US stocks fell as the federal government cracked down on Big Tech over antitrust breaches. Reports of the regulatory scrutiny sent shares of four of the largest tech companies – Alphabet (Google’s parent company), Amazon, Apple and Facebook – hurtling and in turn the market indices. The tech-heavy NASDAQ was hardest hit dropping 1.61% and entering correction territory while the S&P shed 0.28%. The DOW, which counts only Apple as a constituent of the four, was about flat at +0.02%. Yield on 10Y USTs fell 5bps to 2.071% further deepening the ominous yield-curve inversion.


Asian stocks were in the red in afternoon trading amid strong suggestions that a Federal Reserve rate cut could be in the offing. This was after the St Louis Fed chief said, “a downward policy rate adjustment may be warranted soon,” marking the first time a Fed official has publicly suggested a rate cut. The CSI was trading 1.20% lower as was the HANG SENG at -0.70%. The NIKKEI was just about flat at -0.01%.


UK manufacturing shrank in May against analyst expectations and for the first time since 2016. Manufacturing PMI dropped to 49.4 from 53.1 in April and some way off the 52.2 polled in a Bloomberg survey. The reversal follows intensive stockpiling as plants shored up inventory ahead of the then-deadline for Brexit of March 29. The shadow of Brexit also looms large for the manufacturing sector as some EU clients have already started shifting supply chains away from the UK. The pound continued marginal gains against the dollar at 1.2664 while yield on 10Y UKTs fell 2.5bps to 0.8607%.


Eurozone manufacturing followed its across-the-channel neighbours and remained stuck in its slump in May and close to a 6-year low. The Purchasing Manager’s Index fell to 47.7 and highlights the bloc’s failure to emerge from the economic slowdown that has lasted over a year. This should come as a talking point for ECB policymakers as they meet this week and discuss how much to pour into the euro area to keep the economy on track. The euro strengthened against the dollar to 1.1241 while 10Y DBRs was about flat at -0.201%.


Oil tethered close to bear-market territory after escalating trading tensions prompted the sharpest monthly plunge this year as Brent slipped to $61.28 in a fourth day of declines. Saudi Energy Minister’s comments on Monday that OPEC will continue efforts to avoid an oversupply were largely ignored by investors who remain worried that trade disputes will suppress economic growth that drives oil demand. The trade escalation fears have also overridden the threat of unrest in the Middle East because of Iran.


In what is a seeming breakthrough in the US efforts to stop Turkey from purchasing Russia’s S-400 missile defence system, President Erdogan agreed with his US counterpart to form a joint study group on the Russian system. The study will examine any risks the system poses to the F-35 jet with the Americans of the view that the group’s findings will support the US position. While Turkey has maintained that the purchase can no longer be halted, the US is hoping to use the study to explain to Turkey the incompatibility of the Russian and US defence systems. The lira firmed slightly to the dollar at 5.8340 while TURKEY 47s traded about flat at 78.182.


The peso suffered further losses yesterday as markets still reeled from the impending tariffs on Mexican goods by the US. The peso shed 0.5% in the afternoon to 19.729 to the dollar before closing further lower at 19.779. Analysts are suggesting that the tariffs will also hurt the US economy, with some pointing out that as much as “a few tenths” will be sliced of GDP growth this year should the tariffs get to 25%. MEXICO 47s traded higher at 94.579.


Russian officials believe President Putin’s ambitious plan to double the country’s GDP to 4% is unattainable. Dubbed the National Projects, Putin is aiming to spend $396 billion on projects spanning across sectors from mordernisation of infrastructure to education and health. With his term set to expire in 2024, officials found that the majority of targets will be impossible to achieve before he leaves office. Most economists agree that the most effectual way to ramp up growth would be to have US and European sanctions removed in addition to other legal and bureaucratic reforms. The ruble was slightly weaker at 65.3456 while RUSSIA 47s traded higher in the low 105s.