Market Quick Take – 12 June 2025

Market drivers and catalysts

• Equities: US inflation cools; trade deal uncertainty; Europe drops; UK outperforms
• Volatility: VIX up, but calm persists; light hedging ahead of Fed; macro-driven moves
• Digital assets: Bitcoin steady; IBIT, ETHA see strong ETF inflows; sentiment bullish
• Fixed Income: Treasuries rally on soft US CPI
• Currencies: USD falls, JPY firms on soft US CPI that boosts bonds
• Commodities: Tehran threat lifts crude oil and gold; Ags await U.S. crop report
• Macro events: US May PPI, US Weekly Jobless Claims, US 30-year

Macro data and headlines

• Trump said he will set unilateral tariffs rates within two weeks. Earlier deal with China left tariffs at 55%, 30% from reciprocal tariffs, and 25% from fentanyl.
• US May CPI rose to 2.4% YoY, below the expected 2.5%. Price increases were notable in food (2.9%), transportation services (2.8%), used cars and trucks (1.8%), and new vehicles (0.4%). Core CPI increased 2.8%, slightly below the 2.9% estimate. The month-on-month increases for both releases were at 0.1% vs. 0.2% and 0.3% expected for the headline, core readings, respectively.
• US and China reached a preliminary deal on rare earths supply and eased student visa restrictions, but unclear tariffs and export controls dampened investor optimism. President Trump said the deal was “done,” pending approval from him and President Xi, with a decision expected soon.
• US recorded a $316 billion budget deficit in May, down 9% year-on-year, driven by record customs receipts of $23 billion from new tariffs. Gross customs receipts rose from $6 billion in May 2024 due to increased tariffs.
• Iran threatened to strike American bases in the Middle East if the nuclear talks collapse and the country is attacked. The US ordered some staff to depart its embassy in Baghdad due to heightened security risks, while the UK navy issued a rare warning to mariners that higher tensions could affect shipping, including the Strait of Hormuz the world’s most critical oil transit chokepoint that sees more than 20 million barrels of crude pass through daily.
• Bloomberg reports that the US defense department is reviewing the Aukus defense pact to develop nuclear-powered submarines with Australia and the UK, a deal that was signed in 2021. Trump administration officials are questioning whether it aligns with the US’ “America First” agenda.

Macro calendar highlights (times in GMT)

0600 – UK April Industrial and Manufacturing Production
1230 – US May PPI
1230 – Initial Jobless Claims
1430 – EIA's Natural Gas Storage Change
1600 – World Agriculture Supply and Demand Estimates (WASDE)
1700 – US to sell USD 22 billion 30-year bonds

Earnings events

• Today: Adobe

Next week:

• Monday: Lennar
• Wednesday: Carnival Corporation
• Thursday: Accenture, Kroger, Darden Restaurants

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• US: US stocks pulled back as investors weighed softer May inflation data and an uncertain US-China trade framework. The S&P 500 slipped 0.3%, the Nasdaq dropped 0.5%, and the Dow ended flat. Lower-than-expected CPI cooled Fed hike fears, but new tariffs and export control questions kept optimism in check. A tentative deal with China covers rare earth supplies and student visas, but needs formal sign-off from Trump and Xi. GameStop tumbled 11% postmarket after convertible note plans. Oracle rallied over 7% on upbeat earnings.
• Europe: European stocks ended lower as initial US-China trade optimism faded. The Stoxx 50 lost 1%, DAX -0.2%, and CAC 40 -0.4%. EU officials remain cautious on US trade talks, signaling a deal may take until July or longer. Retail stocks dragged markets down, with Inditex plunging 4% on weak sales, while autos and basic resources gained. Swiss stocks tracked the region lower; the SMI dropped 0.3%, despite Julius Baer rising 1.7% after a bond issue. UK’s FTSE 100 outperformed, closing at a near-record high as Labour’s spending plans boosted defense and health shares.
• UK: The FTSE 100 rose 0.13% to its second-highest close ever, buoyed by upbeat government spending plans and a positive US-China trade update. Financials and defense stocks led gains, while BT Group jumped 2.5% amid takeover rumors. BP edged up, and Burberry gained as analysts saw potential for a margin recovery. The index is up over 8% year-to-date, just 0.08% off its all-time high.
• Asia: Asian markets posted mixed results as Trump reignited tariff threats and Middle East tensions rose. Japan’s Nikkei and TOPIX both slipped, with tech and exporter weakness offsetting minor gains in energy. Australia’s ASX 200 eked out a gain on gold and energy stocks. Hong Kong’s Hang Seng retreated from three-month highs, dragged by tech and rare earth names, despite hopes for eased US-China tensions. South Korea’s KOSPI rose 0.5% on political stability and earnings optimism.

