Japan's petrol subsidies are draining funds at 300bn yen a month while yen intervention nears IMF limits, putting Tokyo's fiscal and currency strategy on a collision course, Reuters Breakingviews argues. Summary:A Reuters column by Hudson Lockett argues that Japanese Prime Minister Sanae Takaichi faces a fundamental contradiction between her energy subsidy programme and her government's efforts to defend the yen from depreciation driven by fiscal concernsGasoline subsidies introduced in March, which cap petrol at 170 yen per litre, are consuming around 300 billion yen per month from an allocated fund of 800 billion yen, with discussions of a supplementary budget now underway despite Takaichi's earlier denialsJapan passed its largest-ever annual budget of 122 trillion yen in April; foreign investor concerns over that spending have pressured the yen, which recently fell below 160 per dollar before apparent government intervention pushed it back upThe finance ministry has indicated it can only intervene in currency markets twice more between now and November under IMF criteria for a free-floating exchange rate regime, severely limiting Tokyo's defensive optionsU.S. Treasury Secretary Scott Bessent is due in Japan on Monday to discuss yen weakness with Takaichi, adding external diplomatic pressure to an already strained domestic policy frameworkThe column concludes that Japanese households face a lose-lose outcome: either higher import costs from a weaker yen or rising energy bills if subsidy support is withdrawnJapanese Prime Minister Sanae Takaichi is caught in a self-defeating policy loop, deploying costly energy subsidies to shield consumers from Middle East war-driven inflation while the fiscal bill for those subsidies erodes the very currency that determines how much Japan pays for its imported energy, according to a Reuters Breakingviews column by Hudson Lockett published on May 11.The tension is rooted in Japan's dependence on imported oil and gas. The Iran war and the disruption to flows through the Strait of Hormuz have driven energy costs sharply higher, prompting Tokyo to introduce petrol subsidies in March that cap pump prices at 170 yen per litre. The programme is consuming approximately 300 billion yen per month from a dedicated fund of 800 billion yen, a pace that will exhaust the allocation well ahead of schedule and is already fuelling speculation about a supplementary budget, despite Takaichi's public denials that one is imminent. Officials are also reluctant to withdraw support for household electricity and gas bills heading into summer.The fiscal pressure from that spending is part of what has been driving the yen lower. Japan passed its largest-ever annual budget of 122 trillion yen in April, and foreign investors have responded by selling the currency, pushing it below 160 per dollar before apparent government intervention in the market arrested the decline. A further 1% gain on May 6 was widely attributed to Tokyo stepping in again. The problem is that the finance ministry has signalled it can only intervene twice more before November under IMF criteria governing free-floating exchange rate regimes, a constraint that limits how long the currency can be artificially supported.The arrival of U.S. Treasury Secretary Scott Bessent in Japan on Monday for discussions on yen weakness adds an external dimension. American pressure on Tokyo over its currency management could further constrain its room to act, at precisely the moment when the domestic policy pressures are intensifying.The column's central argument is that Takaichi's strategy contains no clean exit. A weaker yen raises the cost of energy imports and makes inflation worse, undermining the rationale for the subsidies in the first place. Withdrawing the subsidies exposes consumers directly to elevated global energy prices. Either path leads to the same destination for Japanese households: higher bills. The Reuters Breakingviews view is that something in this policy framework has to give, and the most likely casualty is the prime minister's reputation for fiscal credibility.---Japan's predicament is directly relevant to energy markets: the country is a major importer of oil and gas, and a weaker yen mechanically raises the cost of every barrel it buys, amplifying the inflationary impact of the Hormuz supply disruption on Japanese consumers and industry. The gasoline subsidy programme, which is burning through its allocated fund at a rate of 300 billion yen per month, represents a form of implicit oil demand support that keeps retail consumption artificially insulated from the full price signal, potentially sustaining import volumes above where they would otherwise settle. However, the fiscal cost of that support is itself feeding the currency weakness it is designed to offset, creating a feedback loop that limits Tokyo's room to manoeuvre. With U.S. Treasury Secretary Scott Bessent due in Japan to discuss yen weakness, any pressure on Tokyo to scale back intervention or fiscal stimulus could accelerate the pass-through of global energy prices to Japanese consumers. This article was written by Eamonn Sheridan at investinglive.com.

Netanyahu told CBS the Iran war is not over and declined to rule out seizing nuclear material, while separate reports claim Trump told him 'I want to go in' regarding Iranian nuclear sites.Summary:Netanyahu told CBS's 60 Minutes the war on Iran is not over, with enrichment sites, missile capacity and proxy networks listed as unresolved objectivesHe alleged Iran still holds nuclear material that could be physically removed, declining to rule out military means to achieve itSeparate unconfirmed reports indicate Trump told Netanyahu directly he wants to go in on Iranian nuclear sites, with nuclear material removal described as a continuing war priorityNetanyahu acknowledged significant degradation of Iranian capabilities but was explicit that stated military objectives remain far from completeIsraeli Prime Minister Benjamin Netanyahu has declared that the war on Iran is unfinished, refusing to rule out military action to seize Iranian nuclear material, in an interview with CBS's 60 Minutes set to air on May 10.Netanyahu alleged Iran continues to hold nuclear material and said it could be physically removed through direct action, declining to elaborate on means. He listed remaining war goals as the dismantling of enrichment sites, neutralisation of Iranian proxies and destruction of ballistic missile production, all of which he said remain unresolved despite significant degradation of Iranian capabilities.The most consequential element is the separate, unconfirmed reporting that Trump told Netanyahu personally he wants to go in on Iranian nuclear sites. These claims have not been independently verified and should be treated with caution, but their circulation reinforces the perception that the conflict is moving toward intensification rather than conclusion, with obvious implications for energy markets and the duration of the Hormuz supply disruption.--Netanyahu's public declaration that the war is not over, combined with unverified reports that Trump has privately expressed a desire to physically enter Iranian nuclear sites, represents a significant escalation in the stated ambitions of the conflict and removes any near-term expectation of a negotiated wind-down. For oil markets, the implication is that the Hormuz disruption and associated supply shock are not approaching resolution; if anything, the scope of the military campaign may be widening. Any strike on Iranian nuclear facilities, or an operation to remove nuclear material, would almost certainly trigger a severe Iranian response and risk a major escalation across the region, potentially threatening energy infrastructure well beyond the strait. The already elevated geopolitical risk premium in crude would face further upward pressure if this reporting is corroborated or if military action on nuclear sites is confirmed. This article was written by Eamonn Sheridan at investinglive.com.

Inflation data from China for April 2026.CPI 1.2% y/yexpected 0.8%, prior 0.1%CPI 0.3% m/mexpected -0.1%, prior -0.7%Core CPI 1.2% y/yprior 1%PPI 2.8% y/y (45 month high)expected 1.5%, prior 0.5%PPI +1.7% m/mI'll have more to come on this separately This article was written by Eamonn Sheridan at investinglive.com.

