TL;DR

ECB to cut rates; China rare earth curbs disrupt autos; OPEC raises output, oil steady.

Highlights

• ECB set to cut rates to 2% after Eurozone inflation drops to 1.9%, with a likely summer pause as trade tensions persist3.
• US 10-year Treasury yield falls to 4.35% on weak data; BOJ faces ¥28.6T ($198B) unrealized bond losses as Japanese 40-year yields drop4.
• China’s rare earth export restrictions disrupt global auto supply chains, halting Suzuki Swift production; EU launches 13 critical material projects outside China2.
• US blocks 2.2 million barrels of ethane exports to China in response to Chinese rare earth curbs; US ethane market under pressure6.
• OPEC raises output by 200,000 bpd; Saudi Arabia seeks further hikes, but oil prices remain steady amid demand, tariff, and supply concerns19.
• European Commission to propose a draft ban on Russian gas, oil, and uranium imports by 2027, accelerating EU energy diversification1.
• Ukraine drone strike damages 41 Russian aircraft; Germany to deliver Ukraine-made long-range weapons; US presses NATO for 5% of GDP defense spending7917.
• IEA projects global energy investment at $3.3T in 2025, with $2.2T for clean energy; fossil fuel investment to decline18.
• China delays Apple and Alibaba AI rollouts amid US tariff threats; US SEC proposes stricter disclosure for US-listed Chinese firms1011.
• Citigroup to cut 3,500 tech jobs in China as part of global restructuring; Wise to shift primary listing from London to New York1514.
• JPMorgan to accept Bitcoin ETF holdings as collateral for client loans, expanding crypto’s role in traditional finance12.
• China issues 12.5B yuan in Hong Kong bonds; Hong Kong SFC to allow crypto derivatives trading for professional investors13.

Commentary

Central banks are in focus as the ECB prepares to cut rates to 2%, the first move after Eurozone inflation fell below target since 20233. While this should support European risk assets and peripheral bonds, policymakers are signaling a likely pause as global trade tensions and weak growth persist3. US Treasuries rallied on soft economic data, with yields dropping across the curve, while the BOJ’s mounting unrealized losses highlight ongoing volatility in Japanese government bonds4.

Supply chain and trade disruptions remain a key risk. China’s rare earth export restrictions are forcing automakers to halt production and prompting the EU to accelerate diversification of critical material sources2. The US response—blocking ethane exports to China—adds further stress to energy and petrochemical markets, with knock-on effects for US exporters and Chinese manufacturers6. Meanwhile, OPEC’s output increases and Saudi Arabia’s push for more supply have not moved oil prices as demand concerns and tariff risks weigh on sentiment19.

Geopolitical tensions continue to shape defense and energy markets. The EU’s proposed ban on Russian energy imports by 2027 will accelerate diversification and likely support renewables and nuclear investment, as seen in Czechia’s $18B nuclear deal with South Korea120. Ukraine’s drone strike on Russian aircraft and Germany’s support for Ukrainian weapons production, coupled with the US push for higher NATO defense spending, keep defense and security themes in play7917.

In capital markets, the US SEC’s proposed disclosure rules for Chinese firms and delays in Apple /Alibaba AI launches in China underscore persistent US-China decoupling risks for tech and cross-border listings1011. Wise’s planned move to New York highlights ongoing challenges for European exchanges14. In digital assets, JPMorgan’s acceptance of Bitcoin ETF holdings as collateral and Hong Kong’s expansion of crypto derivatives trading mark further institutionalization of crypto markets1213.

Traders should monitor post-ECB communications, US economic data, and developments in energy and supply chain policy. Cross-asset volatility remains elevated amid shifting macro and geopolitical dynamics.