FINWIRES · TerminalLIVE
FINWIRES

Commerzbank on Overnight News

By

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

Markets: United States Treasuries decline, then turn sideways in Asia. Asian stocks mixed while e-minis recover. The euro (EUR) weakens. Brent hovers around US$93/barrel.

Fed: Federal Reserve Governor Jerome Powell sees risk for Fed credibility if any president were free to dismiss Fed officials over policy disagreement. Federal Reserve Vice Chair for Supervision Michelle Bowman says it is too soon to judge the inflationary impact of the Iran war.

AI: Federal Reserve Bank of New York President John Williams says "demand for macro economists will still be vibrant."

Iran war: President Donald Trump urges calm on Iran deal, says "it will all work out well," after he sends tougher terms to Iran for peace framework, and says most of the deal is about the nuclear program. Iran is preparing counter-proposals to the U.S. draft framework and rejected suggestions it is close to accepting Trump's terms. The U.S. military strikes Iranian radar and drone control sites after Iran shot down a U.S. drone.

==EUROPE:

ECB: Governing Council member (GC) Isabel Schnabel says risk of de-anchoring inflation expectations is rising and the European Central Bank can no longer "look through" energy shock. GC member Alvaro Santos Pereira urges the ECB to act sooner rather than later.

ECB: Schnabel says stablecoins can trigger runs and fire sales, argues in favor of CBDC (speech).

BoE: Bank of England policymaker Catherine Mann warns the "good luck" of Great Moderation has run out.

Germany: Government so far failed to meet targets for the special fund for infrastructure, as 24 billion euros were disbursed in 2025 versus the 37.2 billion euros plan, and only 26 of 109 milestones planned for 2026 have been achieved by May (HB). Hendrik Wust calls speculation he will replace Prime Minister Friedrich Merz "nonsense."

EU: German Finance Minister Lars Klingbeil says Capital Markets Union is a game-changer for securing increased investment, after the six largest nations agree on plan to implement CMU. Germany wants EU-wide deal on CMU plan by year-end.

Ratings: S&P conducted an annual review for France without rating changes. DBRS confirms Spain at A (high)/stable. S&P affirms Latvia and Lithuania at A/stable. Scope affirms Bulgaria at A-/stable.

SoftBank plans 75 billion euros of Artificial Intelligence (AI) investments in France.

==ASIA:

China: Manufacturing PMI slips to 50 as expected, service PMI improves more than expected to 50.1. RatingDog manufacturing PMI falls less than expected.

Related Articles

Treasury

Market Chatter: Canada Could Double Its Exports to China, Minister Says in Rare Visit to Ottawa

Just days after a Canadian warship passed through the Taiwan Strait -- defying Beijing's warning that such transits undermine the bilateral relationship -- Foreign Affairs Minister Anita Anand welcomed her Chinese counterpart Wang Yi to Ottawa on Friday for the first such visit in a decade, The Canadian Press reported Friday.Canada aims to increase exports to China by 50% cent by 2030 while safeguarding Canada's economic and national security interests and values, Anand said.Echoing a trade target set by Prime Minister Mark Carney following his visit to Beijing earlier this year, Anand said Canada and China's leaders have set out a clear and ambitious vision for the countries' "recalibrated relationship.""It includes elevated engagement and co-operation on trade and investment, energy, finance, public security and safety, and people-to-people ties," she said alongside Wang and his delegation at the Global Affairs Canada headquarters in Ottawa. "At the same time, each of our countries must address critical issues and priorities to ensure the safety and security of our peoples."Wang's visit to Ottawa is the first for a Chinese foreign minister in 10 years. He is also meeting Carney on Friday. n his remarks, Wang said Canada could surpass its trade goal and even double exports to China if the relationship is maintained. He said China will soon become the largest market in the world and that it's open to Canada.The prime minister visited China in January and met with President Xi Jinping, the report noted.(Market Chatter news is derived from conversations with market professionals globally, and/or from other media sources. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

$CXY
Treasury

Market Chatter: Trump Administration Wants To Raise North American Auto Content to 82%, With Half From U.S.

