Iranian and Israeli missile attacks over the weekend saw oil open higher yesterday morning, with a barrel of Brent crude initially gaining more than 5% to $98/barrel. However, Iran’s announcement that it had ended its military operation, and news from President Trump that both nations were ‘looking to do’ an immediate ceasefire, saw oil prices reverse course, with Brent crude back to $93/barrel this morning, which is in line with Friday’s close. In FX markets, the news of the weekend escalation further strengthened the dollar, which had already moved significantly higher after Friday’s payrolls data shifted US interest rate expectations, and it traded down towards $1.15 to the euro yesterday morning. However, this support level was not breached, and the move reversed over the afternoon, with the single currency getting back to $1.1540 now, though it’s still lower than the $1.16 levels of last week. Against sterling, the dollar is trading at $1.3360, while EUR/GBP is little changed at 86.4p.
Yesterdays Events
Treasury yields also see-sawed during the day but were ultimately only a little changed. US 10-year yields were up 3bps to 4.55% and 2-year yields were up 1bps to 4.16%, though both are up about 10bps since the start of last week on the back of that strong payrolls data. UK 10-year yields were up 4bps to 4.94% and German 10-year yields were up 2bps.
There are very limited, or no, central bank speakers ahead of central bank meetings (ECB, Fed and BoE) in the next week or so, starting with the ECB on Thursday. However, with the market pricing in a rate hike by year-end, President Trump weighed in over the weekend once again, putting pressure on his new Fed Chair Warsh, saying that a rate hike ‘would be the wrong thing to do’ and calling for lower rates. Meanwhile, in the UK, MPC member Alan Taylor told news media that rates ‘don’t need to go higher because they’re quite restrictive at the moment’, but also that cuts should not be considered until the MPC has ‘more clarity’, strongly suggesting he is firmly in the ‘on hold’ camp.
Equities rose again, taking back some of Friday’s losses. Sharp drops in AI-related stocks at the end of last week took indices down, but the same stocks took back some of that lost ground yesterday, allowing the S&P to close up 0.3% for the day, with the tech-heavy NASDAQ up 0.9%. In Europe, the Euro Stoxx and FTSE were more or less unchanged for the day. Equity markets will be closely watching the outcome of the SpaceX IPO this week, which is the first of some major AI-related IPOs that are in the pipeline.
Very little on the data front, just the New York Fed consumer expectations for May, which suggest inflation is anchored, but the outlook is poor among households. One-year-ahead inflation expectations eased to 3.46% from 3.64% in April, while the three-year and five-year expectations were steady at 3.1% and 3.0% respectively. However, the household financial outlook dropped to the weakest since 2022, suggesting real incomes are being squeezed, while the employment outlook hit its lowest reading so far this year, a contrasting signal compared to the strong payrolls number on Friday.
The Day Ahead
On the agenda today, again little data, with UK retail sales and NFIB small business optimism in the US. Also, there are no central bank speakers, so markets could be moved, by any news from the Middle East.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
8 Jun 2026
Todays Talking Points 08.06.26
Market Commentary
Much better than expected US non-farm payroll data on Friday sent the dollar sharply higher, while US bond yields also moved up and the markets priced in the Fed hiking rates by the end of the year. The US labour market looks in better shape than previously thought, which might encourage some on the FOMC to push for faster hikes to head off inflationary pressures. The dollar gained to $1.1520 this morning to the euro (from $1.1640 just prior to the data) and to $1.3330 to sterling. EURGBP is still remaining in that relatively tight range around 86.4p.
Yesterdays Events
The data sent US yields higher, particularly at the shorter end of the curve. US 2-year yields were up 10bps to 4.15% while 10-year yields rose 6bps to over 4.5%. German 10-year yields were little changed on Friday, though ticking up, but were up about 10bps for the week; similarly, UK 10-year yields were flat for the day on Friday but up 10bps for the week. Markets have also brought forward the timing of a Fed rate hike with a 25bps increase fully priced in for December of this year—and a 60% chance of a hike in October, whereas before the payrolls data a first hike was not priced in until March of next year.
Equities lost ground on Friday with the S&P 500 down 2.6% on Friday, its worst single day in more than 6 months. The Nasdaq lost over 4% for the day as some of the shine came off AI and semiconductor stocks, which drove the move down in equities. In Europe, the loss was less severe, with the Eurostoxx down 0.7% for the day and the FTSE more or less flat. The hopes for peace in the Middle East towards the end of the week saw a barrel of Brent crude trade at around $93 on Friday, though news of Israeli strikes on Lebanon and Iranian strikes on Israel over the weekend may see oil prices move higher at the start of this week.
