??????Breakfast News 25th June ??????

Good morning,

The US is?investigating?China Mobile, China Telecom and China Unicom over concerns the firms could exploit access to American data through their US cloud and internet businesses by providing it to Beijing, Reuters reports, citing three unidentified people familiar with the matter.

Market participants will be keeping a keen eye on France’s main political parties which will hold a?debate?Tuesday evening ahead of the first round of legislative elections on Sunday. Spain is scheduled to?publish?its May Producer Price Index with an ECB speech later on in the day.

EXECUTIVE SUMMARY

FED’S DALY SAYS CONSUMER SPENDING IS SLOWING - MNI BRIEF

US PROBING CHINA TELECOM, CHINA MOBILE OVER INTERNET, CLOUD RISKS - RTRS

ECB’S SCHNABEL DOWNPLAYS PROSPECT OF POLICY DIVERGENCE FROM US - BBG

JAPAN MAY SERVICES PPI RISES 2.5% VS. APRIL 2.7% - MNI BRIEF

AUSTRALIAN HOUSEHOLDS REMAIN PESSIMISTIC ON RBA RATE-RISE FEARS - BBG

UK

ECONOMY (BBG): “Rishi Sunak and Labour leader Keir Starmer traded stark warnings about each other’s handling of the UK economy as the prime minister sought to turn around his Conservative Party’s fortunes ahead of next week’s general election.”

EUROPE

ECB (BBG):”European Central Bank Executive Board member Isabel Schnabel downplayed the likelihood that interest rates in the euro zone will take a significantly different path from those in the US.”

EU (MNI): Italian Prime Minister Giorgia Meloni has agreed to support Ursula von der Leyen’s bid for a second term as European Commission president in return for a high-ranking job for Italy in the new Commission, a source close to the Italian government told MNI.

SWEDEN (MNI RIKSBANK WATCH): Sweden’s Riksbank is likely to leave policy on hold this week, with an inflation uptick raising questions over whether its rate path will point to another cut in August or September.

FRANCE (BBG): “President Emmanuel Macron said the agendas of the far-right and far-left blocs in France’s upcoming legislative elections pit the country’s people against each other, going so far as to say that “extreme” parties could spark a “civil war.””

US

FED (MNI BRIEF): U.S. consumer spending is slowing as Americans exhaust excess savings built up during the pandemic, San Francisco Fed President Mary Daly said Monday.

FED (MNI): The Federal Reserve faces a risk of rising unemployment, in addition to sticky inflation, and it would be appropriate to lower the policy rate if the labor market weakens more than expected, San Francisco Fed President Mary Daly said Monday.

OTHER

JAPAN (MNI BRIEF): Japan's services producer price index rose 2.5% y/y in May vs. April's 2.7%, according to preliminary data released by the Bank of Japan on Tuesday, which also showed firms transferring higher labour costs to services prices.

JAPAN (RTRS): Japanese Chief Cabinet Secretary Yoshimasa Hayashi said on Tuesday authorities would respond appropriately to excessive currency volatility, in a fresh warning as the yen weakens towards to the key 160 per dollar level.

AUSTRALIA (BBG): “Australia’s consumers remained downbeat in June, reflecting concern that persistent inflation could prompt the Reserve Bank to resume raising interest rates.”

NEW ZEALAND (BBG): “Employment confidence index fell 13 points to 91.4 in 2q, Westpac Banking Corp. and McDermott Miller Ltd. say in emailed statement. Weakest since 2020. Gauge below 100 indicating households now have a pessimistic view of the labor market.”

CANADA (MNI BRIEF): Bank of Canada Governor Tiff Macklem Monday affirmed his view that if inflation continues to make progress as officials expect, more interest-rate cuts are warranted after the first reduction in four years earlier this month.

CANADA/CHINA (MNI BRIEF): Canada is moving to impose tariffs on Chinese electric vehicles following a similar move from the United States, seeking to head off any perception it will become a back door to the North American trade zone before the USMCA is up for review in 2026.

MEXICO (MNI WATCH): The Central Bank of Mexico is expected to hold its overnight interbank interest rate at 11.00% Thursday for the second consecutive meeting, despite board members having indicated that a 25 basis point cut could come as inflation falls.

CHINA

RRR (YICAI): “China’s central bank will likely lower the reserve requirement ratio rather than interest rates this year, given strong U.S. dollar expectations and the need to support fiscal policy, according to Sheng Songcheng, senior advisor at the Lujiazui International Finance Research Institute.”

FISCAL (SECURITIES TIMES): “China’s general public budget revenue fell by 2.8% y/y to reach CNY9.7 trillion in the first five months, with tax revenue falling by 5.1% but non-tax revenue rising by 10.3%, Securities Times reported.”

FINANCIAL MARKETS (FINANCIAL NEWS): “ China will strive to improve the attractiveness of its financial market from an institutional perspective and promote the opening of its derivatives market, SAFE spokeswoman Wang Chunying said in an interview with state-backed Financial News. “

?? MAIN ECONOMIC DATA/CENTRAL BANKS/GOVERNMENT (ALL TIMES CET) ??

9:00 a.m.: Spain 1Q F GDP, May PPI

11:00 a.m.: ECB’s Stournaras speaks

4:00 p.m.: US June Conference Board Consumer Confidence

7:15 p.m.: ECB’s Nagel speaks