8 (Prev. 48.5)
• US ISM Manufacturing New Orders Index (Jun) 46.4 (Prev. 47.6)
• US ISM Manufacturing Prices Paid (Jun) 69.7 vs. Exp. 69.0 (Prev. 69.4)
• US ISM Manufacturing Employment Index (Jun) 45.0 vs. Exp. 47.0 (Prev. 46.8)
• US Construction Spending MM (May) -0.3% vs. Exp. -0.2% (Prev. -0.4%, Rev. -0.2%)
• US JOLTS Job Openings (May) 7.769M vs. Exp. 7.3M (Prev. 7.391M, Rev. 7.395M)

FX

• USD was ultimately little changed amid the choppy risk sentiment with US data, comments from Fed Chair Powell and developments on Capitol Hill the main highlights. Today's data releases included a stronger-than-expected JOLTS report which helped the greenback rebound off lows and ISM Manufacturing PMI also topped forecasts with an increase in Prices Paid although Construction Spending contracted by more than expected. In terms of the Fed, Chair Powell's tone was in fitting with his testimonies to Congress and kept an open mind into the July meeting, as well as noted that they went on hold when they saw the size of the tariffs, while the attention was also on the Senate which passed President Trump's tax bill.
• EUR saw two-way price action and traded both sides of the 1.1800 level after mixed data releases and a slew of ECB rhetoric including from Lagarde who stated that the mission is not yet accomplished, but they are now through that disinflationary process and there is a lot of uncertainty.
• GBP traded indecisively and kept to within the 1.3700 handle with UK Manufacturing PMI printing inline with expectations, while there were comments from BoE Governor Bailey who said they see signs of softening in the economy and labour market, as well as noted that the path of interest rates will continue to be gradually downwards.
• JPY was ultimately firmer on the day albeit with price action also choppy and with late headwinds in USD/JPY after President Trump suggested Japan could pay 30% or 35% tariffs.
• SNB's Zanetti said the central bank has the tools to deal with the current challenging situation and that negative rates are an option, while he added the SNB has all the required instruments, even with zero interest rates.

FIXED INCOME

• T-notes were pressured and the curve flattened following a strong JOLTS report.

COMMODITIES

• Oil prices saw slight gains, albeit in choppy trade amid light crude-specific newsflow.
• US Private inventory data (bbls): Crude +0.7mln (exp.-1.8mln), Distillate -3.5mln (exp. -1.0mln), Gasoline +1.9mln (exp. -0.2mln), Cushing -1.4mln.
• US President Trump said regarding the SPR that they will fill it up when the market is right.

GEOPOLITICAL

MIDDLE EAST

• Senior Israeli official said there is a good chance the new proposal will enable progress to proximity talks between Israel and Hamas to finalise the deal's details and that Qatar had conveyed an updated proposal for a hostage deal and ceasefire to Israel and Hamas.
• US President Trump expects a ceasefire in Gaza sometime next week and wants to return the hostages, while Trump later said he will be firm with Israeli PM Netanyahu on ending the war and thinks they will have a deal next week.
• US President Trump's envoy Witkoff is set to meet with one of Israeli PM Netanyahu's top aides to discuss US ideas for a post-war plan in Gaza, according to Axios sources.
• Israel's Channel 12 cited a source familiar with the Gaza negotiations and noted there is a possibility of progress to reach an agreement soon, according to Sky News Arabia.
• Israeli army significantly strengthened its forces and equipment in the past 24 hours in the Gaza Strip pending instructions to expand its operation, according to Walla News.
• Israel is in 'advanced talks' for a deal that would end hostilities with Syria and there may be an opportunity, according to Times of Israel citing an Israeli official.
• Iranian government said there is no date or decision on negotiations with Washington, according to Al Arabiya.
• Iran's Foreign Minister warned in a phone call with the EU foreign policy chief against a 'destructive approach' of several European countries, criticising their stance on escalation between Iran, Israel and the US.