US non-farm payrolls rose by 172,000 in May, much higher than the consensus forecast of 88,000, while revisions to the previous two months saw a further 93,000 jobs added. The unemployment rate was unchanged at 4.3%. The revisions mean that the 3-month average was 188,000, the best since early 2024, and indicates the US labour market is in a better position than previously, though having had little or no jobs growth during all of 2025. One thing to note, however, is that job creation is heavily concentrated in leisure and hospitality (potentially boosted by the upcoming World Cup) and public sector jobs in government, education and health, providing the majority of new employment with little job creation in other sectors. In fact, aside from those sectors, all other sectors in the US have shown net job losses in aggregate since December 2022. In addition, real wages are being squeezed with average hourly earnings up 3.4% year-on-year in May but PCE inflation running at 3.6%. Nonetheless, with seemingly renewed impetus in the labour market and inflation above target, this data may embolden some of the more hawkish members of the Fed to push their colleagues into a faster and potentially sharper hiking cycle.
The Day Ahead
On the agenda this week, the main event is the ECB meeting conclusion on Thursday with a 25bps rate hike a virtual certainty according to the latest market pricing. We also get US inflation data and NFIB small business optimism. We also get labour market data in the UK.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
Todays Talking Points 05.06.26
Market Commentary
News of the conditional ceasefire between Israel and Lebanon improved market sentiment for a time, sending stocks higher, oil lower, while the dollar weakened yesterday. However, Hezbollah rejected the deal, so the truce could be short‑lived, and a broader deal between the US and Iran is still not yet agreed. A barrel of Brent crude fell 3% back to around $95 while the dollar slipped to over $1.1640 to the euro at times yesterday but is back trading at around $1.1620 to the single currency this morning and $1.3430 against sterling. The euro managed to edge up against sterling, back to 86.5p.
Yesterdays Events
Government bonds rallied again, taking back a little of the ground lost on Wednesday. Yields ticked down, with 10‑year US yields down 3bps to 4.47%, UK 10‑year yields also down 3bps to 4.9% and 10‑year bunds down just 1bps to 3.02%. Equities rallied on the foot of more positive sentiment, with the moves being broad‑based rather than concentrated in AI‑related businesses. Investment moved away a little from tech and into other industries as Broadcom’s disappointing AI chip revenue guidance tested confidence in AI stocks. The Dow was up 1.7% and the S&P 0.4%, while the tech‑heavy NASDAQ closed marginally lower.
Today’s main data release will be non‑farm payrolls, with modest growth of 88,000 expected for May and the unemployment rate expected to remain unchanged at 4.3%. April’s payrolls rose 115,000, beating expectations, with health, education and transport driving jobs growth. The ADP private payrolls measure in May was 120,000, the strongest in 15 months, while initial jobless claims rose to 225,000 last week, the highest since February, but Memorial Day may be distorting the data and underlying new unemployment likely remains low. This data points to the potential for May’s non‑farm payrolls to beat expectations, which might cause markets to price in an earlier Fed rate hike if the underlying economy and labour market show resilience.
Irish Q1 GDP fell by a record 12.1% quarter‑on‑quarter in Q1, but that hides the domestic economy continuing to perform well. The surge in exports of pharmaceuticals that pushed GDP growth up to 12.3% in 2025 is now unwinding, pushing down on growth. With GDP down 17% year‑on‑year, the data suggests headline GDP growth will be negative in 2026. However, the domestic economy is in much better shape and grew at a robust pace in early 2026. Consumer spending rose by a healthy 0.6% in Q1 2026, up 2.6% year‑on‑year. Similarly, government spending rose by 0.5% quarter‑on‑quarter, up 3.7% in the year. Modified investment was also up 9.4% on the year, helped by homebuilding (34%), repair & maintenance (4.8%), and machinery & equipment (16%). Overall, modified domestic demand rose by a healthy 0.6% in Q1 2026, quarter‑on‑quarter, and was up 4.3% year‑on‑year.
The Day Ahead
On the agenda today, we have another estimate of Q1 Euro Area GDP, while the main data will be US non‑farm payrolls for May and, on the speaker front, we get Dhingra and Bailey from the BoE.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
4 Jun 2026
Todays Talking Points 04.06.26
Market Commentary
A peace deal in the Middle East looks closer this morning after Israel and Lebanon agreed a ceasefire. The situation is very volatile as, yesterday, peace seemed very far away after new clashes between Iran and the US which depressed sentiment and sent 0il prices higher, bond yields rose, equities were weaker, while the dollar strengthened. Brent crude was up 1% to $97/barrel – and was above $98 at times – while WTI was up 2% to $96/barrel. The news this morning is helping reverse some of those moves. The dollar gained some ground on the euro, dipping below $1.16 at times though up at $1.1610 currently, and is at $1.3430 to sterling with EURGBP again more or less unchanged at 86.4p
Yesterdays Events
Government bonds faced renewed weakness again yesterday, with yields rising across the curve both in the US and Europe, with yields rising by a few bps more, in general, in Europe than in the US. German 10-year yields were up 6bps, back above 3% to 3.03%, while French 10-year yields were up 8bps to nearly 3.7%. In the UK, 10-year yields were also up 7bps to 4.93%, while US 10-year yields were up 5bps to 4.5%. Again, the more positive sentiment this morning is seeing bond yields tick down from these levels this morning. US equities had what has been a rarity of late, a down day, with AI news unable to fully counter the worries about a further prolonged clash with Iran, and the S&P lost 0.7% for the day, while, in Europe, the Eurostoxx lost 0.9% and the FTSE lost 0.4%.