The PBOC allows the yuan to fluctuate within a +/- 2% range, around this reference rate.Injects 500mn yuan via 7-day reverse repos in open market operates today. Unchanged rate of 1.4%.Confirmation from China, says U.S. President Donald Trump will pay a state visit to China from May 13–15 at the invitation of President Xi Jinping. This article was written by Eamonn Sheridan at investinglive.com.

Apollo Global Management is in talks to sell its $3bn BDC MidCap Financial Investment Corp after defaults jumped to 5.3% and the fund posted a $61m first-quarter loss, the Wall Street Journal (gated) reported. Summary:Apollo is in talks to sell MidCap Financial Investment Corp., its publicly listed BDC valued at around $3 billion, with any deal likely involving a share-based rather than cash purchase, according to the Wall Street JournalLoan defaults rose to 5.3% in Q1 from 3.9% in December; the fund posted a $61 million net loss and its shares trade at roughly 85% of net asset valueApollo restructured a separate vehicle in January, transferring $9 billion of commercial property mortgages to its insurance arm AtheneInvestors in Apollo's private BDC requested redemptions of 11% of shares last quarter, part of a sector-wide withdrawal trend hitting private credit managersApollo Global Management has been in discussions to sell MidCap Financial Investment Corp., its publicly listed private credit fund, as rising loan defaults and a widening discount to net asset value make the vehicle increasingly difficult to operate, the Wall Street Journal reported.MFIC is a business development company that makes loans primarily to mid-sized businesses through Apollo's MidCap Financial platform. Apollo values the fund's investments at roughly $3 billion, though no deal is guaranteed. Loan defaults climbed to 5.3% in the first quarter from 3.9% in December, contributing to a net loss of $61 million, and the fund's shares trade at around 85 cents on the dollar relative to net asset value. MFIC has largely stopped new lending, directing repayment proceeds toward share buybacks and debt reduction instead.The situation reflects broader stress across the BDC sector, which has traded at discounts since last autumn on fears of mounting losses. Apollo's private BDC saw redemption requests equivalent to 11% of its shares last quarter. The firm has already restructured one other vehicle this year, moving $9 billion of commercial property mortgages from its REIT into its insurance subsidiary Athene in January. --- The potential sale of MFIC is a symptom of broader stress in the private credit and direct lending space, where rising corporate defaults tied in part to higher borrowing costs and energy-driven input price pressures have eroded loan valuations across the sector. For energy-linked borrowers in the mid-market, where direct lenders have been particularly active, the tightening of credit conditions implied by this story could raise the cost of capital and reduce the availability of financing for smaller oil and gas operators. The sector-wide discount at which publicly traded BDCs are trading reflects a market-wide reassessment of private credit risk, and Apollo's move to potentially restructure or exit MFIC follows its earlier decision to shift $9 billion of commercial property mortgages off a separate vehicle. Taken together, these actions point to a broader deleveraging and consolidation dynamic within alternative asset management that could affect the flow of private capital into energy and commodities lending more broadly. This article was written by Eamonn Sheridan at investinglive.com.

Pimco's CIO warned the Financial Times (gated) that the Iran war's energy shock could make Fed rate cuts counter-productive and may even necessitate hikes, with Franklin Templeton echoing the concern.Summary:Pimco chief investment officer Dan Ivascyn told the Financial Times at the Milken Institute conference in Beverly Hills that rate cuts by the Federal Reserve would be counter-productive given the inflation dynamics created by the Iran war's impact on energy prices, and said hikes could not be ruled out for the United StatesFranklin Templeton chief executive Jenny Johnson, in a separate interview at the same conference, said inflation would be harder to control and that it would be difficult for the Fed to cut rates, adding that investor appetite for inflation-protected assets was risingThe Fed's preferred inflation measure, the personal consumption expenditures index, registered 3.5% in March, its highest level in almost three years, amid energy price pressures stemming from the Hormuz disruptionThe Fed held rates steady for a third consecutive meeting last month in a decision that featured the highest number of internal dissents since 1992, though it retained language suggesting the next move could still be a cutThe two-year Treasury yield has risen around 0.5 percentage points since the war began in late February to 3.87%, reflecting a significant repricing of the Fed rate pathKevin Warsh, Trump's nominee to replace outgoing Fed chair Jay Powell whose term ends on May 15, is expected to be confirmed by the Republican-controlled Senate; both Pimco and Franklin Templeton expressed confidence he would maintain sufficient independence on rate-setting and balance sheet management---The intervention from two of the world's largest fixed income and asset managers carries significant weight for markets, as it frames the Iran-driven energy price surge not merely as a supply shock but as a structural inflation problem that central banks may need to actively tighten against. A Fed rate hike scenario, even if still a tail risk, would strengthen the dollar and historically weigh on commodity prices including crude, creating a countervailing force to the geopolitical risk premium currently supporting oil. The jump in the two-year Treasury yield of around 50 basis points since the war began is already tightening financial conditions in a way that could dampen demand. With the Fed's preferred inflation gauge running at 3.5% in March, its highest in nearly three years, the energy channel from Hormuz to Main Street is now firmly part of the monetary policy calculus, adding a further layer of complexity to crude's price outlook beyond the purely supply-side disruption story. This article was written by Eamonn Sheridan at investinglive.com.

The People’s Bank of China is due to set the daily USD/CNY reference rate at around 0115 GMT (2115 US Eastern time), a fixing that remains one of the most closely watched signals in Asian foreign exchange markets. China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours. Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader international FX conditions, and domestic economic considerations such as capital flows, growth momentum and financial stability objectives. The midpoint is not a purely mechanical calculation, allowing policymakers discretion to guide market expectations. Once the midpoint is announced, onshore USD/CNY is free to trade within the allowable band. If market pressures push the yuan toward either edge of that range, the central bank may step in to smooth volatility. Intervention can take the form of direct buying or selling of yuan, adjustments to liquidity conditions, or guidance through state-owned banks. As a result, the daily fixing is often interpreted as a policy signal rather than just a technical reference point. A stronger-than-expected CNY midpoint is typically read as a sign the PBOC is leaning against depreciation pressure, while a weaker fixing for the CNY can indicate tolerance for a softer currency, often in response to dollar strength or domestic economic headwinds.In periods of heightened global volatility, such as shifts in US rate expectations, trade tensions or capital flow pressures, the fixing takes on added significance. For investors, it provides insight into Beijing’s currency priorities, balancing competitiveness, capital stability and financial market confidence. This article was written by Eamonn Sheridan at investinglive.com.