The Trump administration wants to increase the level of regional content in North American-built vehicles to 82% to qualify for preferential treatment under the U.S.-Mexico-Canada Agreement on trade, with 50% of that value produced in the United States, four people familiar with the U.S. negotiating position said, Reuters is reporting Friday.The expansive demand, unveiled during this week's U.S.-Mexico negotiations over revisions to the six-year-old USMCA in Mexico City, has no provision for counting any parts content from Canada in the totals, the report noted. Canada is not represented in the Mexico City talks, the sources said.The shift, if accepted, would be a major break from the current USMCA, which requires that 40% of the "core parts" value of North American passenger vehicles be produced in high-wage jurisdictions, effectively the U.S. or Canada, Reuters said.That threshold is now 45% for pickup trucks. Overall, vehicles built in North America currently must have 75% regional content to qualify for preferential treatment under USMCA.The U.S. demand and lack of accommodation for Canada are consistent with Trump administration officials' frequent questioning of why Canada should export vehicles and auto parts to the U.S. and voicing a desire to move that production to the U.S, the report noted.Auto industry officials said there was a high likelihood that U.S. Trade Representative Jamieson Greer would seek to negotiate the new rules of origin with Mexico and then present them to Canada as a take-it-or-leave-it proposition. Greer has been evasive about whether USMCA would continue as a trilateral trade pact or be broken into separate bilateral agreements.(Market Chatter news is derived from conversations with market professionals globally, and/or from other media sources. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Treasury

RBC On Key Things To Watch Next Week and Its Rates View

RBC Capital Markets said next week's key Canadian economic release will be the May Labour Force Survey on Friday, with its economists expecting employment growth and a modest decline in the unemployment rate.In its CAD Weekly Soundbites report, RBC said it expects a 25,000 increase in employment in May and a decline in the unemployment rate to 6.8% from 6.9% in April. "Near-term, the labour outlook is unlikely to worsen further, given trade-concentrated layoffs have likely bottomed out and recent weakness largely reflected longer job searches for new entrants," RBC added.Remaining economic slack, along with inflation around target, reinforces RBC's view for the Bank of Canada to stay on hold with rates for the rest of 2026.RBC noted other key things to watch for next week include first-quarter productivity on Wednesday and S&P PMIs, with manufacturing due Monday and services and composite readings due Wednesday. Senior Deputy Governor Carolyn Rogers is also scheduled to appear before the House Public Accounts committee on Monday, although RBC said no fireworks are expected given the proximity to the June Bank of Canada meeting.On monetary policy, RBC said the recent GDP print "further extends runway to hikes." The bank noted that the Bank of Canada flagged risk scenarios to both cuts and hikes at its April meeting, though its overarching message was one of comfort with where policy was positioned."Slight but meaningful slack in labour markets and the economy, combined with underlying inflation around the 2% target, provides little impetus for the BoC to move off the bottom-end of its 2.25-3.25% neutral range," RBC added.RBC said despite volatility during the week around Iran deal optimism and weak Canadian GDP data, Canada-U.S. bond spreads were little changed from the previous week, with the five-year spread at negative 108 basis points.On foreign exchange, RBC said that if the U.S. and Iran were to reach a deal, USD/CAD may have further room to sell off on a weaker U.S. dollar initially. However, it added that the U.S. dollar's status as a higher-yielder in the G10 and relatively wide U.S.-Canada rate differentials act as a floor under USD/CAD.George Davis of RBC Capital Markets said a "spinning top pattern" halted the move higher in Canadian 10-year yields near 3.70%, while the subsequent bullish trend reversal below 3.51% resulted in a false break to the topside. "A daily close below resistance at 3.43% would amplify the false break and shift the focus down to 3.39% and 3.36% initially, followed by 3.27%," Davis said. "Support is now located at 3.53% and 3.61%."

$CXY$CAD$USD