Futures Slide As Debt Ceiling Talks Enter 11th Hour, European PMIs Crumble

US equity futures are lower, as treasuries also dropped across the curve, with the two-year yield rising for an eighth day, after the latest round of talks between Joe Biden and Kevin McCarthy Monday ended without a deal, while Eurozone manufacturing activity shrank at the fastest pace since the pandemic shuttered factories three years ago, threatening to sap momentum from an economy driven by services. The dollar rose as did bitcoin, gold fell again while oil reversed earlier losses and jumped to session highs after Saudi Arabia's energy minister told oil speculators to “watch out” just over a week before the OPEC+ alliance is due to meet.

At 7:45am ET, US equity futures dropped 0.2% to session lows, dropping back under 4,200, whlie the Nasdaq was shocking in the red perhaps finally realizing where the 10Y yield is. Lowe’s slipped 1.5% in pre-market trading after cutting its sales outlook. In Europe, a rout in luxury-goods makers including Hermes International and LVMH dragged the Stoxx 600 lower after Deutsche Bank AG analysts warned the sector is crowded and valuations are lofty. Tokyo’s Topix index fell for the first time in eight days, with semiconductor-related stocks turning lower on news that Japan’s tighter export controls will take effect July 23.

In premarket trading, one of the last major home-improvement retailers left to report Lowe's slumped after it cut its comparable sales forecast for the full year. Here are the other notable premarket movers:

Yelp shares jump 11% in premarket trading after TCS Capital Management said it believes “several buyers” would pay a premium for the company as the activist investor confirmed it had written to the board urging the exploration of a sale.
Zoom fluctuated in US premarket trading. The video communications platform boosted its revenue guidance for the full year and management outlined plans to incorporate artificial intelligence into its products.
PacWest shares surged in premarket trading Tuesday, set to extend Monday’s gains. The surge was fueled by the bank’s sale of a $2.6 billion portfolio of 74 real estate construction loans to Kennedy Wilson for about $2.4 billion.
Microvast plunged as much as 24%, following the US Energy Department’s cancellation of a planned $200 million grant to the lithium-ion battery maker amid criticism over ties to China.
Chimerix shares jump 5% in premarket after Baird Equity Research initiates coverage on the biopharmaceutical company with an outperform recommendation. The broker said Chimerix has a lead agent for the treatment of H3 K27M-mutant glioma that is potentially first in class.
Tegna shares rose 2.3% in extended trading after the company announced share a share buyback plan and said its merger with Standard General was terminated.

The neverending debt drama continued overnight after Joe Biden and House Speaker Kevin McCarthy called their discussions on Monday productive, but an agreement remains elusive. That left traders on tenterhooks with only a few days left before June 1, when Treasury Secretary Janet Yellen said her department may run out of cash. Any deal would have to be approved by Congress before then.

“I think a default is very unlikely as I don’t think either Democrats and Republicans want it, but we could get close to it and the deadline,” Fabiana Fedeli, chief investment officer for equities and multi-asset at M&G Plc, said on Bloomberg TV. “The closer we get to the deadline the more nervous clients will get. You could have a move towards safer havens, perhaps the long end of yield curve" she warned.

Today’s macro focus will be May PMIs at 9.45am, where consensus estimates the Mfg PMI to print to dip to 50.0 from 50.2 while the Services PMI is also expected to drop to 52.5 from 53.6 prior.

European stocks slumped as a rout in luxury-goods makers including Hermes International and LVMH dragged local markets lower after Deutsche Bank AG analysts warned the sector is crowded and valuations are lofty. The Stoxx 600 was down 053% with consumer products, retailers and industrials the worst-performing sectors. Among individual stock movers, Vivendi SE tumbled after billionaire Vincent Bollore sold shares of the media conglomerate, a sign that he’s isn’t planning a buyout. Swiss asset manager Julius Baer Group Ltd. sank after disappointing results. Here are the most notable European movers:

