Daily Game Plan

TODAY’S GAME PLAN:  from the trading
desk, this is not research

TODAY’S ECONOMIC DATA:  1:00ET 3-Year Note Auction

Highlights and News:  

• Lutnick says US-China trade talks going well on second day
• Iran and the US will hold a new round of nuclear talks in Oman on Sunday
• China Commerce Minister: We welcome British businesses to investment in China
• Britain To Sanction Israeli Ministers Over Gaza Comments – The Times
  
• TRADERS FULLY PRICE TWO MORE BOE RATE CUTS THIS YEAR
• EU TO TARGET NORD STREAM, RUSSIAN OIL CAP IN NEW SANCTIONS: FT

Global stocks edged higher as US-China trade talks continued into a second day, offering investors hope that tensions between the two largest economies might be subsiding.
The MSCI All-Country World index traded near record highs after Trump said on Monday that the talks with China were going well and he was “only getting good reports” from his team in London.  Elsewhere, in Tokyo, Finance Minister Katsunobu Kato said policymakers
were looking at measures to promote domestic ownership of Japanese government bonds.

EQUITIES: 

US equity futures are slightly higher after erasing earlier gains ahead of a second day of talks between the Trump administration and China, with investors staying cautious in the absence
of meaningful progress in day one talks. Commerce Secretary Howard Lutnick said today that trade talks with China were going well. Investors are also awaiting US consumer prices data on Wednesday for clues on the Federal Reserve’s rate trajectory. While traders
largely expect the Fed to keep interest rates unchanged next week, focus will be on any signs of pick-up in inflation due to Trump’s tariffs. Shares of vaccine makers dipped in premarket trading while Health Secretary RFK Jr. is in the process of replacing
all 17 members of a US Centers for Disease Control and Prevention panel of vaccine experts.

Futures ahead of the bell: E-Mini S&P +0.15%, Nasdaq +0.15%, Russell 2000 +0.5%, DJI +0.05%.

In pre-market trading, Brown & Brown (BRO) falls 3% after agreeing to buy privately-held insurance brokerage Accession Risk Management Group. Insmed (INSM) rises 17%
after the company announced positive topline results from Phase 2b study of treprostinil palmitil inhalation powder as a once-daily therapy in patients with pulmonary arterial hypertension. JM Smucker (SJM) falls 7% after the packaged-food company projected
profit for the coming fiscal year that trailed Wall Street’s expectations. TechTarget (TTGT) drops 4.8% after the marketing software firm was downgraded to underweight at JPMorgan on a lack of catalysts. Tencent Music Entertainment Group (TME) ADRs rise 5%
after agreeing to buy Chinese podcasting startup Ximalaya Inc. for $1.3 billion in cash plus an issuance of stock. Magnificent Seven stocks: Tesla (TSLA) +2%, Nvidia (NVDA) +0.2%, Alphabet (GOOGL) -0.2%, Amazon (AMZN) -0.1%, Meta Platforms (META) +0.6%, Apple
(AAPL) -0.3%, Microsoft (MSFT) -0.3%.

Materials sector led gains yesterday: XLB testing its key 200dma which has been pivotal.

European gauges are mixed with investors reluctant to make big bets ahead of a second day of trade negotiations between the US and China. The UK’s FTSE 100 surpassed
its March closing record. The gains were partly driven by a weaker pound after figures showed UK employment plunged by the most in five years and wage growth slowed more than expected in May, lifting rate cut bets. The Stoxx 600 is roughly flat after recovering
from earlier losses. The energy and auto sectors lead gains, while financial services stocks were among the biggest laggards. Novo Nordisk shares jumped 3.3% after FT reported that activist hedge fund Parvus built a stake in the drugmaker. Stoxx 600 ~flat,
DAX -0.3%, CAC +0.05%, FTSE 100 +0.55%. Energy +1.3%, Autos +0.7%, Real Estate +0.6%. Financial Services -1.5%, Banks -1.2%.

Shares in Asia were mostly higher as traders stayed cautiously optimistic over any potential progress in trade talks. Chinese stocks slid suddenly in the afternoon
session amid speculation that the negotiations might have hit some bumps. Shares of rare earth companies jumped, which is a central point of contention between the two sides. The MSCI Asia Pacific Index gained 0.3% with TSMC, MediaTek and Commonwealth Bank
of Australia among the biggest boosts. Taiwan led gains in the region, with notable advances also in Indonesia and Australia. Chinese property developers’ shares had their best day in more than a month as new signs point to a potential sector recovery, including
a rare bond offering and additional policy support. Taiwan +2.1%, Indonesia +1.6%, New Zealand +1.3%, Australia +0.8%, Kospi +0.6%, Vietnam +0.4%, Thailand +0.3%, Nikkei 225 +0.3%, Topix was flat. Sensex -0.05%, Hang Seng Index -0.1%, CSI 300 -0.5%, Philippines
-0.9%.

FIXED INCOME: 
 

Treasuries hold modest gains in early US session, supported by bigger advance for gilts after soft UK labor-market data boosted expectations for Bank of England interest-rate
cuts this year. US yields are 2bp-3bp richer across maturities with the curve flatter by 1bp; 10-year is around 4.45%, about 2.5bp lower on the day. The 30-year yield is lower by ~3 basis points to 4.91%. US session features first of this week’s three Treasury
coupon auctions, a 3-year new issue.