ADP employment showed private payrolls in the US rose 122,000 in May. This was slightly ahead of the consensus forecast, with April’s number revised slightly higher also, and the highest job gains since January. The lion’s share of job gains were in the services sector, accounting for 114,000 of new jobs. This is a positive indicator ahead of May’s non-farm payrolls due on Friday. The data continues to support a Fed position of staying on hold, leading to a probable rate hike sometime this year. Dallas Fed President Logan said the data indicates a broadly balanced labour market and she advocates higher rates later this year, while New York Fed President Williams said the job market ‘has stabilised’ and he sees no need to move rates up or down right now.
The Fed’s Beige Book shows a still growing US economy amid heightening concerns about the impact of the Middle East conflict. Economic activity increased at a slight to moderate pace in 10 of 12 districts, with the outlook showing little change in expected growth, and consumer spending remained mixed with middle- and lower-income consumers citing affordability pressure. Related to this, prices increased at a moderate to strong rate, with most districts reporting higher inflation pressures and an energy price shock from the Middle East conflict cited as the main risk to the economy. Overall, the tone of the book supports the market view that the Fed will remain on hold.
The OECD’s latest economic outlook sees slower global growth this year. World economic activity is now expected to increase by 2.8% this year, from 3.4% last year, with the persistent conflict in the Middle East dampening growth and pushing up inflation globally. The growth outlook for the US, at 2.0% this year and 1.8% next year, is significantly ahead of the Euro Area and UK, which are both expected to grow by just under 1% this year and by just over 1% next year. Although the report says the energy price shock should be ‘sharp but temporary’, the US is more exposed with a 3.7% PCE inflation rate expected this year compared to a Euro Area HICP rate of 2.8%. On this point, the OECD sees more room for the ECB to keep monetary policy looser compared to the Fed and BoE given the Euro Area’s comparatively lower inflation and weaker growth environment.
The Day Ahead
On the agenda today, we get Euro Area retail sales and the UK construction PMI. In the US, we have initial jobless claims and, here in Ireland, we get Q1 GDP. On the speaker front, BoE Governor Bailey and Fed members Daly, Bowman, Barkin and Schmid are scheduled to speak.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
3 Jun 2026
Todays Talking Points 03.04.26
Market Commentary
With a lot of uncertainty surrounding the situation in the Middle East, markets were in somewhat of a holding pattern. There remains hope a peace deal can be agreed, but there was no positive news yesterday and uncertainty about whether Israel will cease its Lebanon attacks to bring Iran fully back to the table. Oil prices edged up slightly, with a barrel of Brent crude up about 1% to nearly $96/barrel. The dollar strengthened somewhat, to around $1.1620 to the euro and $1.3450 to sterling currently, with EUR/GBP largely unchanged at 86.4p. Meanwhile President Trump announced new tariffs of up to 12.5% on most countries overnight to replace tariffs that have been struck down by the US Supreme court.
Yesterdays Events
Government bonds rallied yesterday, particularly in Europe, though some of this may have been retracement from a sizable rise in euro yields on Monday. German 10-year yields fell 3bps back below 3%, while French 10-year yields were also down 3bps to 3.6%. The euro bond markets shrugged off higher-than-expected Euro Area core inflation in the “flash” HICP print, with the bond market already baking in a 25bps ECB hike next week. In the UK, 10-year yields were down 4bps to just above 4.86%, while in the US, 10-year yields were down 1bps to 4.44%. The AI boom continued to push equities higher, with indices on both sides of the Atlantic posting gains on the day, with the S&P up 0.1% for the day, setting a record high for a ninth consecutive day—the best run of this kind since 1995.
President Trump opened a new front in his tariff campaign, after previous tariffs were struck down, putting tariffs of 10% on several trading US trading partners -including the EU- and 12.5% on others who ‘have failed to address importation of goods made by forced labour’. The Trump administration is now using ‘Section 301’ of the Trade Act 1974 to impose these levies which commentators say is more legally sound than previous methods though the tariffs will not come into place immediately and are now subject to a review period with a panel convening on July 7th. Several other ‘Section 301’ investigations may be ongoing so other tariff or non-tariff trade actions may be announced in the future. This action will not breach the EU-US trade agreement agreed last year – though not ratified yet – if this 10% tariff is not an additional tariff on the EU but is part of the total of a maximum of a 15% tariff agreed under the deal.
Headline Euro Area HICP inflation rose to 3.2% in May, according to the “flash” estimate released yesterday. This is in line with expectations but is up from 3.0% in April and the highest since September 2023. In terms of specific countries, German inflation was slightly softer than expected – at 2.7% – with a temporary fuel tax cut helping to lessen energy inflation, while French inflation was also slightly softer than expected at 2.5%, but Italian (3.3%) and Spanish (3.6%) prints were to the upside of forecasts.
