Middle East:
China:
Other:
Tensions between Israel and Iran surged over Sunday and Monday, as both sides launched fresh attacks, fuelling fears of a broader regional conflict.
The Israeli Defence Forces struck missile sites in central Iran, along with Revolutionary Guard facilities in Qazvin and the Parchin military complex near Tehran. Iran responded with its most extensive missile barrage to date, with footage suggesting ballistic missile impacts at the Haifa Oil Refinery and near Tel Aviv and Jerusalem.
Gold rose for a fourth straight session to a near two-month high as safe-haven demand picked up. Oil gapped higher at the open, buoyed by reports that Israeli strikes may have targeted Iranian energy infrastructure. However, prices later retraced, filling the gap as markets assessed escalation risks.
Adding to concerns over potential regional spillover, a large-scale military airlift appears to be underway, with an unusually high number of U.S. Air Force KC-135 and KC-46 aerial refueling tankers departing from bases across the U.S. and seemingly preparing to cross the Atlantic toward Europe.
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Japanese government bond prices fell in the Tokyo morning session as inflation concerns outweighed safe-haven demand. Yields rose, tracking oil prices higher amid the Israel-Iran tensions. The Bank of Japan meets today and Tuesday, with policy expected to remain unchanged, though focus is on potential plans to slow the pace of JGB tapering from 2026. USD/JPY rose during the session.
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China’s new home prices fell at the fastest pace in seven months in May, down 0.22% from April, highlighting persistent weakness in the property sector and prompting renewed official pledges to stabilise the market.
However, the broader economic picture was less downbeat. Retail sales jumped 6.4% y/y in May – the strongest pace since December and well above expectations – helped by shopping festival promotions. The rebound in consumption offset softer-than-expected industrial output growth (+5.8%) and modest investment data. Analysts suggested further policy support remains likely, though current conditions may not yet warrant large-scale stimulus.
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The USD was broadly firmer, yen and CHF on the weaker end of the spectrum.
Other:
- Group of Seven leaders meet in Canada this week. There are many other nations in attendance, trade talks with Trump top of the agenda.
- the US Federal Reserve’s Federal Open Market Committee (FOMC) meet on Wednesday
- Bank of Japan statement is due Tuesday, Japan time (see above), as always, there is no firm time scheduled for the release
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