European paper and pulp manufacturers gain after their Brazilian peer Suzano raised June pulp prices in Asia by $30 per ton, according to a Bloomberg report
Qiagen rise as much as 3.3% after Morgan Stanley upgraded the diagnostics and laboratory technology firm to overweight from equal-weight, saying the firm’s outlook is being undervalued
Cranswick shares rise as much as 5.9%, making it the top performer in the FTSE 250 Index on Tuesday, after the meat supplier reported sales and profit for the full year that beat estimates
SSP Group shares rise as much as 5.2% after the food-service company reported first-half revenue that beat estimates. Analysts highlighted new business wins and SSP’s trading momentum
Banca Profilo shares jump as much as 9.1% after Twenty First Capital Sas reaches an agreement with Banca Profilo’s controlling shareholder Arepo BP SpA to buy a 29% stake in the bank
Crayon gains as much as 16% after the Norwegian IT firm reported 1Q results, including gross profit growth of 31%. DNB says gross profit, Ebitda and operating free cash flow all beat estimates
BW LPG shares gain as much as 10%, hitting a record high, after the Norwegian LPG carrier firm’s 1Q results beat expectations, with DNB calling the report solid and a proposed dividend “hefty”
Julius Baer shares decline as much as 8.5%, the most in a year, after it reported assets under management of CHF429 billion as of the end of April, which analysts said was below expectations
Vivendi falls in Paris trading after billionaire Vincent Bollore sold shares in the media conglomerate, damping optimism among speculators that he would launch a buyout offer
RS Group shares decline as much as 5.6%, hitting the lowest since June 2022, after the outlook from the industrial and electronic products distributor pointed to a slowdown in its broader markets

Earlier in the session, Asian stocks were mized as participants digested the latest from the debt limit negotiations with the meeting between US President Biden and House Speaker McCarthy said to be productive but still lacked any major breakthrough.

China’s CSI 300 Index falls 1.4% to close at its lowest since Jan. 4, with losses steepening in afternoon trading led by telecoms and financials. Benchmark about 1% away from wiping out 2023 gains; Shanghai Composite drops 1.5%. Hang Seng Index down as much as 1.6%, Hang Seng Tech Tech -1.5%. Mainland stocks was pressured after Chinese press reports noted expectations for the PBoC’s benchmark lending rates to remain unchanged for some time and after the US denied it was planning to lift sanctions on China's defence minister.
Tokyo’s Topix index fell for the first time in eight days, with semiconductor-related stocks turning lower on news that Japan’s tighter export controls will take effect July 23. Toyota Motor Corp. tumbled in the final minute of trading. Japan's Nikkei 225 initially climbed to its highest level since August 1990 and was on course to match its longest win streak in around four years, before eventually deteriorating in afternoon trade.
ASX 200 was kept afloat but with the upside capped by weakness in the consumer sectors and after Australia’s Flash Manufacturing PMI remained in a contraction.
Key stock gauges in India rose for the third successive day amid continued buying by overseas investors and gains in the Adani pack. The NSE Nifty 50 Index advanced 0.2% to 18,348 in Mumbai, while the S&P BSE Sensex closed higher by 18.1 points at 61,981.79. Adani Group stocks clocked third straight day of gains following the observations made by a Supreme Court-appointed panel in relation to stock price manipulation. Adani Ports recovered all of its post-Hindenburg Report losses during the day. of consumer-facing firms and lenders were also contributors to the rally in Nifty 50 and the Sensex indexes, and helped them outperform most Asian peers. The MSCI Asia-Pacific Index closed 0.6% lower. Adani Enterprises contributed the most to the Nifty 50’s gain, surging 13.2%. Out of 50 shares in the Nifty index, 28 rose, while 22 fell.

In FX, the dollar index rose 0.2%, hovering near its two-month high, after talks between Joe Biden and Kevin McCarthy Monday ended without a deal, though they called their discussions productive and vowed to keep negotiating. The Japanese yen is the best performer among the G-10’s, rising 0.2% versus the greenback. The Norwegian krone is the weakest. GBP/USD fell as much as 0.5% to 1.2373, its lowest since April 21 after disappointing PMI prints; EUR/GBP trades 0.1% higher at 0.8703.

In rates, treasuries added to Monday’s losses with front-end underperforming led by two-year Treasury yields rising another 5bps to 4.36% and flattening the curve even as stock futures also dropped as European names stumbled after euro-zone manufacturing activity shrank at the fastest pace since the pandemic. Treasury yields cheaper by up to 7bp across front-end of the curve with 2s10s, 5s30s spreads flatter by ~4bp on the day; 10- year yields around 3.745%, cheaper by ~ 3bp with gilts following suit, lagging by 1bp and 5.5bp in the sector. European bonds are also in the red and Gilts also fell, underperforming their European counterparts, as UK services PMI data showed cost pressures in the services sector increased at the fastest pace in three months. The Treasury auction cycle begins 2-year note sale, and Fed Chair Powell reportedly will make an unscheduled appearance. $42b 2-year note auction at 1pm New York time begins cycle that also includes 5- and 7-year sales Wednesday and Thursday. WI 2-year yield at 4.335% is ~37bp cheaper than last month’s, which tailed by 0.3bp.