European core inflation picks up. While energy price inflation remains the main driver of headline inflation in May in the Euro Area, core inflation rose sharply, to 2.5%, from 2.2% in April and ahead of expectations. Services inflation was the culprit here, rising to 3.5%, from 3.0% in April. This will be a key concern for the ECB as it debates if this is a sign that second-round effects are beginning. A 25bps rate hike next week is more or less a racing certainty, but the concerns will then shift onto whether more is needed, and faster, to counter rising cost pressures, or whether this one hike will be enough for now – with the ECB’s Rehn saying yesterday a June rate hike would just be an ‘insurance hike’ – especially considering the signs of weaker demand in some key Euro Area economies like Germany.
In contrast, the Bank of England is in more of a “wait and see” mode. Governor Bailey’s comments yesterday acknowledged the delicate situation facing the MPC. He said the inflation overshoot is “entirely due to Gulf events” and the committee faces a growth/inflation trade-off, with the outlook for slower growth and not recession. However, he did add the committee “can’t wait for hard evidence on second-round effects”. MPC member Greene was more hawkish than that, saying the longer the Mid East conflict goes on for, the stronger the case for a rate hike and that the ‘risk of acting is less severe than the risk of not acting’, while the speed of the BoE’s response is as important as the size of the response. Markets continue to think the MPC will hold off for now, with only a circa 10% chance of a hike at the June meeting.
The Day Ahead
For today, on the data front, it’s mostly US, with ADP employment, ISM services, factory orders, and later on the Fed Beige Book. We also get final May PMI services and composite readings for major economies.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
2 Jun 2026
Todays Talking Points 02.06.26
Market Commentary
Oil prices rebounded yesterday after reports that Iran had suspended peace talks. Late last week oil prices had fallen on hopes a peace deal was near – with Brent down to touch off close to $90/barrel on Friday – but Israeli attacks in Lebanon have apparently prompted Iran to pull back from negotiations. Brent crude oil prices are now back up at around $94.5 per barrel although they are off their intraday high of $97 following comments from President Trump that talks were ‘continuing at a rapid pace’ and that he had a call with Israeli Prime Minister Netanyahu who promised, according to Trump, to scale back attacks on Lebanon. Meanwhile the euro and sterling are trading at about $1.1650 and $1.3480 against the dollar, respectively. The dollar had gained on the single currency early on yesterday but lost most of the gains on news of Trump’s comments. EURGBP nudged at little lower, now at about £0.8640, while still in a tight range.
Yesterdays Events
Government bond yields all headed higher on the poor news about the peace talks, with 2-year US yields up 3bps to 4.03% and 10-year yields up 2bps to 4.45%. Yields in the Euro Area and UK headed sharply higher with 2-year German yields up 10bps to 2.6% (10-year up 7bps to 3%) and 2-year UK up 11bps to 4.3%. Driving up European yields was not only oil prices heading higher again but markets pricing in a higher chance of an ECB hike this month (now circa. 95% probability), some hawkish comments from ECB Executive board member Schnabel and data showing 12-month inflation expectations remain well above the ECB target. Yields are, however, moving down on both sides of the Atlantic in early trading this morning, presumably on hopes the situation in the Lebanon will calm down. In equity markets, European stocks ended lower for the 0.3% setting a new all-time high again.
Sentiment in the US was helped by healthy ISM manufacturing data in May. The index rose to 54 from 52.7 in April, beating expectations and is the highest reading since May 2022 and the fifth month of an above 50 print indicating expansion. New orders rose to 56.8, the highest in four months driving the expansion while production also rose on foot of stronger domestic and foreign demand while employment also gained. Surprisingly, the prices paid index fell when a rise was expected due to higher energy costs but a rise in this index may come in later months. Manufacturing in the US appears to have some tailwinds now helped by continued demand from AI data centre buildout.
The ECB inflation expectations data showed 1-year ahead inflation expectations remain elevated at 4%. This is well above the ECB’s 2% target although longer term 5-year expectations remain more anchored at 2.4%. Income growth expectations fell with household already feeling the squeeze from higher inflation with economic growth expectations also deteriorating. Also yesterday were very hawkish comments from ECB executive board member Schnabel who said the ECB ‘can no longer look through this shock. The risk of de-anchoring inflation expectations is rising’. This is a clear hawkish amplification from an ECB member from the ECB commentary that they are debating if the energy price shock from the Iran war was temporary whereas Schnabel clearly believed now it is not and the ECB has to act and supports the case for the ECB to hike rates by 25bps at their June meeting.
The Day Ahead
For today, on the economic slate we have the May ‘flash’ inflation estimate from the Euro Area where an uptick to 3.2% from 3% in April is expected. Among the speakers we have Fed’s Hammack and Rehn from the ECB and also BoE Governor Andrew Bailey and MPC member Greene.