METALS: 

Gold prices steadied near $3,330 an ounce as US-China trade talks showed signs of concessions and looked forward to key US inflation data due tomorrow. Investors
are also focusing on Thursday’s auction of long-dated Treasuries, which could impact gold demand if the showing is weak. Platinum retreated from a four-year high after jumping more than 15% over the previous six sessions. Platinum may be the next star performer
among precious metals, driven by a deepening supply deficit, MLIV said. Its one-month lease rate hit the highest in at least six years. Spot gold +0.2%, Silver -0.2%, Copper -0.6%.

ENERGY:   

Oil prices edge higher as investors awaited the outcome of today’s US-China talks that could potentially ease trade tensions and improve demand for energy. Wildfire
risks to Alberta crude output are easing as power readings returned at Cenovus’s Christina Lake site. A Reuters survey found that OPEC oil output rose in May, although the increase was limited as Iraq pumped below target to compensate for earlier overproduction
and Saudi Arabia and the United Arab Emirates made smaller hikes than allowed. Elsewhere, Iran said it would soon hand a counter-proposal for a nuclear deal in response to a US offer that Tehran deems “unacceptable.” Iran and the US will hold a new round of
nuclear talks in Oman on Sunday, Tehran said.  WTI +0.5%, Brent +0.5%, US Nat Gas -0.05%, RBOB +0.5%. 

CURRENCIES: 

In currency markets, the pound led G-10 losses after weaker-than-expected UK jobs data. Traders fully priced in one BOE rate cut by September and bolstered bets for
a second by year-end. The dollar is mixed as trade talks between the US and China continue. China is earnest about trade talks with the US but is at the same time principled, said a social media account affiliated with state broadcaster CCTV.  US$ Index +0.05%,
GBPUSD -0.3%, EURUSD +0.1%, USDJPY -0.05%, AUDUSD +0.1%, NZDUSD +0.1%, USDCHF -0.05%, USDCAD -0.05%, USDSEK -0.2%, USDNOK +0.1%.

Bitcoin +0.7%, Ethereum +7%.   French banking giant Societe Generale announced plans to launch a U.S. dollar-pegged stablecoin called USD CoinVertible (USDCV) on
Ethereum and Solana, potentially becoming the first major European bank to do so.

Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance 

• Upgrades
• Eagle Bancorp (EGBN) Raised to Buy at Janney Montgomery; PT $24
• Macerich (MAC) Raised to Outperform at Mizuho Securities; PT $18
• Quantasing (QSG) ADRs Raised to Buy at Citi; PT $9.52
• Warner Bros Discovery (WBD) US Raised to Overweight at Huber Research Partners; PT $12
• Yum (YUM) Raised to Buy at Redburn; PT $177
• Downgrades
• Arch Capital (ACGL) Cut to Hold at Jefferies; PT $100
• Cameco (CCO CN) Cut to Hold at Paradigm Capital; PT C$100
• Elevation Oncology (ELEV) Cut to Neutral at HC Wainwright
• Cut to Hold at TD
• Cut to Hold at TD Cowen
• GAP Airports (GAPB MM) ADRs Cut to Underperform at Bradesco BBI; PT $215
• Knight Therapeutics (GUD CN) Cut to Hold at Paradigm Capital; PT C$6
• Manhattan Associates (MANH) Cut to Neutral at Redburn; PT $200
• McDonald’s (MCD) Cut to Sell at Redburn; PT $260
• TechTarget (TTGT) Cut to Underweight at JPMorgan; PT $8
• Warner Bros Discovery (WBD) US Cut to Neutral at President Capital Management; PT $10.36
• Initiations
• Amazon (AMZN) Reinstated Buy at William O’Neil
• Antalpha Platform Holding (ANTA) Rated New Buy at Roth Capital Partners
• Bel Fuse (BELFA) Rated New Outperform at Baird; PT $88
• Chipotle (CMG) Rated New Neutral at Redburn; PT $55
• Domino’s Pizza (DPZ) Rated New Sell at Redburn; PT $340
• Dynatrace (DT) Rated New Overweight at KeyBanc; PT $69
• Elastic (ESTC) Rated New Sector Weight at KeyBanc
• G. Mining Ventures (GMIN CN) Rated New Buy at Desjardins; PT C$25
• Harrow (HROW) Rated New Outperform at William Blair
• Lumentum (LITE) Reinstated Buy at William O’Neil
• Methanex (MX CN) Rated New Neutral at JPMorgan; PT C$45.23
• Newamsterdam Pharma (NAMS) Rated New Buy at Stifel; PT $44
• NexGen Energy (NXE CN) Rated New Buy at Desjardins; PT C$13.50
• Omeros (OMER) Rated New Buy at HC Wainwright; PT $9
• Quinsam Opportunities I (VHI CN) Rated New Outperform at National Bank
• SunCar (SDA) Rated New Outperform at Oppenheimer; PT $3.50
• Viking Holdings (VIK) Reinstated Buy at William O’Neil
• VolitionRX (VNRX) Rated New Buy at Jones; PT $3

Data sources: Bloomberg, Reuters, CQG

David Wienke