The UK and France will co-chair a 40-nation defence ministers' meeting Tuesday on plans to restore Hormuz shipping, hours after Iran warned any foreign warships would face a decisive response.Summary:The UK and France will on Tuesday co-chair a virtual meeting of more than 40 nations to advance military plans for a multinational mission to restore navigation through the Strait of Hormuz, per a British defence ministry statement reported by AFPUK Defence Secretary John Healey and French Defence Minister Catherine Vautrin will jointly chair the meeting, which follows a two-day gathering of military planners in London in AprilFrance has dispatched its nuclear-powered aircraft carrier the Charles de Gaulle to the Middle East region, while the UK announced on Saturday it was sending the destroyer HMS DragonBoth countries described the deployments as pre-positioning ahead of any formal international protective mission, according to AFPIran's deputy foreign minister Kazem Gharibabadi warned that British and French warships, or those of any other country, would meet a decisive and immediate response, and asserted that only Iran can establish security in the straitFrench President Emmanuel Macron said France had never envisaged a naval deployment inside the Strait of Hormuz itself, and that any security mission would be coordinated with IranBefore the war began on February 28, around one fifth of the world's oil transited the Strait of Hormuz; that flow has been severely curtailed since Iran largely closed the waterwayBritain and France will on Tuesday co-chair an emergency defence ministers' meeting involving more than 40 nations to advance concrete military plans for restoring commercial shipping through the Strait of Hormuz, the British government announced, as Iran issued a stark warning that any foreign warships entering the region would face an immediate and decisive response.UK Defence Secretary John Healey and French Defence Minister Catherine Vautrin will jointly chair the virtual gathering, which the British defence ministry described as the multinational mission's first ministerial-level meeting. It follows a two-day session of military planners held in London in April, at which the practical framework for a protective naval mission was thrashed out. Healey said the process was now converting diplomatic agreement into actionable military plans designed to restore confidence for commercial vessels transiting the strait.The diplomatic push is backed by a tangible military build-up. France has already deployed its nuclear-powered aircraft carrier the Charles de Gaulle to the Middle East, while Britain announced on Saturday that it was sending the destroyer HMS Dragon to the region. Both governments have been careful to characterise the movements as pre-positioning rather than active deployment, with a British defence ministry spokesperson describing HMS Dragon's despatch as prudent planning to ensure readiness when conditions permit a formal protective mission to begin.Iran moved quickly to signal its opposition. Deputy foreign minister Kazem Gharibabadi warned that British and French vessels, or those of any other nation, would be met with a decisive and immediate response, and reiterated Tehran's position that security in the strait is exclusively Iran's prerogative to provide. The warning came directly alongside the British announcement, underscoring the degree to which Tehran is monitoring and reacting to Western military signalling in real time.France introduced a further layer of nuance. President Emmanuel Macron, speaking to journalists in Nairobi, said Paris had never contemplated a naval operation inside the strait itself and that any mission France participated in would be coordinated with Iran. He also restated his opposition to a blockade from any party, and his commitment to ensuring ships can pass freely without being subjected to any form of toll or levy on their transit.The backdrop to all of this is the severe disruption to global energy markets that has followed Iran's effective closure of the strait since the outbreak of the war on February 28. Before hostilities began, roughly one fifth of the world's entire oil supply moved through the waterway. That flow has been reduced to a trickle, sending prices sharply higher and prompting the improvised dark-shipping workarounds documented in recent days. The United States subsequently imposed its own blockade of Iranian ports in response, compounding the supply shock. Whether Tuesday's ministerial meeting translates into a mission that can genuinely restore normal transit, and whether Iran can be brought to accept or at least tolerate such a presence, remains the central question hanging over the global oil market.---The convening of a 40-nation defence ministers' meeting signals that Western efforts to reopen the Strait of Hormuz are moving from planning into a more operationally credible phase, which in theory points toward eventual supply restoration through the world's most critical oil chokepoint. However, Iran's explicit threat of a decisive and immediate response to any foreign naval presence materially raises the risk of a direct military confrontation, which would represent a severe escalation for energy markets. Macron's public clarification that France has not envisaged a combat deployment in the strait and that any mission would be coordinated with Iran introduces a notable ambiguity around the mission's actual scope and teeth, which traders will weigh carefully. The pre-positioning of the Charles de Gaulle and HMS Dragon is being framed as contingency planning rather than imminent action, but the presence of a nuclear-powered carrier and a destroyer in the region adds a layer of military tension that keeps the geopolitical risk premium in crude firmly supported. This article was written by Eamonn Sheridan at investinglive.com.

Two VLCCs carrying a combined 4 million barrels of Gulf crude exited the Strait of Hormuz last week with transponders switched off to avoid Iranian attack, Kpler data showed. Summary:The VLCC Basrah Energy loaded 2 million barrels of Upper Zakum crude at ADNOC's Zirku terminal on May 1 and exited the Strait of Hormuz on May 6 with its tracker switched off, according to Kpler shipping data reported by ReutersThe Panama-flagged vessel, owned and managed by Sinokor, offloaded its cargo at Fujairah Oil Tanker Terminals on May 8, per the Kpler dataThe charterer of the Basrah Energy was not immediately identified; Sinokor did not respond to a request for comment, according to ReutersA second VLCC, the Kiara M, exited the Gulf on Sunday with its transponder switched off, carrying 2 million barrels of Iraqi crude, per Kpler dataThe destination of the San Marino-flagged Kiara M was not immediately clear, according to ReutersADNOC and its buyers have been sailing multiple tankers through the strait in an effort to move crude stranded in the Gulf by the ongoing Middle East conflict, per ReutersTwo very large crude carriers managed to navigate the Strait of Hormuz last week with their tracking transponders disabled to avoid detection and potential Iranian attack, shipping data showed, in a development that underscores the dire state of Gulf oil flows rather than offering any meaningful relief to a market starved of normal transit volumes.The VLCC Basrah Energy loaded 2 million barrels of Upper Zakum crude at Abu Dhabi National Oil Company's Zirku terminal on May 1. The vessel, owned and managed by South Korean shipper Sinokor and sailing under a Panamanian flag, exited the strait on May 6 before offloading its cargo at Fujairah Oil Tanker Terminals on May 8, according to Kpler shipping data. The charterer of the vessel was not immediately identified, and Sinokor did not respond to a request for comment.Separately, a second VLCC, the Kiara M, exited the Gulf on Sunday carrying 2 million barrels of Iraqi crude, also with its transponder switched off. The San Marino-flagged vessel's discharge destination was not immediately clear from the available data.That these two movements, totalling 4 million barrels between them, are being reported as a meaningful development is itself a stark illustration of how comprehensively the Hormuz crisis has upended normal market functioning. Under ordinary conditions, the strait facilitates the transit of roughly 20 million barrels of crude per day. Four million barrels spread across two vessels and nearly a week of operations would barely register as a footnote in a normal shipping report. Today, it is news.ADNOC and its buyers have been making repeated attempts to move crude that has become stranded in the Gulf as the Middle East conflict has choked normal shipping activity. The transponder-off approach has emerged as a workaround, allowing vessels to reduce their visibility to potential attackers, but it is a tactic with hard limits. It cannot be scaled to anything approaching the volumes needed to restore meaningful supply flows, it complicates maritime safety and coordination, and it adds layers of insurance and logistical complexity that further raise the cost of every barrel that does make it through.Until transits through the strait can be conducted openly, at normal frequency and without the threat of attack, the fundamental supply disruption driving the Gulf oil crisis will remain firmly in place. Two tankers making it out is not a trend; it is a reminder of how much is not moving.Yes, two is better than none. But not by much. ---The fact that two tankers moving a combined 4 million barrels constitutes notable market news speaks volumes about just how severely constrained Hormuz transit has become. In a functioning market, that volume would be rounding error on a single day's normal strait throughput. The transponder-off tactic offers producers a workaround, but it is inherently limited in scale, impossible to conduct at the volume needed to meaningfully offset the broader disruption, and carries its own navigational and insurance risks. Until transits can be conducted openly and at scale, the strait's effective closure will continue to underpin the geopolitical risk premium in crude prices, with any incremental dark-shipping news unlikely to shift the supply picture in any material way. This article was written by Eamonn Sheridan at investinglive.com.