Dealer Comments
Todays Talking Points 09.06.26
Market Commentary
Iranian and Israeli missile attacks over the weekend saw oil open higher yesterday morning, with a barrel of Brent crude initially gaining more than 5% to $98/barrel. However, Iran’s announcement that it had ended its military operation, and news from President Trump that both nations were ‘looking to do’ an immediate ceasefire, saw oil prices reverse course, with Brent crude back to $93/barrel this morning, which is in line with Friday’s close. In FX markets, the news of the weekend escalation further strengthened the dollar, which had already moved significantly higher after Friday’s payrolls data shifted US interest rate expectations, and it traded down towards $1.15 to the euro yesterday morning. However, this support level was not breached, and the move reversed over the afternoon, with the single currency getting back to $1.1540 now, though it’s still lower than the $1.16 levels of last week. Against sterling, the dollar is trading at $1.3360, while EUR/GBP is little changed at 86.4p.
Yesterdays Events
Treasury yields also see-sawed during the day but were ultimately only a little changed. US 10-year yields were up 3bps to 4.55% and 2-year yields were up 1bps to 4.16%, though both are up about 10bps since the start of last week on the back of that strong payrolls data. UK 10-year yields were up 4bps to 4.94% and German 10-year yields were up 2bps.
There are very limited, or no, central bank speakers ahead of central bank meetings (ECB, Fed and BoE) in the next week or so, starting with the ECB on Thursday. However, with the market pricing in a rate hike by year-end, President Trump weighed in over the weekend once again, putting pressure on his new Fed Chair Warsh, saying that a rate hike ‘would be the wrong thing to do’ and calling for lower rates. Meanwhile, in the UK, MPC member Alan Taylor told news media that rates ‘don’t need to go higher because they’re quite restrictive at the moment’, but also that cuts should not be considered until the MPC has ‘more clarity’, strongly suggesting he is firmly in the ‘on hold’ camp.
Equities rose again, taking back some of Friday’s losses. Sharp drops in AI-related stocks at the end of last week took indices down, but the same stocks took back some of that lost ground yesterday, allowing the S&P to close up 0.3% for the day, with the tech-heavy NASDAQ up 0.9%. In Europe, the Euro Stoxx and FTSE were more or less unchanged for the day. Equity markets will be closely watching the outcome of the SpaceX IPO this week, which is the first of some major AI-related IPOs that are in the pipeline.
Very little on the data front, just the New York Fed consumer expectations for May, which suggest inflation is anchored, but the outlook is poor among households. One-year-ahead inflation expectations eased to 3.46% from 3.64% in April, while the three-year and five-year expectations were steady at 3.1% and 3.0% respectively. However, the household financial outlook dropped to the weakest since 2022, suggesting real incomes are being squeezed, while the employment outlook hit its lowest reading so far this year, a contrasting signal compared to the strong payrolls number on Friday.
The Day Ahead
On the agenda today, again little data, with UK retail sales and NFIB small business optimism in the US. Also, there are no central bank speakers, so markets could be moved, by any news from the Middle East.
8 Jun 2026
Todays Talking Points 08.06.26
Market Commentary
Much better than expected US non-farm payroll data on Friday sent the dollar sharply higher, while US bond yields also moved up and the markets priced in the Fed hiking rates by the end of the year. The US labour market looks in better shape than previously thought, which might encourage some on the FOMC to push for faster hikes to head off inflationary pressures. The dollar gained to $1.1520 this morning to the euro (from $1.1640 just prior to the data) and to $1.3330 to sterling. EURGBP is still remaining in that relatively tight range around 86.4p.
Yesterdays Events
The data sent US yields higher, particularly at the shorter end of the curve. US 2-year yields were up 10bps to 4.15% while 10-year yields rose 6bps to over 4.5%. German 10-year yields were little changed on Friday, though ticking up, but were up about 10bps for the week; similarly, UK 10-year yields were flat for the day on Friday but up 10bps for the week. Markets have also brought forward the timing of a Fed rate hike with a 25bps increase fully priced in for December of this year—and a 60% chance of a hike in October, whereas before the payrolls data a first hike was not priced in until March of next year.
Equities lost ground on Friday with the S&P 500 down 2.6% on Friday, its worst single day in more than 6 months. The Nasdaq lost over 4% for the day as some of the shine came off AI and semiconductor stocks, which drove the move down in equities. In Europe, the loss was less severe, with the Eurostoxx down 0.7% for the day and the FTSE more or less flat. The hopes for peace in the Middle East towards the end of the week saw a barrel of Brent crude trade at around $93 on Friday, though news of Israeli strikes on Lebanon and Iranian strikes on Israel over the weekend may see oil prices move higher at the start of this week.
