Commerzbank on Overnight News

Commerzbank in its "European Sunrise" note of Monday highlighted:

Markets: United States Treasuries weaken in Asia as stocks and e-minis are mostly supported (Japan and China are closed). The euro (EUR) pares Friday's gains, yen (JPY) jumps. Oil is little changed.

Fed: Minneapolis Fed President Neel Kashkari, Federal Reserve Bank of Cleveland President Beth Hammack and Dallas Federal Reserve President Lorie Logan outline their views that the next move could be either cut or hike in separate statements, after dissenting that the Fed was leaning toward resuming rate cuts. Chicago Federal Reserve Bank President Austan Goolsbee says recent inflation data was "bad news." Federal Reserve Board Governor Michael Barr says stress in private credit could spark "psychological contagion," leading to a broader credit crunch. Kashkari says a bigger Middle East shock may translate into labor weakness and a downward growth shift.

Tariffs: President Donald Trump vows 25% tariffs on cars and trucks from the European Union (up from 15%) this week, as the EU was "not adhering" to their agreement. Ifo's President Clemens Fuest warns new tariffs could tip Germany into recession.

Iran: The U.S. launches "Project Freedom" to escort neutral ships out of the Strait of Hormuz starting on Monday. Iran says US naval interference would be a ceasefire violation. Trump says he will review Iran's latest peace proposal, doubts that it would satisfy him, and doesn't rule out new military strikes.

U.S./China: President Trump says he will meet President Xi Jinping in China in two weeks, calls the trip "very important."

G7: President Trump says he will "probably" go to the summit in France in June.

OPEC+ agrees on a symbolic output hike by 188,000 barrels/day in June, after UAE's exit.

Merger and Acquisitions: Gamestop offers to buy eBay for $56 billion in cash and stock, with $20 billion debt financing from TD.

==EUROPE:

ECB: European Central Bank Governing Council (GC) member Joachim Nagel favors a rate hike in June unless the outlook improves markedly. GC member Olli Rehn says ECB must react "forcefully and quickly" if signs of second-round effects emerge. GC member Yannis Stournaras says a possible recession is "real and justified." GC member Madis Muller says the ECB rate at more or less neutral level allows time to wait. GC member Pierre Wunsch says Europe is "naive" in believing that the liberal economic model can survive the global shift (FT).

TSX Closer: Index Down Again Friday As Global Economy May Soon Face Renewed Tariffs Spats

The Toronto Stock Exchange closed lower Friday following a day-prior surge that recovered all of the losses made over the prior five sessions, as U.S. President Donald Trump said he will lift the tariffs charged on cars and trucks from the European Union next week to 25%, potentially adding more pressures on a global economy already struggling with the fallout from the Middle East war.The S&P/TSX Composite Index closed down 73.15 points, or 0.2%, to 33,891.18, with sectors mixed. Energy was down by more than 1%, while the Battery Metals Index rose 2.3% and Info Tech was up near 2%Still FactSet noted that going in to today the index was up 1,196.29 points or 3.65% in April, and up 2,251.57 points or 7.1% year-to-date.In its Monthly Equity Monitor for May 2026 published today National Bank noted equities are "riding exceptionally strong earnings expectations", with global markets reaching new highs despite an ongoing oil shock and persistent geopolitical risk. "Markets appear to be pricing in a rapid return to normal, but the Strait of Hormuz disruption continues to support a meaningful commodity-price premium," the bank said.National Bank remains cautious on risk assets, as renewed escalation could have severe global consequences, while even de-escalation may leave inflation and rates higher for longer. AI productivity gains offer upside over time, but they may not arrive quickly enough to fully offset the near-term drag from the commodity-price shock, weaker real income, and higher interest rates, the bank added.Meanwhile, on the economics front, Trump's latest threat against the EU comes as The Canadian Press reported Canada's Prime Minister Mark Carney is rejecting the notion that his government might use energy or critical minerals as "leverage" in upcoming trade talks with the U.S. administration. Carney is cited in an interview as saying he wouldn't describe those sectors as "leverage" since Canada is not talking about stopping any sort of existing trade. His comments come after United States Trade Representative Jamieson Greer told an audience in Washington that Canada should not attempt to use its energy and mineral resources as leverage in discussions about renewing the continental free trade pact, the report notes.Of commodities, gold edged higher by midafternoon Friday but remained rangebound, even as the dollar and treasury yields rose while traders turn to bonds and also while the Iran War pushes up oil prices and boosts inflation and threatens higher interest rates. Gold for June delivery was up US$12.80 to US$4,642.40 per ounce.But West Texas Intermediate crude oil closed lower as Iran made a new peace proposal, that U.S. President Trump rejected. WTI crude oil for June delivery closed down US$3.13 to US$101.94 per barrel, while July Brent oil was down US$2.17 to US$108.23.

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Commerzbank on Overnight News

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