We had Chinese trade data over the weekend:China's April exports surge 14.1% as Iran war fear drives global stockpiling rushToday we get inflation data. China's deflation story appears to have run its course, with both consumer and producer prices having turned positive on a year-over-year basis in March, and April's data due today is expected to broadly sustain that shift, albeit with some moderation at the headline level.Analysts forecast China's April CPI at around 0.8% to 1.0% year-on-year, easing slightly from the 1.0% recorded in March as the demand boost from the Lunar New Year holiday period fades from the comparison base. Core CPI, which strips out volatile food and energy components, is expected to hold in a narrow range of around 1.1% to 1.2%, a reading that would point to continued softness in underlying domestic consumer demand despite the broader stabilisation in prices.The more closely watched figure for energy markets is likely to be the producer price index, where the recovery from a prolonged deflationary stretch has been more pronounced. PPI is forecast to push further into positive territory, with estimates ranging from around 1.5% to 1.9% year-on-year, driven by rising energy and commodity input costs. That would extend a rebound that analysts have linked in part to elevated global energy prices tied to the ongoing Iran war and its disruption to supply chains feeding Chinese industry.The divergence between a softening headline CPI and a firming PPI will be a key dynamic for markets to watch, as it speaks to the uneven nature of China's price recovery and the degree to which rising input costs are being absorbed by producers rather than passed through to consumers.This snapshot from the investingLive economic data calendar.The times in the left-most column are GMT.The numbers in the right-most column are the 'prior' (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected. This article was written by Eamonn Sheridan at investinglive.com.

Iran Hormuz sovereignty claimSummary:Iranian state media reported that the U.S. proposal amounted to a demand for Iran to surrender to what it characterised as excessive American demands, per Iranian state mediaIran's own proposal was said to stress the need for the United States to pay compensation for war damages inflicted on Iran, according to Iranian state mediaTehran's proposal also emphasised Iran's sovereignty over the Strait of Hormuz, per Iranian state mediaOil prices moved higher after U.S. futures markets opened, reflecting the deteriorating tone of the negotiations, per the source materialThe exchange follows Trump's earlier public rejection of Iran's proposals as totally unacceptable, and Iran's dismissal of his reaction as irrelevant, per earlier reporting on the day's eventsAll Iranian-sourced material originates from state media and has not been independently verifiedU.S.-Iran nuclear negotiations have taken a sharply confrontational turn, with Iranian state media reporting that Tehran's proposal includes demands for American war reparations and a formal recognition of Iran's sovereignty over the Strait of Hormuz, as oil prices moved higher following the open of U.S. futures markets.The escalation in rhetoric follows a day of increasingly hostile public exchanges. Iranian state media characterised the American negotiating position as a demand for Iran to effectively capitulate to what it described as excessive U.S. demands, a framing that signals Tehran views the gap between the two sides as fundamental rather than technical. Iran's own counter-proposal, as reported by state media, goes considerably further than the earlier draft reported by Tasnim, adding war compensation and the Hormuz sovereignty question to an already expansive list of conditions.The Hormuz dimension is the most consequential element for energy markets. The Strait remains the single most critical chokepoint in global oil and gas trade, and any Iranian assertion of sovereign control over its waters, whether rhetorical or operationalised, introduces a threat to the transit rights that underpin the flow of millions of barrels of crude per day. That Iran has chosen to include the point in its negotiating text, at whatever level of formality, will be read by traders as a signal of intent to use the strait as leverage.The demand for war damage compensation adds a further layer of complexity that is likely to be a non-starter for Washington, hardening the sense that both sides are currently moving away from rather than toward any framework agreement. Earlier in the day, Trump had publicly declared Iran's response totally unacceptable via Truth Social, while an Iranian source told state media that his displeasure was not only irrelevant but welcome.Oil's move higher on the U.S. futures open reflects market participants adjusting the probability of a near-term diplomatic breakthrough sharply downward. The prospect of sanctioned Iranian crude returning to the market in any meaningful timeframe has receded materially on the back of the day's exchanges. The tone also casts a shadow over Trump's planned visit to Beijing on May 14 and 15, where the Iran war and its disruption to Gulf energy flows are expected to feature prominently in discussions with President Xi Jinping. With both negotiating positions now publicly entrenched, the path to de-escalation looks considerably narrower than it did at the start of the day.---Oil's move higher on the opening of U.S. futures markets reflects traders pricing a meaningful step-up in the risk of total talks collapse, with Iran's assertion of sovereignty over the Strait of Hormuz the most market-sensitive element of the latest exchange. Any Iranian move to formalise or enforce that claim would pose a direct threat to one of the world's most critical energy chokepoints, through which a substantial share of global crude exports transit. The compensation demand adds a further dimension that makes a near-term agreement look increasingly remote, removing any residual expectation of sanctioned Iranian barrels returning to market in the short term. With the Trump-Xi summit in Beijing scheduled for May 14 and 15, the trajectory of the Iran talks will also colour that meeting, as China remains heavily exposed to Gulf energy flows disrupted by the war. This article was written by Eamonn Sheridan at investinglive.com.

Oil is higher. Up more than 3%. ES and NQ are a touch lower. Barely off at all. Globex open now. Catch up on the news from here if you need:Futures aren't open yet, but early FX is pointing to risk off gap This article was written by Eamonn Sheridan at investinglive.com.