US non-farm payrolls rose by 172,000 in May, much higher than the consensus forecast of 88,000, while revisions to the previous two months saw a further 93,000 jobs added. The unemployment rate was unchanged at 4.3%. The revisions mean that the 3-month average was 188,000, the best since early 2024, and indicates the US labour market is in a better position than previously, though having had little or no jobs growth during all of 2025. One thing to note, however, is that job creation is heavily concentrated in leisure and hospitality (potentially boosted by the upcoming World Cup) and public sector jobs in government, education and health, providing the majority of new employment with little job creation in other sectors. In fact, aside from those sectors, all other sectors in the US have shown net job losses in aggregate since December 2022. In addition, real wages are being squeezed with average hourly earnings up 3.4% year-on-year in May but PCE inflation running at 3.6%. Nonetheless, with seemingly renewed impetus in the labour market and inflation above target, this data may embolden some of the more hawkish members of the Fed to push their colleagues into a faster and potentially sharper hiking cycle.
The Day Ahead
On the agenda this week, the main event is the ECB meeting conclusion on Thursday with a 25bps rate hike a virtual certainty according to the latest market pricing. We also get US inflation data and NFIB small business optimism. We also get labour market data in the UK.
Todays Talking Points 05.06.26
Market Commentary
News of the conditional ceasefire between Israel and Lebanon improved market sentiment for a time, sending stocks higher, oil lower, while the dollar weakened yesterday. However, Hezbollah rejected the deal, so the truce could be short‑lived, and a broader deal between the US and Iran is still not yet agreed. A barrel of Brent crude fell 3% back to around $95 while the dollar slipped to over $1.1640 to the euro at times yesterday but is back trading at around $1.1620 to the single currency this morning and $1.3430 against sterling. The euro managed to edge up against sterling, back to 86.5p.
Yesterdays Events
Government bonds rallied again, taking back a little of the ground lost on Wednesday. Yields ticked down, with 10‑year US yields down 3bps to 4.47%, UK 10‑year yields also down 3bps to 4.9% and 10‑year bunds down just 1bps to 3.02%. Equities rallied on the foot of more positive sentiment, with the moves being broad‑based rather than concentrated in AI‑related businesses. Investment moved away a little from tech and into other industries as Broadcom’s disappointing AI chip revenue guidance tested confidence in AI stocks. The Dow was up 1.7% and the S&P 0.4%, while the tech‑heavy NASDAQ closed marginally lower.
Today’s main data release will be non‑farm payrolls, with modest growth of 88,000 expected for May and the unemployment rate expected to remain unchanged at 4.3%. April’s payrolls rose 115,000, beating expectations, with health, education and transport driving jobs growth. The ADP private payrolls measure in May was 120,000, the strongest in 15 months, while initial jobless claims rose to 225,000 last week, the highest since February, but Memorial Day may be distorting the data and underlying new unemployment likely remains low. This data points to the potential for May’s non‑farm payrolls to beat expectations, which might cause markets to price in an earlier Fed rate hike if the underlying economy and labour market show resilience.
Irish Q1 GDP fell by a record 12.1% quarter‑on‑quarter in Q1, but that hides the domestic economy continuing to perform well. The surge in exports of pharmaceuticals that pushed GDP growth up to 12.3% in 2025 is now unwinding, pushing down on growth. With GDP down 17% year‑on‑year, the data suggests headline GDP growth will be negative in 2026. However, the domestic economy is in much better shape and grew at a robust pace in early 2026. Consumer spending rose by a healthy 0.6% in Q1 2026, up 2.6% year‑on‑year. Similarly, government spending rose by 0.5% quarter‑on‑quarter, up 3.7% in the year. Modified investment was also up 9.4% on the year, helped by homebuilding (34%), repair & maintenance (4.8%), and machinery & equipment (16%). Overall, modified domestic demand rose by a healthy 0.6% in Q1 2026, quarter‑on‑quarter, and was up 4.3% year‑on‑year.
The Day Ahead
On the agenda today, we have another estimate of Q1 Euro Area GDP, while the main data will be US non‑farm payrolls for May and, on the speaker front, we get Dhingra and Bailey from the BoE.
4 Jun 2026
Todays Talking Points 04.06.26
Market Commentary
A peace deal in the Middle East looks closer this morning after Israel and Lebanon agreed a ceasefire. The situation is very volatile as, yesterday, peace seemed very far away after new clashes between Iran and the US which depressed sentiment and sent 0il prices higher, bond yields rose, equities were weaker, while the dollar strengthened. Brent crude was up 1% to $97/barrel – and was above $98 at times – while WTI was up 2% to $96/barrel. The news this morning is helping reverse some of those moves. The dollar gained some ground on the euro, dipping below $1.16 at times though up at $1.1610 currently, and is at $1.3430 to sterling with EURGBP again more or less unchanged at 86.4p
Yesterdays Events
Government bonds faced renewed weakness again yesterday, with yields rising across the curve both in the US and Europe, with yields rising by a few bps more, in general, in Europe than in the US. German 10-year yields were up 6bps, back above 3% to 3.03%, while French 10-year yields were up 8bps to nearly 3.7%. In the UK, 10-year yields were also up 7bps to 4.93%, while US 10-year yields were up 5bps to 4.5%. Again, the more positive sentiment this morning is seeing bond yields tick down from these levels this morning. US equities had what has been a rarity of late, a down day, with AI news unable to fully counter the worries about a further prolonged clash with Iran, and the S&P lost 0.7% for the day, while, in Europe, the Eurostoxx lost 0.9% and the FTSE lost 0.4%.