Volatility

Volatility nudged higher but remains subdued. The VIX rose to 17.26 (+1.8%), with one-month VIX futures near 18.25, reflecting light hedging ahead of next week’s Fed meeting. Skew and VVIX are flat, indicating few signs of deep concern, and volumes in VIX options spiked as investors positioned for macro risk rather than stock-specific events. With the index still below its long-term average, market caution persists, but stress is absent.

Digital Assets

Digital assets held steady despite mild price pullbacks. Bitcoin hovered near $108.6k (-0.8%), Ethereum just below $2.8k, and altcoins were broadly weaker. Institutional interest is solid: BlackRock’s IBIT ETF absorbed another 3,000+ BTC, pushing assets near $72bn, while ETHA saw $163m of net inflows to $4.4bn AUM. Steady ETF flows and resilient prices signal deepening adoption even as short-term volatility cools. Social sentiment remains bullish, but “greed” is rising, with analysts watching for new highs.

Fixed Income

• US Treasury yields fell all along the curve on the soft US May CPI data and on a strong US 10-year auction later in the day, with more than 90% of the auction absorbed by non-dealers. The US 2-year treasury benchmark yield fell some eight basis points and trades 3.94% this morning, while the 10-year fell slightly less, trading near 4.41% this morning in Europe. Today, the US treasury will auction USD 22 billion of 30-year T-bonds.

Commodities

• The Bloomberg Commodity Index trades near a three-month high, led by weekly gains among some of the index heavyweights from crude oil and gold to silver and aluminium. The index trades up 7% year-to-date, as the sector maintains its lead over the major stock indexes, and just ahead of the MSCI World.
• Crude prices surged to two-month highs on Wednesday, lifted by a US-China trade deal, and not least heightened tensions in the Middle East after Iran threatened to strike US bases in the region. Brent briefly traded above USD 70 while short-end spreads point to near-term tightness, especially in WTI after the EIA reported a bigger-than-expected stockpile draw as refineries processed the most crude since December 2019.
• Gold rose after softer-than-expected inflation data bolstered expectations that the US Fed will cut interest rates later this year. The data drove the US dollar lower while short-end bond yields fell. Later in the day, the Iranian threat gave bullion an additional boost, but for now prices remain stuck with a break above USD 3,400 needed to change that.
• CBOT soybean and corn futures drifted lower on Wednesday as initial US-China trade optimism faded due to a lack of specifics about agricultural goods, with most of the focus on rare earths. Instead, traders shifted their focus back to benign crop weather and today’s monthly supply/demand reports from the US government, which will include updated estimates for US wheat production.

Currencies

• The US dollar weakened in the wake of the soft US May CPI data yesterday, with EURUSD surging above 1.1500 for the first time since April and eyeing the multi-year high of 1.1573. USDJPY reversed back lower, picking up more momentum than other USD pairs overnight and trading below 144.00.
• Despite the weak USD, the Aussie has failed to sustain a rally once again versus the greenback, as another intraday rally that briefly saw new highs for the year in AUDUSD above 0.6540 was rejected, with the pair trading at 0.6500 this morning in Europe.

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