EUR down, AUD down, NZD down as examples. Yen hanging in there. Earlier:Iran state media says Iran wants sovereignty over the Strait of HormuzIran demandTrump says noIran rejects Trump This article was written by Eamonn Sheridan at investinglive.com.

Iranian state media:US proposal amounted to Iran surrendering to Trump’s excessive demandsIran’s proposal stressed the need for the United States to pay compensation for war damages and emphasized Iran’s sovereignty over the Strait of HormuzYou can catch up here if needed:Iran demandTrump says noIran rejects Trump This article was written by Eamonn Sheridan at investinglive.com.

China's April exports jumped 14.1% year-on-year to $359.4bn, smashing forecasts of 7.9%, while imports surged 25.3% to a record $274.6bn, lifting the trade surplus to $84.8bn.Summary:China's April trade surplus came in at $84.82 billion, up sharply from $51.13 billion in March and above market expectations of $83.3 billion, according to customs dataExports grew 14.1% year-on-year to $359.44 billion in April, a dramatic acceleration from March's 2.5% rise and well ahead of the 7.9% forecast, per customs dataImports climbed 25.3% year-on-year to a record $274.62 billion, above the prior month's 27.8% pace and significantly exceeding forecasts of 15.2%, according to the dataThe export acceleration was driven in part by overseas buyers rushing to stockpile components amid fears the Iran war could push global input costs higher, per reporting on the dataNew export orders rose to their highest level in two years in April, according to separate factory activity data cited in the reportingFactory data showed input prices remained elevated, particularly for refined goods, petroleum, coal and chemicals, while unemployment edged higher and retail sales continued to underperform industrial output, per the same reportingChina's Q1 GDP growth hit 5% year-on-year, at the top of the government's full-year target range, reducing the immediate need for stimulus, according to the reportingU.S. President Donald Trump is expected to visit China next week for talks with President Xi Jinping, per the reporting China's export growth surged in April, driven in large part by a global scramble to secure components ahead of anticipated cost increases tied to the ongoing Iran war, with the headline trade figures beating expectations across the board when customs data was released over the weekend.Exports expanded 14.1% year-on-year in U.S. dollar value terms to reach $359.44 billion, a sharp acceleration from the 2.5% gain recorded in March and well above the 7.9% rise that economists had forecast. Imports also posted a strong month, climbing 25.3% year-on-year to a record $274.62 billion, surpassing both the prior month's 27.8% pace and forecasts that had pointed to growth of around 15.2%. The combined effect pushed China's trade surplus to $84.82 billion in April, up from $51.13 billion in March and slightly above market expectations of $83.3 billion.The standout driver of export strength was a wave of overseas orders from buyers seeking to get ahead of potential cost increases, with concerns that prolonged conflict in the Middle East could push energy and transport costs to levels that strain supply chains. Separate factory activity data for April, published last month, showed new export orders rising to their highest level in two years, underscoring the breadth of overseas demand pulling on Chinese manufacturing capacity.Chinese exporters have so far navigated the fallout from the regional conflict with relative resilience, benefiting from the same supply security instinct that is lifting order books. However, economists have flagged a risk that the stockpiling dynamic could reverse if the war drags on long enough to materially erode buyers' purchasing power, particularly given that China's domestic consumption remains sluggish and would be poorly placed to absorb a drop in external demand.Factory data pointed to ongoing cost pressures on the input side, with elevated prices noted particularly in refined goods, petroleum, coal and chemicals. Unemployment rates edged higher over the period and retail sales continued to lag industrial output, reinforcing the view that the recovery remains uneven.China's broader macroeconomic backdrop offers some cushion. First-quarter GDP growth came in at 5% year-on-year, hitting the top of the government's full-year target range and reducing the urgency of near-term stimulus. That momentum, combined with the April trade beat, gives policymakers some room to monitor conditions before acting.Adding a further layer of complexity, Trump is expected to travel to China this week for a meeting with President Xi Jinping. The visit is seen as potentially yielding progress on specific trade items including farm goods and aircraft components, but analysts do not expect it to resolve the deeper strategic tensions between the two countries, particularly around Taiwan.Meeting scheduled for May 14 and 15, so just three days away. The visit was originally scheduled for March 31 to April 2 but was pushed back due to the Iran war. ---The data carries a clear energy demand signal: surging Chinese imports, particularly in petroleum, coal and refined goods, point to sustained buying appetite from the world's largest crude importer, which is broadly supportive for oil prices. However, the driver is partly precautionary stockpiling rather than organic demand growth, meaning the pace may not be sustained if the Iran conflict stabilises or energy costs continue to erode buyers' purchasing power. Elevated input prices flagged in China's factory data suggest refining and petrochemical margins remain under pressure, a dynamic that could temper crude processing run rates further into the quarter. The prospect of a Trump-Xi meeting adds a further variable, with any softening of trade frictions potentially altering the energy import calculus, though strategic rifts are seen as unlikely to resolve quickly. This article was written by Eamonn Sheridan at investinglive.com.

Iran has dismissed Trump's rejection of its nuclear proposals as irrelevant, with a source telling Tasnim that negotiators draft plans for Iranian interests alone and that Trump's dissatisfaction is "naturally better." Earlier:Iran said to table broad demands covering sanctions, war and security in U.S. talksTrump says Iran's proposals are "TOTALLY UNACCEPTABLE"Monday open indicative forex prices, 11 May 2026. USD bids.Summary:Trump posted on Truth Social that he had read Iran's response and found it totally unacceptable, per the post visible in the screenshotAn Iranian source told Tasnim that Trump's reaction to Iran's response does not matter at allThe same source stated that no one in Iran drafts negotiating plans with the aim of pleasing Trump, per TasnimThe source added that Iran's negotiation team should only draft plans in the interests of the Iranian nationThe source concluded that if Trump is not satisfied with Iran's response, that outcome is naturally better, per Tasnim citing an informed sourceAll Iranian commentary originates from Tasnim, a state-linked outlet, citing a single unnamed source, and has not been independently verifiedDonald Trump publicly rejected Iran's nuclear negotiating proposals on May 11, declaring them totally unacceptable in a post on Truth Social, as an Iranian source fired back through state-linked media to say that Trump's reaction carried no weight whatsoever with Tehran's negotiating team.Trump's post, brief and characteristically blunt, said he had read the response from what he called Iran's so-called representatives and found it unacceptable, signing off with his full title in capital letters. The post attracted hundreds of re-truths and drew immediate attention given the sensitive state of the negotiations, which had been the subject of earlier reporting on Iran's proposed draft text covering sanctions relief, security guarantees and an end to hostilities.Iran's response came rapidly and in pointed terms. A source cited by Tasnim said Trump's reaction to Iran's position does not matter at all, a formulation that went well beyond standard diplomatic pushback. The same source stated that Iran's negotiators do not and should not draft proposals with any consideration for what would satisfy the U.S. president, insisting that the negotiating team's sole obligation is to protect the rights and interests of the Iranian people.Most strikingly, the source suggested that Trump's dissatisfaction with Iran's position is not merely acceptable but preferable, framing his displeasure as a form of validation rather than a setback. That framing, whether reflecting genuine Iranian confidence or a posture adopted for domestic consumption, signals that Tehran is not inclined to soften its demands in response to public pressure from Washington.The exchange illustrates how quickly the diplomatic atmosphere can shift when both sides resort to public channels rather than quiet negotiation. The combination of Trump's blunt rejection and Iran's contemptuous response raises the prospect of a serious stall in the talks. As with the earlier reporting on Iran's draft proposals, the Tasnim material originates from a single unnamed source at a state-linked outlet and should be read with appropriate caution, though the Trump Truth Social post is a matter of public record.--The open defiance from Tehran, delivered through a state-linked channel, significantly raises the probability of a near-term breakdown in U.S.-Iran nuclear talks, which would dash any near-term prospect of sanctioned Iranian crude returning to market. Crude traders had begun pricing in a slim probability of sanctions relief following earlier reports of Iran's proposed text; this exchange hardens the risk premium. The tone from both sides, Trump's public rejection and Iran's dismissal of his reaction as irrelevant, suggests the gap between the two positions is wider than diplomatic language had previously implied. A collapse in talks would sustain the existing sanctions architecture on Iranian oil exports and remove a potential bearish supply overhang from the market. This article was written by Eamonn Sheridan at investinglive.com.