ADP employment showed private payrolls in the US rose 122,000 in May. This was slightly ahead of the consensus forecast, with April’s number revised slightly higher also, and the highest job gains since January. The lion’s share of job gains were in the services sector, accounting for 114,000 of new jobs. This is a positive indicator ahead of May’s non-farm payrolls due on Friday. The data continues to support a Fed position of staying on hold, leading to a probable rate hike sometime this year. Dallas Fed President Logan said the data indicates a broadly balanced labour market and she advocates higher rates later this year, while New York Fed President Williams said the job market ‘has stabilised’ and he sees no need to move rates up or down right now.
The Fed’s Beige Book shows a still growing US economy amid heightening concerns about the impact of the Middle East conflict. Economic activity increased at a slight to moderate pace in 10 of 12 districts, with the outlook showing little change in expected growth, and consumer spending remained mixed with middle- and lower-income consumers citing affordability pressure. Related to this, prices increased at a moderate to strong rate, with most districts reporting higher inflation pressures and an energy price shock from the Middle East conflict cited as the main risk to the economy. Overall, the tone of the book supports the market view that the Fed will remain on hold.
The OECD’s latest economic outlook sees slower global growth this year. World economic activity is now expected to increase by 2.8% this year, from 3.4% last year, with the persistent conflict in the Middle East dampening growth and pushing up inflation globally. The growth outlook for the US, at 2.0% this year and 1.8% next year, is significantly ahead of the Euro Area and UK, which are both expected to grow by just under 1% this year and by just over 1% next year. Although the report says the energy price shock should be ‘sharp but temporary’, the US is more exposed with a 3.7% PCE inflation rate expected this year compared to a Euro Area HICP rate of 2.8%. On this point, the OECD sees more room for the ECB to keep monetary policy looser compared to the Fed and BoE given the Euro Area’s comparatively lower inflation and weaker growth environment.
The Day Ahead
On the agenda today, we get Euro Area retail sales and the UK construction PMI. In the US, we have initial jobless claims and, here in Ireland, we get Q1 GDP. On the speaker front, BoE Governor Bailey and Fed members Daly, Bowman, Barkin and Schmid are scheduled to speak.
3 Jun 2026
Todays Talking Points 03.04.26
Market Commentary
With a lot of uncertainty surrounding the situation in the Middle East, markets were in somewhat of a holding pattern. There remains hope a peace deal can be agreed, but there was no positive news yesterday and uncertainty about whether Israel will cease its Lebanon attacks to bring Iran fully back to the table. Oil prices edged up slightly, with a barrel of Brent crude up about 1% to nearly $96/barrel. The dollar strengthened somewhat, to around $1.1620 to the euro and $1.3450 to sterling currently, with EUR/GBP largely unchanged at 86.4p. Meanwhile President Trump announced new tariffs of up to 12.5% on most countries overnight to replace tariffs that have been struck down by the US Supreme court.
Yesterdays Events
Government bonds rallied yesterday, particularly in Europe, though some of this may have been retracement from a sizable rise in euro yields on Monday. German 10-year yields fell 3bps back below 3%, while French 10-year yields were also down 3bps to 3.6%. The euro bond markets shrugged off higher-than-expected Euro Area core inflation in the “flash” HICP print, with the bond market already baking in a 25bps ECB hike next week. In the UK, 10-year yields were down 4bps to just above 4.86%, while in the US, 10-year yields were down 1bps to 4.44%. The AI boom continued to push equities higher, with indices on both sides of the Atlantic posting gains on the day, with the S&P up 0.1% for the day, setting a record high for a ninth consecutive day—the best run of this kind since 1995.
President Trump opened a new front in his tariff campaign, after previous tariffs were struck down, putting tariffs of 10% on several trading US trading partners -including the EU- and 12.5% on others who ‘have failed to address importation of goods made by forced labour’. The Trump administration is now using ‘Section 301’ of the Trade Act 1974 to impose these levies which commentators say is more legally sound than previous methods though the tariffs will not come into place immediately and are now subject to a review period with a panel convening on July 7th. Several other ‘Section 301’ investigations may be ongoing so other tariff or non-tariff trade actions may be announced in the future. This action will not breach the EU-US trade agreement agreed last year – though not ratified yet – if this 10% tariff is not an additional tariff on the EU but is part of the total of a maximum of a 15% tariff agreed under the deal.
Headline Euro Area HICP inflation rose to 3.2% in May, according to the “flash” estimate released yesterday. This is in line with expectations but is up from 3.0% in April and the highest since September 2023. In terms of specific countries, German inflation was slightly softer than expected – at 2.7% – with a temporary fuel tax cut helping to lessen energy inflation, while French inflation was also slightly softer than expected at 2.5%, but Italian (3.3%) and Spanish (3.6%) prints were to the upside of forecasts.
