Global News Summary 2-6 June 2025
Markets navigated a volatile week marked by tariff escalations, shifting rate expectations, and mixed growth signals. From Trump’s 50% steel and aluminium tariffs and a Musk feud to surprisingly resilient U.S. job data, investors weighed geopolitical tensions against signs of economic durability. The S&P 500 breached 6,000 amid Fed repricing, Eurozone inflation dipped below target, and China’s PMI contracted, while AI funding and trade disputes shaped the global narrative.
United States
Trump doubled steel/aluminium tariffs to 50% (effective 4 June), sparking retaliatory risks and global trade concerns.
Q1 GDP fell −0.3%, while May nonfarm payrolls beat at +139K, but prior months were revised down by 95K.
S&P 500 broke 6,000, rising ~1.5% for the week on optimism over resumed Trump–Xi trade talks (starting 9 June).
10Y yield rose to 4.40%, and 2Y exceeded 4% as markets pared back Fed rate-cut bets.
Dollar Index +0.45%, despite volatility from mounting debt concerns and institutional outflows.
Trump–Musk spat escalated; Musk called Trump’s tax bill “disgusting,” prompting Trump to threaten contracts.
Treasury Secretary Bessent reassured markets the U.S. would not default, even as bond and equity pressures mount.
United Kingdom
ONS revised April inflation down to 3.4% (from 3.5%), due to a tax input error.
OECD warned fiscal buffers are “very thin”, advising Chancellor Reeves to raise taxes.
Labour leader Starmer rejected major tax hikes, calling weak growth the bigger issue.
Gilt yields climbed, and BoE’s Mann warned QT could lift long yields further.
Euro Area
EZ CPI dropped to 2.0% in May (Apr: 2.2%, cons: 2%), its first sub-2% print in 7 months.
ECB cut rates 25 bps to 2%, with Lagarde stating the cycle is “nearly concluded”.
Panetta flagged balanced risks for future cuts; focus shifting to stability.
Steel imports surged tenfold, due to U.S. tariffs redirecting global flows, threatening EU prices and competitiveness.
EU restricted Chinese medical devices >€5M in retaliation for market discrimination.
Switzerland
Inflation turned negative at −0.1% (May), prompting speculation about sub-zero rates returning.
SNB’s Tschudin dismissed the print as short-term noise, reaffirming a medium-term focus.
Japan
Household spending fell −0.1% YoY, and exports rose 2.0% YoY in early May as tariffs hit.
Capex rose +1.6% QoQ in Q1, reflecting early-stage resilience.
BoJ expected to slow bond purchase tapering, as 40Y JGB demand weakened and yields surged.
China
Caixin PMI dropped to 48.3 (Apr: 50.4), indicating contraction from weak domestic demand.
Wang Yi criticised Washington, while Chinese firms ramped up AI chip self-sufficiency.
Xi–Trump call scheduled for 9 June, aiming to de-escalate tensions.
Australia
Q1 GDP rose just +0.2% (vs forecast: 0.4%), confirming soft growth as public demand and exports weakened.
Trade negotiations with U.S. and EU ongoing, but biosecurity and beef access remain sticking points.
Economic Growth
Australia’s Q1 GDP slowed to +0.2%, missing forecasts.
Japan showed firm Q1 capex (+1.6%), but weakening consumer data emerged.
U.S. growth remains fragile, as confirmed by −0.3% Q1 GDP and softened trade outlook.
EZ activity steady, but steel import surges could disrupt competitiveness.
Debt Securities
U.S. 10Y yield rose to 4.40%, 2Y passed 4%, reflecting revised Fed expectations.
UK gilt yields rose, stressing Reeves’ fiscal targets.
Japan’s 40Y JGB bid-to-cover fell to 2.2, showing weaker long-end demand.
Swiss rates may turn negative, following deflationary pressures.
Jobs & Labor Market
U.S. added 139,000 jobs in May, beating expectations but down from earlier months.
Unemployment steady at 4.2%, with wage growth up, delaying rate cuts.
Fed rate cut odds for September dropped from 90% to 70%; now only 43 bps total priced in for 2025.
Recession / Slowdown Signals
Global investor rotation out of U.S. assets, citing debt and tariff risk.
U.S. institutional flows pulled back, undercutting market dominance.
Japan’s household spending fell, and China’s PMI slipped into contraction.
EZ faces steel price suppression, while BoE flagged QT–growth tradeoffs.
Inflation
EZ CPI fell to 2.0% (May), ECB signalled end of easing.
UK April inflation revised to 3.4%, still elevated but overstated earlier.
Switzerland: −0.1% May CPI, raising deflation fears.
Japan: Inflation pinched consumer spending, discouraging discretionary outlays.
Artificial Intelligence
Cohere seeks >$500M funding, chasing leaders like OpenAI, Anthropic.
Musk’s xAI valued at $113B, begins $300M share sale.
Broadcom launched new data center chips, targeting AI compute efficiency.
Abridge AI raised $300M, focusing on medical AI.
Bengio launches nonprofit AI lab to develop safer systems.