In commodities, crude futures rose with Brent trading near $76.70 of session highs after Saudi Arabia's energy minister threatened bearish oil speculators. Spot gold falls 0.6% to $1,960.

Bitcoin is bid and has convincingly surmounted the USD 27k handle to a USD 27.47k peak as we await a busy US agenda where the debt ceiling, Powell and PMIs are all potential macro movers.

To the day ahead now, and the main highlight will be the flash PMIs from Europe and the US. Other US data releases include new home sales for April, and the Richmond Fed’s manufacturing index for May. From central banks, we’ll hear from ECB Vice President de Guindos, the ECB’s Muller, Villeroy and Nagel, the Fed’s Logan and the BoE’s Haskel.

Market Snapshot

S&P 500 futures little changed at 4,202.75
MXAP down 0.4% to 162.32
MXAPJ down 0.4% to 514.15
Nikkei down 0.4% to 30,957.77
Topix down 0.7% to 2,161.49
Hang Seng Index down 1.3% to 19,431.25
Shanghai Composite down 1.5% to 3,246.24
Sensex up 0.4% to 62,180.82
Australia S&P/ASX 200 little changed at 7,259.89
Kospi up 0.4% to 2,567.55
STOXX Europe 600 down 0.3% to 467.52
German 10Y yield little changed at 2.46%
Euro down 0.1% to $1.0799
Brent Futures down 0.2% to $75.87/bbl
Gold spot down 0.6% to $1,960.23
U.S. Dollar Index up 0.16% to 103.37

Top Overnight News

Saudi Arabia’s top energy official issued another warning to oil short-sellers, just over a week before the OPEC+ alliance is due to meet. “I keep advising them that they will be ouching — they did ouch in April,” Saudi Energy Minister Prince Abdulaziz bin Salman said at the Qatar Economic Forum in Doha on Tuesday. “I would just tell them: Watch out!” BBG
Japan’s flash PMIs improve in May, with manufacturing rising to 50.8 (up from 49.5 in April) and services jumping to 56.3 (up from 55.4 in April). S&P
Taiwan’s industrial production sinks by far more than anticipated in April, coming in -22.8% (vs. the Street -13% and down from -16% in March) (Bloomberg); shipping container production slumps dramatically amid a steep pullback in the global transport industry as consumers globally cut back on discretionary goods purchases. FT
The US said it has no plans to lift sanctions on Chinese Defense Minister Li Shangfu, appearing to backtrack on comments made a day earlier by President Joe Biden while he attended the Group of Seven summit in Japan. BBG
Europe’s flash PMIs for May are mixed, with a steep drop in manufacturing (44.6, down from 45.8 in April and below the Street’s 46 consensus) while services hold in better (55.9, down from 56.2 in April but ahead of the Street’s 55.5 forecast). S&P
Biden/McCarthy meeting is called “productive” and “better than any other”, but a deal still hasn’t been reached, while the “X-date” fast approaches (Yellen reiterated the June 1 ceiling breach date). Politico
Private equity groups are increasingly selling shares in portfolio companies at a discount to the price at which they went public, in a sign they do not expect stock market valuations to regain their previous highs soon. Private equity-backed follow-ons in the US are up 180 per cent year on year, but almost two-thirds of the deals were priced below the companies’ IPO. FT
Deere will sell $36 billion of medium-term notes through John Deere Financial. It filed to sell notes ranking as senior or subordinated due nine months or more from the date of issue. BBG
Activist investor TCS Capital Management has built a stake in Yelp and is calling on the service-recommendation site to explore strategic alternatives including a sale, people familiar with the matter said. WSJ
HF VIPS: Mega-cap tech remains at the top of Goldman's list of popular hedge fund long positions. MSFT, AMZN, META, and GOOGL remain the top four stocks in the VIP list this quarter, with the Info Tech and Comm Services sectors accounting for nearly half of the list. The VIP list contains the 50 stocks that appear most often among the top 10 holdings of fundamental hedge funds. The basket has outperformed the S&P 500 in 58% of quarters since 2001 with an average quarterly excess return of 37 bp. 13 new constituents: AER, AVGO, DDOG, FCNCA, GDDY, IAC, ISEE, JPM, LLY, NEWR, SPOT, TTWO, WMT. Read Ben Snider and team’s HF trend monitor HERE.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were indecisive as participants digested the latest from the debt limit negotiations with the meeting between US President Biden and House Speaker McCarthy said to be productive but still lacked any major breakthrough. ASX 200 was kept afloat but with the upside capped by weakness in the consumer sectors and after Australia’s Flash Manufacturing PMI remained in a contraction. Nikkei 225 initially climbed to its highest level since August 1990 and was on course to match its longest win streak in around four years, before eventually deteriorating in afternoon trade. Hang Seng and Shanghai Comp. were subdued following Hong Kong’s failure to sustain the early tech-led momentum from China’s approval of 86 domestic online games in May, while the mainland was pressured after Chinese press reports noted expectations for the PBoC’s benchmark lending rates to remain unchanged for some time and after the US denied it was planning to lift sanctions on China's defence minister.

