【True Burn Finance】Israel-Iran ceasefire; Alibaba among companies added to U.S. military-linked list
Iran and Israel have agreed to a ceasefire, with Trump seeking to avoid escalation. Traders are betting that the US May CPI will record its largest increase in years. OpenAI has confidentially filed IPO documents. The Pentagon has added dozens of Chinese companies, including Alibaba and WuXi AppTec, to a "military-related entity list," which could strain Sino-US relations. Tencent plans to issue US dollar and offshore renminbi bonds, with pricing expected as early as Tuesday.
Overnight Highlights
l Boosted by the Iran-Israel ceasefire and bottom-fishing sentiment, investors entered the market seeking a rebound, pushing most major US stock indices higher, led by tech and chip stocks. Fears of a surge in US CPI sharply increased rate hike expectations, sending US Treasury yields across the curve significantly higher, with the 2-year yield hitting a 15-month high. Reduced safe-haven demand led funds to exit the US dollar and flow into other currencies that had previously fallen sharply, dragging the dollar slightly lower, though it remained near recent two-month highs. The Iran-Israel ceasefire deal significantly reduced geopolitical risk premiums, with international oil prices fluctuating and closing lower. Intertwined rate hike expectations and ceasefire hopes significantly cooled risk aversion, with gold futures plunging over 3%, while spot gold barely held steady with support from bargain-hunting.
International News
l Iran and Israel have agreed to a ceasefire, with Trump seeking to avoid escalation but emphasizing that the blockade of Iranian ports will continue until a peace deal is reached.
l Bond traders are betting that the US May CPI, due Wednesday, will record its largest increase in years. Citadel Securities predicts the next major risk for investors is the tightening of financial conditions, with inflationary pressures potentially forcing the Fed to raise rates soon.
l A New York Fed survey shows consumer views on the job market deteriorated in May, while inflation expectations remained largely unchanged from a month ago.
l OpenAI has confidentially filed IPO documents with the SEC. SpaceX's IPO is said to have been significantly oversubscribed, with underwriters expected to stop accepting institutional investor orders after the US market close on Wednesday, New York time.
l Apple unveiled a new generation AI platform and an upgraded Siri voice assistant, with investors reacting lukewarmly. The company stated the new AI features are temporarily unavailable in mainland China.
l Google reportedly awarded Intel orders for over 3 million dedicated AI chips for 2028, with Intel posting its biggest gain in a month.
l Strategists at several major Wall Street banks believe last Friday's tech stock pullback was a healthy correction, with the US bull market structure intact.
l A private credit fund under Blue Owl, hit by redemptions, raised $500 million in the investment-grade bond market on Monday, with proceeds to be used for debt repayment.
l Michael Saylor's Strategy resumed buying Bitcoin after the recent plunge, purchasing a total of 1,550 coins.
Greater China News
l The Pentagon added dozens of Chinese companies, including Alibaba, Baidu, BYD, and WuXi AppTec, to a list of entities supporting China's military, a move that could heighten US-China tensions.
l A meeting of China's National Financial Regulatory Administration emphasized advancing risk resolution for local small and medium-sized financial institutions and called for accelerating the establishment of a financing system compatible with the new real estate development model.
l Tencent plans to issue US dollar and offshore renminbi bonds, reportedly aiming to raise about $3 billion, with pricing expected as early as Tuesday. WeChat is offering developers access to its WeChat AI ecosystem, currently in internal testing.
l Politico: French President Macron will host a video call between G7 nations and China on Thursday.
l US-listed emerging market stock and bond ETFs saw outflows for a third consecutive week, with outflows from China slowing significantly while South Korea turned to inflows.
Commodities & Forex
l The Bloomberg Dollar Index edged lower as the Iran-Israel ceasefire eased market concerns. US Treasury yields rose sharply across the curve.
l Crude oil futures fluctuated and closed lower as the ceasefire deal prompted a retreat in geopolitical risk premiums. Gold futures plunged, while spot gold prices barely held steady.
Earnings & Economic Data Focus
l US Wholesale Sales MoM for April (Prev: 2.80%)
l US Trade Balance for May (in $100M) (Prev: -603, Forecast: -564)
Source: Golden Horse Capital Management (Hong Kong) Limited
Author: Terry Chow
Proofreader: Ella Song
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