RUSSIA-UKRAINE

• Russia's Kremlin commented on US envoy Kellogg's remarks about Russia stalling Ukraine talks in which it stated that no one is delaying anything.

ASIA-PAC

NOTABLE HEADLINES

• BoJ Governor Ueda said he hopes inflation would be at 2% by the end of his term but noted the balance sheet reduction will still be ongoing and should then continue with great care.
• BoJ's Masu said he does not have any strong disagreement to the view that underlying inflation is still short of 2% and wants to scrutinise how prices move after recent commodity spikes moderate (with specific reference to rice), while he said recent conditions suggest they are not in a place where the BoJ can rush into lifting rates and must move cautiously. Masu added that many firms likely saw profits increase from a weak JPY but there is a negative consumption impact via increased import costs. Furthermore, he said at some point, the BoJ must "unload its huge ETF holdings" and must do so cautiously, while he responded he probably stands in the middle and does not have a strong view when asked if he is a dove or hawk.

EU/UK

NOTABLE HEADLINES

• UK PM Starmer won the vote in parliament on welfare reform.
• BoE Governor Bailey said they see signs of softening in the economy and labour market, while he added the path of interest rates will continue to be gradually downwards and he is not convinced cyclical productivity will come back. Furthermore, he said they have seen a steepening of the long-term bond yield curve and does not think there is anything unusual about the UK when it comes to the yield curve.
• ECB President Lagarde said the mission is not yet accomplished, but they are now through that disinflationary process and there is a lot of uncertainty, while she added need to remain extremely vigilant on inflation, in a very good position to navigate "tormented waters".
• ECB's Lane said it is going to be a lively few years and it is not very helpful to provide too much forward guidance, while 10% tariffs are part of the baseline and EUR appreciating has a tightening effect.
• ECB's de Guindos said the level of uncertainty is huge and must keep all options open. De Guindos added that EUR/USD at 1.17 is perfectly acceptable and even 1.20 could be overlooked, but any more would be "complicated".
• ECB's Kazaks said 10% US tariff plus EUR appreciation is large enough to hurt exports, while he added that any further rate cut would be small.
• ECB's Muller said it makes sense for the ECB to hold on rates for a while and no need to change in July, while it is not obvious rates should be much lower even further out and EUR appreciation is quick but not particularly concerning now.
• ECB's Nagel said we are in "calm waters" on inflation, but cannot be complacent, while he added that policy is in neutral territory and that uncertainty warrants a meeting-by-meeting approach.
• ECB's Wunsch said risks are more tilted to the downside and if a move on rates was needed it would be down, while the broad consensus is that the job is primarily done.
• ECB's Vujcic said there is the possibility of new inflation shocks, according to CNBC.
• ECB Consumer Expectation Survey 1-year CPI 2.8% (prev. 3.1%), 3-year 2.8% (prev. 3.1%), 5-year 2.1% (prev. 2.1%).

DATA RECAP

• UK S&P Global Manufacturing PMI (Jun) 47.7 vs. Exp. 47.7 (Prev. 47.7)
• German Unemployment Change (Jun) 11.0k vs. Exp. 15.0k (Prev. 34.0k)
• German HCOB Manufacturing PMI (Jun) 49.0 vs. Exp. 49.0 (Prev. 49.0)
• French HCOB Manufacturing PMI (Jun) 48.1 vs. Exp. 47.8 (Prev. 47.8)
• Italian HCOB Manufacturing PMI (Jun) 48.4 vs. Exp. 49.5 (Prev. 49.2)
• EU HCOB Manufacturing Final PMI (Jun) 49.5 vs. Exp. 49.4 (Prev. 49.4)
• EU HICP Flash YY (Jun) 2.0% vs. Exp. 2.0% (Prev. 1.9%)
• EU HICP-X F&E Flash YY (Jun) 2.4% vs. Exp. 2.4% (Prev. 2.4%)
• EU HICP Excluding Food, Energy, Alcohol & Tobacco Flash YY (Jun) 2.3% vs. Exp. 2.3% (Prev. 2.3%)