• US stocks were choppy although most major indices eventually finished in the green after clawing back the losses from an early tech-led sell-off as Huawei's AI chip ambitions continued to hit NVIDIA (NVDA) and with sentiment also weighed on by a disappointing Dallas Fed Manufacturing survey. Nonetheless, a recovery was seen intraday despite little newsflow with the S&P 500 re-emerging from a brief dip beneath the psychological 5,500 level to notch its fifth consecutive daily gain but with the upside limited ahead of this week's key earnings and data releases.
• USD weakened against all G10 peers in a quiet session with sparse newsflow and no tier-1 data but comes ahead of a week filled with key releases (GDP, PCE, QRA, NFP, ISM Mfg.) and mega-cap US earnings (AAPL, AMZN, META, MSFT), while the move lower in US Treasury yields weighed on the buck as did a dismal Dallas Fed survey.
• Looking ahead, highlights include Singapore Unemployment Rate, Comments from RBA Assistant Governor Kent, Holiday Closure in Japan.

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LOOKING AHEAD

• Highlights include Singapore Unemployment Rate, Comments from RBA Assistant Governor Kent, Holiday Closure in Japan.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were choppy although most major indices eventually finished in the green after clawing back the losses from an early tech-led sell-off as Huawei's AI chip ambitions continued to hit NVIDIA (NVDA) and with sentiment also weighed on by a disappointing Dallas Fed Manufacturing survey. Nonetheless, a recovery was seen intraday despite little newsflow with the S&P 500 re-emerging from a brief dip beneath the psychological 5,500 level to notch its fifth consecutive daily gain but with the upside limited ahead of this week's key earnings and data releases.
• SPX +0.06% at 5,529, NDX -0.03% at 19,427, DJI +0.28% at 40,228, RUT +0.41% at 1,966.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump reportedly sees no red line or "certain number" at which point he would feel compelled to change course on tariffs, while he said “It always affects you a little bit” regarding the idea that market pressure, recessionary threats and the soft USD could cause a rollback, according to The Atlantic.
• US Treasury Secretary Bessent said all aspects of the government are in contact with China and it is up to China to de-escalate, while he reiterated that 145% tariffs are unsustainable and he has an "escalation ladder in his back pocket" but is "anxious not to use it". Furthermore, he said Chinese exemptions show they want a de-escalation on trade and noted there are 15-18 important trade negotiations (incl. China) in which many have provided very good proposals although China is more complex, according to CNBC.
• US Treasury Secretary Bessent said they are doing bespoke deals with 18 trading partners and that President Trump will be involved with each one, while he said we will see what happens with China and replied "Maybe they will call me one day" when asked if he plans to call China, according to Fox News. Bessent also stated the first trade deal could be as early as this week or next week.
• US White House Press Secretary said the entire team is working 24/7 to get trade deals done and we will hear more about trade deals this week, while she also commented that trade talks with the UK are moving in a very positive way.
• Two Trump administration sources familiar with the talks told FBN that President Trump is working on larger trade deals with countries and that is why it’s taking longer to hear announcements, while sources said these deals are not just about lowering tariffs but greater deals, according to FBN's Lawrence.
• China's Foreign Ministry said President Xi and US President Trump have not had a call recently and that the US and China have not conducted negotiations and consultations on tariffs.
• Japan's Economy Minister Akazawa said they are not thinking about sacrificing agricultural products for the sake of autos in tariff negotiations. It was separately reported that the hold up in the Japan tariff deal is due to the level of commitment to buy oil from the Alaska pipeline, according to FBN's Gasparino.
• South Korean Vice Industry Minister said there is no chance of reaching an agreement on a trade package with the US before the June 3rd snap elections and noted that working groups will have their first meetings next week.

NOTABLE HEADLINES

• US President Trump is to sign an order requiring a nationwide list of sanctuary cities and states in relation to his deportation promises, according to WSJ.
• White House said President Trump wants tax cuts in this reconciliation package, while it stated Treasury Secretary Bessent will brief the press on Tuesday and will hold a tax meeting today.
• Politico's Hill reported that US Treasury Secretary Bessent and the "Big Six" Republican reconciliation negotiators were to meet in the Capitol at 21:00BST/16:00ET today.
• US Treasury Financing Estimates (Q2): expects to borrow USD 514bln in privately-held net marketable debt, assuming end of June cash balance of 850bln (prev. guided USD 123bln, assuming end of June cash balance USD 850bln).
• 12 potential issuers are said to be considering US investment-grade deals on Monday with around USD 35bln of new bond sales expected, according to Bloomberg citing a survey of underwriters.