Earlier:Iran said to table broad demands covering sanctions, war and securityThe prez says no:Trump says Iran's proposals are "TOTALLY UNACCEPTABLE"The USD is a touch higher in really early trade. Weekend oil trade is a touch higher. This article was written by Eamonn Sheridan at investinglive.com.

Earlier:Iran said to table broad demands covering sanctions, war and security in U.S. talksThe usual process is tantrum first, taco later This article was written by Eamonn Sheridan at investinglive.com.

Iran is said to have proposed a text demanding U.S. sanctions relief, an end to its naval blockade, war-end guarantees and removal of OFAC oil sanctions within 30 days, per Tasnim citing an "informed source". Summary:Iran's proposed negotiating text is said to underline the necessity of lifting U.S. sanctions as a condition of any agreement, according to Tasnim citing an informed sourceThe proposal reportedly calls for an end to the naval blockade of Iran following the signing of any initial understanding, per TasnimIran's draft is said to include demands for an immediate end to the war and guarantees against any renewed military attack on Iran, according to Tasnim citing an informed sourceThe proposal stresses the need for a ceasefire across all active fronts, per TasnimA 30-day window for rescinding U.S. OFAC sanctions related to Iranian oil sales is included in the draft demands, according to Tasnim citing an informed sourceAll reporting is sourced from Iran's state-linked Tasnim news agency citing a single unnamed informed source and has not been independently confirmed Iran is reported to have tabled a sweeping proposed text ahead of ongoing negotiations with the United States, with the draft said to cover sanctions relief, security guarantees and an end to active hostilities, according to Iran's state-linked Tasnim news agency, which cited an unnamed informed source. The claims have not been independently confirmed and should be treated with caution.The reported proposal places the lifting of U.S. sanctions at its core, framing relief as a prerequisite rather than an outcome of talks. Among the specific measures said to be included is a demand that Washington rescind Office of Foreign Assets Control sanctions on Iranian oil sales within a defined 30-day window following any initial understanding. That timeline would represent a significant early test of American willingness to engage on the economic dimensions of any potential framework.Beyond the sanctions question, the draft is said to address military and security concerns directly. According to the Tasnim reporting, Iran's proposed text calls for an immediate end to the war, a halt to hostilities across all fronts, and binding guarantees against any renewed attack on Iranian territory. The inclusion of such terms suggests Tehran is seeking formal security assurances as part of any negotiated arrangement, rather than relying on informal understandings.The reported demand for an end to the naval blockade of Iran adds a further dimension. That measure is said to be tied to the signing of an initial understanding rather than a final comprehensive agreement, indicating Iran may be seeking early, tangible concessions as confidence-building steps before committing to broader obligations.The reporting originates solely from Tasnim, a news agency with ties to Iran's Islamic Revolutionary Guard Corps, and is attributed to a single unnamed source. No corresponding confirmation has emerged from U.S. or third-party diplomatic channels. The unverified status of the material means the reported demands may reflect one Iranian faction's position, a negotiating posture intended for public consumption, or information selectively shared to shape the diplomatic environment. Analysts and traders should weigh the content accordingly until further corroboration is available.Everyone ready for another roller coaster rise this week. If that metaphor doesn't suit we can always try headline ping pong ---If the reported demands are accurate, Iran's position signals it is seeking sweeping concessions before any deal is formalised, raising the risk of a prolonged negotiating standoff. Markets will focus particularly on the 30-day OFAC oil sanctions rescission demand, which, if agreed, could unlock meaningful volumes of Iranian crude and weigh on prices. The unverified nature of the report limits immediate price moves, but persistent leaks of this kind tend to keep a geopolitical risk premium embedded in crude benchmarks. Any sign that Washington is unwilling to meet the sanctions timeline could cause talks to stall, sustaining supply risk perceptions tied to the broader regional conflict. This article was written by Eamonn Sheridan at investinglive.com.

