Commerzbank on Overnight News

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

Markets: United States Treasuries bear-steepen into New York close, stabilize in Asia. U.S. equities also close lower, e-minis recover. Brent falls below US$94/barrel. The US dollar (USD) is softer.

U.S.: Job-loss fears are rising alongside the probability of quitting jobs, NY Fed survey finds. Inflation expectations are little changed.

Iran war: President Donald Trump says Iran is willing to agree not to have a nuclear weapon, the U.S. will declare "total victory" over the next two weeks, he could have an idea on Iran in one to two days, is "very close" to a strong deal. Earlier Iran and Israel agreed to halt attacks after Trump issued a warning to Prime Minister Benjamin Netanyahu (Axios).

G7: French President Emmanuel Macron to host video call between G7 and China to address global trade imbalances (Politico).

AI: OpenAI files confidentially for IPO, listing seen as soon as this fall. SpaceX is "well oversubscribed" with institutional investors placing orders for about US$10 billion (Bloomberg).

Fitch changes global sovereign sector outlook to "deteriorating" from "neutral."

==EUROPE:

Italy: The government won't interfere in the battle for Monte dei Paschi, the issue will come down to "whoever pays more" (Finance Minister Giancarlo Giorgetti).

Germany/France: Governments cancel 100 billion euros joint fighter-jet project.

U.K.: British BRC retail sales growth beat expectations at 3.4% in May, while consensus was 0.8%.

==ASIA:

China: Exports rose more than expected in May, pushing trade surplus to US$105 billion, while the consensus was US$93 billion.

Fairfax Completes US$750-Milliion Senior Notes Offering

Fairfax Financial Holdings Limited (FFH.TO) after the close Monday said it completed its private offering of US$750 million in principal amount of 6.200% senior notes due 2056.The company said it intends to use proceeds of this offering for general corporate purposes.According to the statement, the offering was made solely by means of a private placement either to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act of 1933, as amended, or to certain non-U.S. persons in offshore transactions pursuant to Regulation S under the Securities Act.The company shares closed up C$32.06 to C$2,252.77 on Toronto Stock Exchange.

$FFH.TO

TSX Closure: The Index Gains As Energy, Financial Shares, Advance Ahead of the BoC's Rate Decision

The Toronto Stock Exchange closed higher on Monday, recovering some of Friday's 804-point drop as strength in energy, financial and base metals stocks offset weakness in battery metals and defensive sectors, while investors weighed rising oil prices, inflation concerns and expectations the Bank of Canada will leave interest rates unchanged this week.The S&P/TSX Composite Index closed up 65.29 points, or 0.19%, to 34,478.74, with sectors mixed. Battery Metals Index led decliners , down 12.33%, while Health Care, Telecom, Utilities and Industrials were down 2.27%, 0.42%, 0.83%, and 0.15%, respectively. Energy led gainers, up 1.63%, with Financial, up 0.42%, Information and Technology, up 0.88%, and the Base Metals, up 1.13%.In commodities, gold fell to a fresh five-month low as rising oil prices fueled concerns that higher energy costs could keep inflation elevated and pressure central banks to raise interest rates. Gold for June delivery was last down US$5.00 at US$4,360.30 an ounce, while Saxo Bank said renewed tensions in the Middle East and a stronger-than-expected U.S. jobs report had reinforced expectations that the Federal Reserve may need to raise interest rates in 2026.However, oil prices rose as renewed hostilities between Iran and Israel heightened concerns over global crude supplies, although gains eased after reports the two sides had agreed to halt further attacks. WTI crude settled up US$0.76 at US$91.30 a barrel after earlier climbing as high as US$95.47, while Brent crude rose US$1.13 to US$94.22. Market participants continued to monitor the impact of tensions around the Strait of Hormuz, a key transit route for global oil shipments, with reports noted that supply risks are overshadowing OPEC+'s planned production increases.Against that backdrop, National Bank said the BoC should consider publishing an unemployment-rate forecast as part of its quarterly Monetary Policy Report, mentioning that labor market conditions are central to the inflation outlook and the future path of interest rates.The bank noted that the monthly Labour Force Survey remains the most closely watched Canadian economic release for bond markets, as employment and unemployment data help investors gauge inflation pressures and recalibrate expectations for monetary policy. It added that publishing unemployment-rate projections, alongside an estimate of the economy's trend or natural unemployment rate, would improve market understanding of how the central bank is likely to pursue its price-stability mandate.Meanwhile, CIBC said Canada's efforts to reduce its reliance on the U.S. economy through trade diversification have yielded only modest results despite recent progress. The bank noted that Canada has 15 free-trade agreements covering 51 countries and more than 61% of global GDP, but the impact on export diversification has been limited.CIBC said the share of Canadian exports destined for the United States has fallen to 69% over the past 12 months from 76% in 2024, with demand from China and Europe helping offset some of the decline. The lender added that despite ongoing trade tensions, Canada's long-term economic alignment is likely to remain with the United States.Looking ahead, National Bank said the BoC is expected to leave its overnight target unchanged at 2.25% on Wednesday. This would mark the fifth consecutive hold after policymakers first declared in October that policy is at "about the right level" to keep inflation near target and support the economy's transition, noted the bank.There is little in the data to justify a more hawkish shift from the BoC at its Wednesday policy meeting, said ING. April inflation undershot expectations with the headline consumer price index rising more modestly than feared to 2.8% year over year from 2.4%, the market consensus had been 3.1%, while core inflation surprisingly slowed. Meanwhile, the labor market has been mixed, noted the bank.Despite the gain in employment data on Friday, UBS said the BoC considers this in the broader trend of a "soggy" labor market. A flat four-month moving average in employment growth, even with Friday's strong gain in May, suggests the BoC would need to see a sustained improvement rather than just this one-month gain before this would tip the balance, stated UBS. This also has to be framed alongside disappointing growth in Q1, writes the bank in a note to clients.Additionally, the federal government on Monday offered loans to airlines struggling to cope with the soaring price of jet fuel, as Iran war forced them to cut flight schedules and curtail profit forecasts, reported The Canadian Press.The new program will let carriers borrow up to $150 million each, said Finance Minister Francois-Philippe Champagne."By building on existing relief measures with targeted and temporary support for Canada's airline sector, we are helping maintain connectivity, protect Canadian jobs and reduce pressures on travelers during this period of elevated fuel costs," Champagne said in a news release.Besides, s new report pointed out Canada could be poised for a slower-than-usual summer rental market as average asking rents for May were down approximately $100 from a year earlier, reported CP.The latest monthly analysis from Rentals.ca and Urbanation finds the average asking rent for May was down 4.7 per cent year-over-year to $2,029, marking the 20th consecutive annual decline, it added.

$^GSPTSE$.GSPTSE$$CXY

Commerzbank on Overnight News

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