Top Asian News

Chinese press reports stated that the PBoC's Loan Prime Rates are expected to remain unchanged for some time and noted the LPR faces little downside due to the economic recovery and banks' tight NIM.
Russian PM Mishustin said on his visit to China that Russia-China ties will positively impact both countries and 2023 trade turnover between the countries could reach USD 200bln, according to TASS and RIA.

European bourses are pressured, Euro Stoxx 50 -0.5%, with the exception of the FTSE 100 +0.1% which is deriving some support from regional banking names on post-PMI hawkish BoE implications. Back to Europe, bourses came under pressure from the region's PMIs as it has hawkish ECB implications and with the Manufacturing sector still under marked pressure. Sectors are somewhat mixed with Real Estate bolstered while Luxury names are tarnished after a cautious note from Deutsche Bank. Stateside, futures are essentially flat with the ES pivoting 4200 as we await more substantive debt ceiling updates and remarks from Fed's Powell. Lowe's Companies Inc (LOW) Q1 2023 (USD): adj. EPS 3.67 (exp. 3.44), Revenue 22.35bln (exp. 21.6bln); SSS -4.3% (exp. -3.2%); updates outlook
EU is seeking to reimpose a EUR 14.3bln tax demand on Apple (AAPL), via FT; Competition Commissioner Vestager is looking to overturn the EU's 2020 legal defeat over a tax bill to Ireland.

Top European News

UK Chancellor Hunt will meet with food manufacturers today to ask for help from the industry to ease the pressure on households and steps up pressure on supermarkets to rein in soaring prices, according to FT.
Hungary is accelerating discussions with Brussels to release nearly a third of its EU funding after a long stand-off, but officials warned funds will likely remain frozen because of differences over reform efforts, according to FT.

DXY underpinned after productive US debt ceiling discussions as the index meanders around a Fib at 103.330.
Yen regains poise with some traction from upbeat Japanese PMIs and USD/JPY running into supply ahead of 139.00.
Aussie underperforms either side of 0.6650 as iron ore slides and the Yuan depreciates below 7.0000.
Kiwi loses traction on the eve of RBNZ irrespective of hawkish shift in pricing, with NZD/USD at the lower end of 0.6302-0.6254 bounds.
Euro keeps tabs on 1.0800 as strength in EZ services counters manufacturing deficiencies, but Pound waning on 1.2400 handle as UK PMIs miss consensus across the board.
PBoC set USD/CNY mid-point at 7.0326 vs exp. 7.0327 (prev. 7.0157)

Fixed Income

Debt futures plumb new cycle lows as bearish momentum continues to build.
Bunds down to 133.69, Gilts 97.22 and T-note 113-09 ahead of US prelim PMIs, new home sales and Fed's Logan all ahead of USD 42bln 2 year supply.
Mixed EU PMIs largely shrugged aside along with UK and German auctions awaiting more talks on the US debt ceiling.

Commodities

Crude benchmarks are in close proximity to the unchanged mark after Monday's circa. USD 0.40/bbl firmer settlement with the complex focused on Energy Officials at the Qatar Economic Forum.
Currently, WTI and Brent are incrementally softer and around the mid-point of USD 71.71-72.62/bbl and USD 75.65-76.53/bbl parameters.
Saudi Energy Minister says I keep telling speculators they will be "ouching" and they did hurt in April, I would tell them to watch out.
Russian Deputy PM Novak says growth of Russian energy shipments to China at 40% in 2023, via Interfax.
Spot gold slips as the USD remains underpinned though the yellow metal remains above Friday's USD 1954/oz trough; base metals similarly dented on the USD and with continued attention on China's recent sub-par metrics.