Sat: Chinese TradeMon: Chinese Inflation (Apr), Norwegian Inflation (Apr)Tue: BoJ SOO (Apr), IEA STEO (May), EU Informal Meeting of Energy Ministers (May 12-13), Japanese Household Spending (Mar), German HICP Final (Apr), Italian Industrial Production (Mar), German ZEW (May), US Inflation (Apr)Wed: BoC Minutes (Apr), EIA OMR (May), OPEC MOMR (May), Riksbank Minutes (May), French Unemployment Rate (Q1), Swedish Inflation Final (Apr), French Inflation Final (Apr), EZ Employment Change (Q1), EZ Industrial Production (Mar), EZ GDP 2nd Estimate (Q1), US PPI (Apr)Thu: Holiday: Europe's Ascension Day, UK GDP (Mar/Q1), Industrial Production (Mar), Indian WPI (Apr), Spanish HICP Final (Apr), Chinese M2 Money Supply (Apr), US Retail Sales (Apr), US Export/Import Prices (Apr), US Jobless Claims (May 9), South Korean Export/Import Prices (Apr)Fri: Japanese PPI (Apr), German Wholesale Prices (Apr), Norwegian GDP (Q1), Italian HICP Final (Apr), Canadian Wholesale Sales (Mar), US Industrial Production (Apr)Week AheadChinese Trade Data (Sat):China will release April trade data on Saturday, with the surplus expected to widen to about CNY 570bln from CNY 354.75bln and to about USD 82.4bln from USD 51.13bln. ING expects exports to rise about 6.5% Y/Y and imports to jump about 20.4%, reflecting strong domestic restocking and higher commodity and energy costs. The key focus will be whether elevated energy prices are inflating import values and compressing underlying trade surplus dynamics.Chinese Inflation (Mon):China’s April CPI and PPI data are expected to show easing headline inflation, with CPI forecast at about 0.8-1.0% Y/Y versus 1.0% previously as post-Lunar New Year demand fades. Core CPI is expected to remain subdued at about 1.1-1.2%, underscoring weak domestic demand. In contrast, PPI is expected to strengthen further into positive territory at about 1.5-1.9% Y/Y on rising energy and commodity costs, extending the recent rebound from deflation.BoJ SOO (Tue):The BoJ Summary of Opinions will be key to confirming how deep the hawkish shift really is after the 6–3 split. Focus is on whether dissent was forceful and if support for a hike is broadening beyond the three hawks, especially given the upgraded inflation outlook and persistent JPY weakness. Markets will also watch for any divergence from Ueda’s cautious presser—i.e. signs the board is more urgent than the messaging.US CPI (Tue), PPI (Wed):CPI is expected to rise by 0.6% M/M in April (prev. 0.9%), while the core rate is seen rising 0.4% M/M (prev. 0.2%). PPI is expected to rise by 0.4% M/M (cooling from the prev. 0.5%). The Cleveland Fed’s inflation nowcast gauge is tracking April CPI at 0.45% M/M, versus 0.42% M/M in March, and the core rate at 0.21%, unchanged from March. Annual rates are tracking at 3.56% Y/Y in April and the core rate at 2.56% Y/Y (the BLS reported annual core inflation of 2.6% in March, for reference). The data follows a hot March CPI report, which showed a pickup in consumer prices, with the annual rate rising to its highest since May 2024 at 3.3% Y/Y. The rise was driven by energy prices, which increased 10.9% M/M in March, led by a 21.2% jump in gasoline. Traders will continue to focus on whether the war-driven energy shock is feeding into inflation and consumer demand. Fed officials are now firmly focused on inflation amid a stable labour market. At the April FOMC meeting, three dissenters (Hammack, Kashkari and Logan) voted against including any easing bias in the statement, arguing that inflation risks had risen enough for the Fed to keep all options open, including holding rates for longer or even hiking, rather than signalling an easing bias. Some analysts suggested this might be a message to incoming Chair Kevin Warsh, who has previously endorsed lower rates and tighter balance sheet policy. Another key shift in the April statement was on inflation, with the line that inflation “remains somewhat elevated” replaced with “elevated”, and the Fed attributing this to the recent surge in global energy prices, a tweak judged to be a hawkish tilt. Elsewhere, the April data will include one-off rent and OER CPI index adjustments after last Autumn’s government shutdown shortfall; Barclays says this would likely give core inflation a one-off boost of around 10bps.BoC Minutes (Wed):The BoC left rates on hold at 2.25%, the lower end of its estimated neutral range, as expected. The bank reiterated that it is looking through the war's immediate impact on inflation, but will not allow higher energy prices to become persistent inflation. On trade, the BoC said it may need to cut the policy rate further to support growth if the US imposes significant new trade restrictions on Canada. Conversely, Macklem said a series of hikes may be needed if higher energy prices after the conflict prove long-lasting. The minutes will be watched for how committee members view the two-sided risks, how they plan to navigate the uncertainty and whether any members favour action in either direction, or whether there is broad support for the wait-and-see approach.US Retail Sales (Thu):The previous retail sales report for March showed a 1.7% M/M rise, driven by gasoline, while core sales printed at 1.9% M/M. The Chicago Fed’s CARTS advance retail trade update suggests ex-autos retail sales will rise 1.1% M/M in April (vs prior 0.6%), and 0.3% M/M when adjusted for inflation. Analysts say this could point to consumer resilience in the face of the energy shock, which is expected to weigh on disposable income ahead. Note, the CARTS data will be updated a day before the April retail sales release. Continuum Economics expects headline retail sales to rise 0.7% M/M, with ex-autos up 0.9% M/M and ex-autos/gas up 0.5%. It notes gasoline prices increased further in April, but at an easier pace than in March, while auto sales appear to have seen a modest recent decline, though they still appear healthy. “Higher gasoline prices pose risk to real disposable incomes, which has underperformed consumer spending in the last four quarters, though only marginally in Q1,” Continuum writes, adding that “tax cuts and higher tax refunds are providing some support to consumers.”Trump-Xi Meeting (Thu-Fri):US President Trump will fly to Beijing to meet Chinese President Xi on the 14th and 15th of May. The two leaders will cover several topics, including the Middle East conflict, trade relations, Taiwan, AI and agriculture. On the Middle East, Trump and China have both suggested they want the war wrapped up before the meeting, which would likely allow the two to focus on other areas. However, Polymarket prices a permanent peace deal between the US and Iran by 13th May at just a 17% probability. China said it wants a resolution, noting the visit is set to go ahead but that the conflict has caused uncertainty over planning and lowered expectations. There were also reports that China is refusing to comply with some US sanctions, having apparently ordered its oil refineries that purchase crude from Tehran not to comply with or enforce US sanctions on Iranian oil - something USTR Greer said will be discussed at the upcoming meeting. The two will also likely discuss China's oil purchases, with President Trump noting he offered to let China send oil ships to the US. Trump is reportedly inviting several CEOs on his trip, from the likes of Nvidia (NVDA), Apple (AAPL), Exxon (XOM), Boeing (BA), Qualcomm (QCOM), Blackstone (BX), Citigroup (C), and Visa (V). On trade, USTR Greer highlighted that China should be an important buyer of US agriculture and medical devices. China has also said it is prepared to work toward improving relations with the US.This article originally appeared on NewsquawkWeek In ReviewOPEC+ (Sun):The 3 May meeting—the first without the UAE—was framed as “business-as-usual”, with the remaining core producers agreeing a modest ~188k bpd June increase broadly as expected. In reality, the move is largely symbolic given Strait of Hormuz disruption is constraining actual exports. The key objective is signalling continuity—Saudi/Russia maintaining control and continuing the unwind of cuts. The UAE exit was the real shift, removing a major producer from quota discipline as it targets ~5mln bpd capacity and leverages Fujairah to bypass Hormuz.RBA Review (Tue):RBA