European core inflation picks up. While energy price inflation remains the main driver of headline inflation in May in the Euro Area, core inflation rose sharply, to 2.5%, from 2.2% in April and ahead of expectations. Services inflation was the culprit here, rising to 3.5%, from 3.0% in April. This will be a key concern for the ECB as it debates if this is a sign that second-round effects are beginning. A 25bps rate hike next week is more or less a racing certainty, but the concerns will then shift onto whether more is needed, and faster, to counter rising cost pressures, or whether this one hike will be enough for now – with the ECB’s Rehn saying yesterday a June rate hike would just be an ‘insurance hike’ – especially considering the signs of weaker demand in some key Euro Area economies like Germany.
In contrast, the Bank of England is in more of a “wait and see” mode. Governor Bailey’s comments yesterday acknowledged the delicate situation facing the MPC. He said the inflation overshoot is “entirely due to Gulf events” and the committee faces a growth/inflation trade-off, with the outlook for slower growth and not recession. However, he did add the committee “can’t wait for hard evidence on second-round effects”. MPC member Greene was more hawkish than that, saying the longer the Mid East conflict goes on for, the stronger the case for a rate hike and that the ‘risk of acting is less severe than the risk of not acting’, while the speed of the BoE’s response is as important as the size of the response. Markets continue to think the MPC will hold off for now, with only a circa 10% chance of a hike at the June meeting.
The Day Ahead
For today, on the data front, it’s mostly US, with ADP employment, ISM services, factory orders, and later on the Fed Beige Book. We also get final May PMI services and composite readings for major economies.
2 Jun 2026
Todays Talking Points 02.06.26
Market Commentary
Oil prices rebounded yesterday after reports that Iran had suspended peace talks. Late last week oil prices had fallen on hopes a peace deal was near – with Brent down to touch off close to $90/barrel on Friday – but Israeli attacks in Lebanon have apparently prompted Iran to pull back from negotiations. Brent crude oil prices are now back up at around $94.5 per barrel although they are off their intraday high of $97 following comments from President Trump that talks were ‘continuing at a rapid pace’ and that he had a call with Israeli Prime Minister Netanyahu who promised, according to Trump, to scale back attacks on Lebanon. Meanwhile the euro and sterling are trading at about $1.1650 and $1.3480 against the dollar, respectively. The dollar had gained on the single currency early on yesterday but lost most of the gains on news of Trump’s comments. EURGBP nudged at little lower, now at about £0.8640, while still in a tight range.
Yesterdays Events
Government bond yields all headed higher on the poor news about the peace talks, with 2-year US yields up 3bps to 4.03% and 10-year yields up 2bps to 4.45%. Yields in the Euro Area and UK headed sharply higher with 2-year German yields up 10bps to 2.6% (10-year up 7bps to 3%) and 2-year UK up 11bps to 4.3%. Driving up European yields was not only oil prices heading higher again but markets pricing in a higher chance of an ECB hike this month (now circa. 95% probability), some hawkish comments from ECB Executive board member Schnabel and data showing 12-month inflation expectations remain well above the ECB target. Yields are, however, moving down on both sides of the Atlantic in early trading this morning, presumably on hopes the situation in the Lebanon will calm down. In equity markets, European stocks ended lower for the 0.3% setting a new all-time high again.
Sentiment in the US was helped by healthy ISM manufacturing data in May. The index rose to 54 from 52.7 in April, beating expectations and is the highest reading since May 2022 and the fifth month of an above 50 print indicating expansion. New orders rose to 56.8, the highest in four months driving the expansion while production also rose on foot of stronger domestic and foreign demand while employment also gained. Surprisingly, the prices paid index fell when a rise was expected due to higher energy costs but a rise in this index may come in later months. Manufacturing in the US appears to have some tailwinds now helped by continued demand from AI data centre buildout.
The ECB inflation expectations data showed 1-year ahead inflation expectations remain elevated at 4%. This is well above the ECB’s 2% target although longer term 5-year expectations remain more anchored at 2.4%. Income growth expectations fell with household already feeling the squeeze from higher inflation with economic growth expectations also deteriorating. Also yesterday were very hawkish comments from ECB executive board member Schnabel who said the ECB ‘can no longer look through this shock. The risk of de-anchoring inflation expectations is rising’. This is a clear hawkish amplification from an ECB member from the ECB commentary that they are debating if the energy price shock from the Iran war was temporary whereas Schnabel clearly believed now it is not and the ECB has to act and supports the case for the ECB to hike rates by 25bps at their June meeting.
The Day Ahead
For today, on the economic slate we have the May ‘flash’ inflation estimate from the Euro Area where an uptick to 3.2% from 3% in April is expected. Among the speakers we have Fed’s Hammack and Rehn from the ECB and also BoE Governor Andrew Bailey and MPC member Greene.