Debt Ceiling News

US President Biden said that he is optimistic they will make some progress on the debt ceiling and that they need a bipartisan agreement and sell it to constituencies, while he added that they need to cut spending and should look at tax loopholes and that the wealthy pay their fair share, according to Reuters. US President Biden later commented that he concluded a productive meeting with House Speaker McCarthy about the need to prevent a default and reiterated once again that default is off the table, while they will continue to discuss the path forward.
US House Speaker McCarthy said after the meeting with President Biden that he felt they had a productive discussion but don't have an agreement yet and that staff will continue discussions with negotiators instructed to come back together and find common ground. McCarthy also noted the tone of the conversation was better than any previous time and believes they can get a deal done. Furthermore, he is confident that President Biden wants a deal, while they both agreed that they want to reach an agreement and will talk daily until they get this done.
White House debt limit negotiators returned to Capitol Hill to resume talks but later declined to comment after the talks concluded for the night, according to Bloomberg.
US Treasury Secretary Yellen reiterated that debt-limit measures could still run out as soon as June 1st and that it is highly likely cash will run out by early June, according to a statement from the Treasury Department.
"Sources close to McCarthy said the House could pass a short-term boost if there was a deal and the Treasury Department needed a very brief patch to avoid default, But barring that, don’t expect it to happen", according to Punchbowl.

Geopolitics

Twitter source noted a drone attack was said to have targeted the departments of the Ministry of Internal Affairs and FSB in Russia's Belgorod, while air raid alerts sounded in central and western Ukraine due to Shahed drone activity.
Russia's Belgorod regional Governor said a counter-terrorism operation continues and a return to homes in the region's Gaivoron district is not possible yet, according to Reuters.
Hungarian PM Orban says the nation will continue to block EU Ukraine aid and the 11th sanctions package; says Ukraine must stop backlisting OTP Bank.

US event calendar

08:30: May Philadelphia Fed Non-Manufactu, prior -22.8
09:45: May S&P Global US Manufacturing PM, est. 50.0, prior 50.2
09:45: May S&P Global US Services PMI, est. 52.5, prior 53.6
09:45: May S&P Global US Composite PMI, est. 53.0, prior 53.4
10:00: May Richmond Fed Index, est. -8, prior -10
10:00: April New Home Sales MoM, est. -2.6%, prior 9.6%
10:00: April New Home Sales, est. 665,000, prior 683,000

Central Bank Speakers

09:00: Fed’s Logan

DB's Jim Reid concludes the overnight wrap

Since it’s AI week, it’s probably worth mentioning that there was a very brief selloff in markets yesterday after unconfirmed reports circulated on Twitter about an explosion near the US Pentagon. For all of a few minutes after the US open, that saw the S&P 500 shed around a quarter of a per cent, whilst yields on 10yr Treasuries moved about 4bps lower as well, even though nothing had been officially confirmed. The tweet was deleted shortly after and the Pentagon confirmed that no explosion had taken place, meaning that markets snapped back those moves in short order. But given the suggestions that the initial photo might have been AI-generated, it just shows the potential pitfalls for markets if fake news driven by AI can cause concrete movements in asset prices. That could be a growing issue over the months and years ahead, particularly if the technology is able to provide increasingly convincing images and that’s before we get to deep fakes. Indeed who knows if it’s really us typing this.

Actually typing is a bit more difficult than normal this morning as I burnt my hand yesterday. File this under first world problems but a power cut/surge blew our boiling water tap yesterday. As we don’t have a kettle I had to make a coffee by putting a pan in the oven (normal for our type of oven when cooking). I took it out carefully with the oven glove and then went over to get my cup. In the 10 seconds I was away I forgot the pan was piping hot and picked it up to pour and scolded my hand.

That’s how you maybe prove this isn’t AI as no robot would be so stupid. Anyway, whilst AI might be the long-term focus right now, in the short term the main issue for investors continues to be the debt ceiling, as the clock ticks towards a potential deadline in early June. Last night’s meeting between Biden and McCarthy seemed to be constructive with Speaker McCarthy saying, “The tone tonight was better than any other time we have had discussions” and President Biden adding “that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement.” This meeting came shortly after Treasury Secretary Yellen’s announcement that it was now “highly likely” that the Treasury would run out of cash in early June with a default possible as soon as June 1. Prior to that meeting President Biden and Speaker McCarthy told reporters that a deal needed to get done in the next few days to avoid hitting the debt ceiling, with the latter saying “decisions have to start being made.”

