Good morning,
 
Last week was a very busy and volatile one with a ton of earnings, key central bank rate decisions and the continuation of the momentum unwind early in the week before a clearing event on Thursday when Citadel bought the levered positions of hedge fund Situational Awareness. The mega-cap earnings were a mixed bag with Microsoft and Amazon posting very strong numbers particularly within their cloud segments while both Meta and Apple left a bit to be desired. The S&P 500 ended the week up 1% reclaiming its 50d ma on Friday. The two other big stories throughout the week were the continued move higher in Treasury yields with the long-end hitting new YTD highs and the coordinated Yen currency intervention. Oil prices ended the week down after a de-escalation over the weekend before Iran broke the peace leading to a new round of strikes.
 
It’s like Ground Hog’s Day here yet again after President Trump called off strikes over the weekend suggesting negotiations taking place today could lead to a diplomatic resolution. Oil prices are pull back again with ICE Brent down ~5% holding at its 50d ma ~$83. This is helping to take some of the pressure off of Treasury yields which are down ~5bps across the curve but off the lows. Continued currency intervention is the other big story on the macro front with both the US and Japan confirming the first coordinated currency intervention since 2011 and suggesting further action could be taken. Treasury Secretary Bessent supports the use of the FIMA Repo Facility which allows central banks to use Treasury holdings as collateral to access dollar as opposed to selling bonds in the open market. The Yen has continued to strengthen breaking below its 200d trading around 157¥/$ from ~164¥/$ last Thursday.
 
The Iran headlines and pullback in oil/yields is putting a bid under US futures. However, it is notable that we’re seeing weakness in chips and DRAM stocks in the pre-market with the latter being weighed down by reports that CXMT is considering building a second DRAM plant in Beijing. Software stocks are bid up. S&P futures are currently up 0.6% while Russell 2k futures are up ~1%.
 

 
On the equity side we’ve got a merger Monday. The FT reported that AstraZeneca (-7%) has held to talks to merge with Bristol Myers (+3%)which would be the largest pharma deal on record. Below are some of the other announced deals.

• Linthium being taken private by Curium for total value of $8B cash + CVR
• INDV and SUPN announced a definitive agreement to combine in an all-stock merger of equals
• Integer Holdings (ITGR) being bought by KKR for $4.3B ($127/sh) rumored by WSJ on Friday
• Atkore (ATKR) being bought by Prysmian for $3.8B ($95/sh)
• Visa buying privately held BioCatch for $2.4B
• Bowhead Specialty Holdings (BOW) being acquired for $1.2 ($34/sh) by American Family

 
Final S&P Global Manufacturing PMI and ISM Manufacturing will be released after the open. NY Fed Williams said he strongly supported last week’s hold as he believes inflation will moderate in the back half of the year. However, Fed Musalem , a non-voting member, said he would have dissented. There are reports that Fed Chair Warsh floated the idea of less Fed policy meetings last week.
 

• US 2yr -4bps to 4.25%, 5yr -5bps to 4.41%, 10yr -5bps to 4.69%, 30yr -5bps to 5.23%
• USD index: -$0.12 to $99.67

 
Global markets were mixed overnight. The Nikkei sold off modestly with concerns around the currency intervention particularly weighing on financials and autos while tech was mixed. After the double digit bounce back on Friday the Kospi was down >5% overnight with the memory stocks under pressure. In China the Shanghai Composite moved modestly lower while the Hang Seng was up a similar amount. Alibaba was up 7% (ADR +4%) after it released its most recent Qwen AI model. European indices are moving higher. The AZN weakness is weighing on the FTSE 100. Germany is outperforming despite a weak retail sales number with SAP (+5%) a standout. Deutsche Telekom is also higher amidst reports of pushback in T-Mobile deal talks.
 

 
We discussed oil prices above. US nat gas prices are up modestly while prices in Europe are lower. Metals tried to rally overnight but have turned lower with momentum picking up over the last hour. Ag is modestly lower. Crypto is also under some pressure. Reportedly over 1k Bitcoin have been lost in the cold wallet hack which started last Friday. MicroStrategy reported it sold $105ml Bitcoin last week. Commentary around the prospect of Clarity Act has been pretty negative. Bitcoin is around where it closed on Friday just under 63k while Ethereum is modestly lower ~1.85k.
 

 
Earnings:
Pre-Market: ALX, AVA, CMDB, CNA, CNH, DEA, HESM, KOS, L, MAR, PLOW, SBH, TSN
After-Market: AHRT, ALG, ARE, ALSN, AMRC, AESI, BSM, BCC, BRCC, BWXT, CBT, CSR, CLX, CRD.B, CRGY, CTOS, DAC, EC, GPOR, IBTA, IRT, IIPR, INVX, INSP, IVT, JBTM, JELD, MATX, MED, MTUS, NJR, OKE, ON, OPAD, PAY, PGR, PLTR, POWL, SBAC, SNAP, TTI, TDW, TKO, TGS, UTL, VVX, VTS, VNO, VOYG, WHR, WMB
Pre-Market: ACRE, ADM, AIN, AME, AOMR, APO, APTV, ATKR, BALL, BOW, BR, BRBR, BRSL, BXDC, CAT, CLDT, CMI, CTRI, DD, DOCN, DUK, ENR, ET, EVEX, EXPD, FIS, HSBC, GPK, GWW, HVT, INGR, IT, KIM, KNF, LDOS, MCD, MD, MPC, MPLX, MRK, MRP, NPO, NRG, NXRT, OPLN, PEG, PFE, PNW, PRKS, Q, ROK, RVTY, SMP, SPOT, SQNS, STVN, SUN, SYY, TDG, TKR, TPB, TREX, ULS, USAC, W, WAT, WLK, WLKP
 
Economic Data:
US:

• 9:45 Final Manufacturing PMI: prior 53.8
• 10:00 ISM Manufacturing: vs. 54 cons., prior 53.3
• 10:00 Construction Spending: vs. 0.2% cons., prior 0.1%
• 11:30 3/6mo T-Bill Auction
• 2:00 Senior Loan Officer Survey
• 3:00 Treasury Refunding Finance Estimates

Global:

• China Rating Dog Manufacturing PMI: 50.9 vs. 51.5 cons., prior 51.7
• Japan Manufacturing PMI (final): 54.5 revised from 54.7
• India Manufacturing PMI (final): 53.5 revised from 53.9
• EU Manufacturing PMI (final): 51.9 revised from 52
• Germany Manufacturing PMI (final): 52.2 unrevised
• Germany Retail Sales:-1.1% vs. -0.5% cons., prior 1.2%
• UK Manufacturing PMI: 51.9 revised from 52.8