Morning Juice – Europe Session Prep

Good Morning Traders.
It is Friday, the 5th of June. Here is what to look out for today.

Sentiment

Global markets remained cautious as investors reassessed expectations for Fed policy and continued rotating away from high-flying AI-linked assets. Treasury traders who have increasingly priced in the possibility of Fed rate hikes over the next year face a significant risk reversal should upcoming US employment data show signs of labor market weakness.

Oil steadied after posting its first decline of the week. Optimism surrounding potential diplomatic progress between the US and Iran continued to weigh on crude prices, though uncertainty over a ceasefire agreement between Israel and Lebanon helped limit downside pressure. Brent crude remained near $95 per barrel as traders balanced geopolitical risks against the prospect of improved supply conditions.

In Japan, economic data strengthened the case for tighter monetary policy. Real wages rose for a fourth consecutive month, marking the longest run of gains in four years and reinforcing expectations that the BoJ could deliver another interest-rate increase this month. The development supported the broader narrative that Japan is gradually moving away from its ultra-loose monetary stance.

Meanwhile, geopolitical developments remained in focus. Zelenskyy publicly proposed peace talks with Putin in a rare open letter, adding to signs that diplomatic efforts aimed at ending the war in Ukraine are gaining momentum after more than four years of conflict.

In the UK, political tensions intensified after Andy Burnham confirmed his intention to challenge Starmer for leadership, prompting an immediate response from the PM, who reiterated his commitment to remaining in office. Political developments are likely to remain a secondary consideration for markets as investors focus on growth, inflation, and central bank policy expectations.

Docket
05:00 ET
Eurozone GDP YoY Revised – Median Forecast: 0.8% | Prior: 0.8% | Range: 0.9% / 0.3%
Eurozone GDP QoQ Revised – Median Forecast: 0.1% | Prior: 0.1% | Range: 0.2% / -0.2%