raised the cash rate 25bps to 4.35% on 5 May, its third straight hike, reinforcing a firm tightening stance. The Bank sees inflation peaking around 4.8% in June and only returning to target by mid-2027, with the Middle East shock adding a stagflationary impulse via energy costs. The vote was at 8–1, showing stronger internal alignment. However, Bullock’s presser leaned slightly softer, highlighting “space to watch” after recent hikes and cautioning that fiscal support could complicate the inflation fight.Swiss Inflation Review (Tue):An in-line Y/Y at 0.6% and a marginally cooler-than-expected M/M for April. No significant reaction to the series, with the inflation drivers still petrol, diesel and heating oil. Somewhat notably, though unsurprisingly, air transport also saw an uptick. For the SNB, the upward bias to CPI removes any residual risk of a near-term move into negative territory from the current ZLB. Furthermore, the Y/Y figure still holding in the lower half of the 0-2% inflation target means that there is no need for a hawkish response, at this stage at least.US ISM Services PMI (Tue):ISM Services PMI fell to 53.6 in April from 54.0, a bigger decline than the expected 53.8. Employment rose to 48.0 (exp. 48.3, prev. 45.2), while prices stayed at 70.7, below the forecast of 73.7. Business activity rose to 55.9 (prev. 53.9), but new orders slipped to 53.5 (exp. 57.3, prev. 60.6). Supplier deliveries and new export orders increased M/M, while inventories and backlog of orders declined, though all remained above 50. The report said there were other signs of economic strength, with exports and imports expanding for two straight months for the first time since September/October 2024. Commentary focused mainly on the impact of and adjustments to the Iran war, and the expected flow-through of higher oil prices. Oxford Economics said the slight decline in the headline was consistent with moderate economic growth in the coming quarter, as mentions of fuel surcharges and uncertainty related to the war rose. OxEco expects the economy to hold up, but sees some of the energy price shock feeding through to core inflation over the coming quarters, keeping core PCE inflation close to 3% for most of the year.US Treasury Refunding Review (Wed):Auction sizes were left unchanged, in line with expectations, while the Treasury also maintained its forward guidance, continuing to state that “based on current projected borrowing needs, Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters.” Some desks expected a tweak to the language, with Barclays looking for guidance to shift to “at least the next few quarters.” Although no change was made at this meeting, the TBAC minutes imply the guidance could be adjusted as soon as next quarter. For full review, please click here.Norges Bank Review (Thu):A 25bps hike to 4.25% in line with the guidance from the March MPR that there would be a hike "at one of the forthcoming meetings". Note, desks were split heading into the announcement on whether the hike would occur in May or if they would wait for the next forecast meeting in June. Pertinently, the statement suggests that the "monetary policy outlook does not appear to have changed materially" since March; as a reminder, the March MPR had an end-2026 policy rate of 4.35%. As such, the statement implies around a 40% chance of another 25bps hike by end-2026.Riksbank Review (Thu):Held the policy rate at 1.75% as expected. The statement made clear that they are taking a wait-and-see approach, with Governor Thedeen thereafter saying they are taking a cautious approach to policy guidance. Unsurprisingly, much of the focus was on the inflation front, outlining that CPIF remains well below the Bank’s own target and the disinflation process was evident in March and April. Overall, the Riksbank has the economic space to wait-and-see before making a decision to alter policy.Banxico Review (Thu):Banxico cut rates by 25bps as expected in a 3-2 vote split, with Heath and Borja once again opting to hold rates. However, the guidance from Banxico was updated to imply that rates are now at the terminal level; “Governing Board estimates that it will be appropriate to maintain the reference rate”. It also described the latest rate cut as a conclusion to the easing cycle that began in March 2024. Inflation forecasts were little changed throughout the forecast horizon, with inflation still expected to return to target in Q2 27.UK Local Election Review (Thu):The count continues, but the results thus far show a significant shift away from the traditional main parties of Labour and Conservatives, significantly in favour of Reform and to a much lesser extent Greens. A Labour loss that is historic, but not at the existential level that some had projected. As such, PM Starmer has received a stay of execution for now, but calls for him to leave and discussions about the mechanism and timeframe of his departure, and who should replace him, will undoubtedly increase. Interestingly, results around Greater Manchester are pro-Reform, which could impair the path back to parliament for Burnham, as a Greater Manchester Mayoral election would likely go to Reform. In terms of reaction, Gilts and Sterling saw modest pressure on the shift to Reform, however the assessment that the losses are likely to be in the range of 1.0-1.5k council seats vs fears of 1.5-2.0k for Labour, and as Starmer pledged to stay on as PM, provided some near-term stability to market participants and allowed both Gilts and GBP to climb and outperform peers. Note, results will continue to print in the next few hours, with a handful of key areas due around 16:00BST and 18:00BST.Canadian Jobs (Fri):Canada lost 17.7k jobs in April, while the unemployment rate unexpectedly rose to 6.9% from 6.7%, against expectations for it to be unchanged. The weak report showed full-time employment fell 46.7k, while part-time employment rose 29k. The participation rate edged up to 65.0% from 64.9%, while average hourly wage growth eased to 4.8% from 5.1%. Participants were watching the report for signs of how the Canadian labour market and the economy were holding up against higher energy prices and US tariffs. As a reminder, the BoC MPR said a range of indicators pointed to some slack in the labour market, while labour force participation had declined. Although economic activity remains strong, a further labour market slowdown could weigh on the Canadian economy, with tariff hikes and a softer jobs market already squeezing real incomes. Oxford Economics think the BoC will remain on hold for all of 2026, and the job report is unlikely to pull them from the sidelines. Continued softness in the labour market should give the Bank confidence that higher energy prices won’t lead to persistently higher inflation, and allow it to remain patient while assessing developments on trade policy and global commodity prices.US Nonfarm Payrolls (Fri):Overall, it was a strong US jobs report. The US economy added 115k jobs in April, above the 73k forecast but below the elevated 178k in March, which was revised up to 185k. Job gains were seen in healthcare, transportation and warehousing, and retail trade. Federal government employment continued to decline. The unemployment rate was unchanged at 4.3%, in line with expectations. The participation rate dipped slightly to 61.8% from 61.9%, while the U-6 unemployment rate rose to 8.2% from 8%. On wages, earnings rose 0.2%, below the 0.3% forecast, maintaining the prior pace from March. The Y/Y rate, however, accelerated to 3.6% from 3.5%. For the Fed, the report allows the central bank to keep its focus on the inflation side of the mandate, particularly with ongoing upside risks around the US/Iran conflict. Looking ahead, however, many are aware of downside risks to employment, particularly if the war drags on and costs for businesses rise further. Pantheon Macroeconomics write that “April’s data bolster the case for thinking the labor market is convalescing. But the continued weakness of surveys of hiring intentions and the developing pressure on firms’ costs from the surge in energy prices suggests it is too soon to sound the all-clear.”This article originally appeared on Newsquawk This article was written by Newsquawk Analysis at investinglive.com.