DATA RECAP

• US Dallas Fed Manufacturing Business Index (Apr) -35.8 (Prev. -16.3); Output Index 5.1 (prev. 6.0)

FX

• USD weakened against all G10 peers in a quiet session with sparse newsflow and no tier-1 data but comes ahead of a week filled with key releases (GDP, PCE, QRA, NFP, ISM Mfg.) and mega-cap US earnings (AAPL, AMZN, META, MSFT), while the move lower in US Treasury yields weighed on the buck as did a dismal Dallas Fed survey.
• EUR benefitted from the softer dollar and reclaimed the 1.1400 status, while there were some comments from central bank officials including ECB's Rehn who noted that EUR strength is complicating the price outlook and that underlying price pressures are easing.
• GBP strengthened and returned to the 1.3400 territory after advancing throughout the day despite the lack of notable catalysts although there were some optimistic comments on trade talks from the White House Press Secretary who noted discussions with the UK are moving in a very positive way.
• JPY outperformed with USD/JPY testing the 142.00 level to the downside following the initial risk aversion and lower US yield environment.

FIXED INCOME

• T-notes settled at highs in a choppy risk environment ahead of a week full of key data releases.

COMMODITIES

• Oil prices were losses to start the week with prices weighed on by the early risk-averse sentiment, as opposed to any oil-related headlines.
• US Energy Secretary Wright said the administration is refilling the strategic oil reserve now, according to CNBC. Wright separately commented that US LNG supply to Europe will continue to grow in a meaningful way and will absolutely see more off-take agreements for LNG from the US in Europe. Furthermore, Wright declined to comment on the potential return of Russian oil and gas supplies to Europe and said the energy situation in Europe is probably largely going to be determined by Europeans.

GEOPOLITICAL

MIDDLE EAST

• Gaza talks in Cairo are said to be witnessing "significant breakthrough" and parties agreed on a number of issues including consensus on a long-term ceasefire in Gaza, although some sticking points remain including Hamas arms, according to Reuters citing two-Egyptian sources.
• Israeli media said the Shin Bet chief Ronen Bar announced their resignation and will step down on June 15th, according to Reuters.
• The fourth round of US-Iran talks is expected to be held in Rome on Saturday, according to Axios' Ravid citing two sources with knowledge. It was separately reported that Iran proposed to meet France, Britain and Germany in Rome on May 2nd to discuss the nuclear programme and Europeans have yet to respond to the Iranian proposal for talks this week, according to Reuters citing sources.
• IAEA Deputy Chief met today with Iran’s deputy nuclear chief in Tehran to discuss outstanding safeguards issues, while they agreed on how to proceed with the issues, continue talks and implement understandings reached.
• US imposed new sanctions related to Yemen's Iran-backed Houthis, according to the US Treasury Department. In relevant news, Yemen's Houthis vowed to continue attacks in the Red and Arabia Seas, while it announced the launch of two "jaffa drones" at a "military target" in the Ashkelon area.

RUSSIA-UKRAINE

• Russia’s Kremlin said President Putin announced a temporary ceasefire for the May public holidays on May 8th-11th and said in the event of violations of the ceasefire by Ukraine, Russia will respond. Furthermore, it said that Russia once again declared its readiness for peace talks without preconditions.
• Ukrainian President Zelensky said the world does not want to wait till May 8th for a ceasefire for it to only be for a few days before killing resumes.
• Ukraine's Foreign Minister said if Russia truly wants peace, it must ceasefire immediately and Ukraine is ready to support a lasting, durable and full ceasefire.
• Ukraine's Foreign Ministry said Ukraine wants the minerals deal with the US to be finalised as soon as possible. It was separately reported that the US and Ukraine are getting closer to signing a minerals framework deal as soon as this week and Kyiv said it secured a significant concession from the US not to factor in past military aid, according to FT.
• US Secretary of State Rubio spoke with Russian Foreign Minister Lavrov on Sunday in which they talked about the next steps in Russia/Ukraine peace talks.
• EU and Ukrainian officials fear US President Trump is on the brink of walking away from peace negotiations with Kyiv and Moscow, potentially using minor progress in talks as an “excuse” to say his job is done, according to FT citing sources.

OTHER

• Pakistan's Defence Minister said a military incursion by India is imminent and Pakistan's military has been reinforced on the India border, while it stated that in an armed conflict, nations should refrain from using the nuclear option and it would only use the nuclear arsenal if there is a direct threat to its existence, according to Reuters.

ASIA-PAC

NOTABLE HEADLINES

• BoJ Quarterly Schedule of Outright Purchases of JGBs pace was maintained for May.

EU/UK

NOTABLE HEADLINES

• ECB's de Guindos said incoming data is indicative of modest growth in Q1 and a meeting-by-meeting approach is appropriate.
• ECB's Rehn said EUR strength is complicating the price outlook and underlying price pressures are easing, while he added that tariff effect in the EZ is two-way and should not rule out rate cuts below neutral based on theory. Furthermore, Rehn said there is some tightening in credit conditions but added it could still be short term.
• Spanish Interior Ministry declared a national emergency after a nationwide power blackout.