With the issue still not resolved at yesterday’s close, markets grew increasingly alarmed about the potential implications of a default, and yields on short-term T-bills continued to rise. For instance, the 1-month T-bill yield surged by +13.2bps yesterday to 5.46%, which was just under the highs reached early last week. This morning we've reversed yesterday's losses on the overnight headlines from Biden and McCarthy

As investors were focusing on the debt ceiling, US Treasuries came under further pressure from a collection of hawkish Fed speakers yesterday. That started with St Louis Fed President Bullard (non-voter), one of the most hawkish FOMC members, who said that “I think we’re going to have to grind higher with the policy rate”, and that his thinking was for “two more moves this year”. Earlier in the day, Minneapolis Fed President Kashkari (voter) had also sounded open to another hike in June, saying that “I think right now it’s a close call, either way, versus raising another time in June or skipping.” Later on however, San Francisco Fed President Daly (non-voter) didn’t give an obvious signal, saying that there was still a lot of time to collect information ahead of the June meeting.

With Fed speakers sounding more hawkish, investors continued to dial up their expectations for the fed funds rate over the months ahead. For instance, the chances of a June hike moved back up to 22.5%. And the rate priced in for the December meeting was up +6.1bps to a post-SVB high of 4.696% (just above the midpoint of its intra-day range of 3.40% to 5.56% this year), which speaks to the increasing scepticism that the Fed will be able to cut rates this calendar year. In turn, that meant yields on 10yr Treasuries rose for a 7th consecutive session, rising +4.2bps to 3.715%. That’s the longest string of increases in over a year, having been at just 3.38% before this current run began a week and a half ago.

Equities were more resilient than bonds yesterday though also seemed to be waiting for the resolution of the Biden-McCarthy talks last night. The S&P 500 closed largely unchanged (+0.02%) but tech stocks again outperformed as the NASDAQ (+0.50%) hit another post-August high, which takes its YTD gains to +21.54%. Back in Europe, equities were broadly flat as well, with the STOXX 600 up +0.01%. However, there was a massive outperformance in Greece, where the Athens Stock Exchange General Index surged +6.09% after Sunday’s election. That was the index’s best daily performance since 9 November 2020, back when Pfizer announced that their vaccine had an effectiveness of over 90%, and global risk assets soared as investors saw a path out of the pandemic. Similarly, the Greek 10yr government bond yield came down -14.2bps, which contrasted with the rest of Europe where yields on 10yr bunds (+3.1bps), OATs (+2.8bps) and BTPs (+4.2bps) all moved higher.

In Asia the Nikkei (+0.64%) is leading gains, pushing towards a fresh 33-year high aided by a weaker yen and stronger PMI data (more below) while the KOSPI (+0.62%) is also trading in the green. Elsewhere, Chinese stocks are losing ground with the Shanghai Composite (-0.58%), the CSI (-0.53%), and the Hang Seng (-0.34%) all edging lower. Outside of Asia, US stock futures are reflecting a more positive tone on the debt ceiling talks with the S&P 500 (+0.21%) and NASDAQ 100 (+0.28%) trading up as we type.

Coming back to Japan, the manufacturing sector witnessed an expansion for the first time in 7 months as the PMI came in at 50.8 in May, up from a reading of 49.5 in April, as output and new orders rose for the first time in 13 months. At the same time, service-sector activity expanded at the strongest pace on record in May, advancing to 56.3, from 55.4 in April, indicating that the post-COVID recovery is showing signs of continuing momentum.

Elsewhere, Australia’s manufacturing sector continued to contract in May, with the PMI remaining unchanged at 48.0, marking the joint-lowest reading since May 2020. The survey also showed that the services PMI fell from 53.7 in April to 51.8 in May with the composite index edging lower from 53.0 in April to 51.2 in May.

Finally, there were some fresh developments in the 2024 US presidential race yesterday, as Senator Tim Scott announced his candidacy on the Republican side. But so far at least, polls continue to suggest that former President Trump is the overwhelming frontrunner for the nomination ahead, with the RealClearPolitics average currently placing Trump at 56%, and Florida Governor Ron DeSantis in second place on 19%. Speaking of DeSantis, several media outlets including CNN and CBS have reported sources saying that he’ll will formally announce a run tomorrow, so the field of candidates is beginning to emerge now.

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