Financial markets enter the first week of June with a cautious but calmer tone. The dollar stayed near a two-week low, while the euro and pound remained under pressure after a difficult May
Financial markets enter the first week of June with a cautious but calmer tone. Reports of progress in US-Iran negotiations, including a possible 60-day ceasefire extension, helped reduce some pressure from energy prices and inflation expectations. Still, the deal has not been fully confirmed, keeping investors careful.
The dollar stayed near a two-week low, while the euro and pound remained under pressure after a difficult May. Bond yields moved lower in the UK and Japan as markets scaled back some rate-hike expectations. Gold and silver recovered, although higher-for-longer interest rate concerns continue to limit stronger upside.
US-Iran Negotiations:
Reports point to progress in talks, with a possible 60-day ceasefire extension under discussion. The market reaction has been positive, but investors still want confirmation before pricing in a stronger risk recovery.
Oil and Inflation Pressure:
Lower oil prices helped ease inflation concerns across major economies. However, energy supply risks remain part of the market story, especially while the Strait of Hormuz issue remains unresolved.
Fed Rate Expectations:
Softer PCE inflation reduced some pressure on the Fed, but markets still price around a 46% chance of a December rate hike. This keeps US jobs data and wage growth in focus this week.
ECB Policy Outlook:
Eurozone inflation remains above the ECB’s 2% target, even though national readings were mixed. Recent ECB minutes pointed to stronger support for earlier tightening, keeping expectations of a June rate hike alive.
UK Economic Weakness:
The pound and gilt yields remained pressured by weaker UK data, softer inflation, cooling labour conditions, and lower expectations for further Bank of England rate hikes.
Japan’s Mixed Signals:
Japanese data showed stronger retail sales and higher industrial production, but the Bank of Japan remained careful. Governor Ueda pointed to inflation risks from oil prices but avoided signaling an immediate rate hike.
US 10-Year Treasury Yield:
US Treasury yields remained sensitive to inflation expectations, Fed pricing, and upcoming labor market data. Softer PCE inflation reduced some immediate pressure, but markets continue to watch whether stronger employment or wage growth could revive rate-hike expectations.
UK 10-Year Gilt Yield:
UK 10-year gilt yields stayed around 4.8%, near their lowest level since April 17. Yields are on track for a 19-basis-point monthly fall, supported by weaker domestic data and hopes that a US-Iran deal could ease inflation pressure.
Japan 10-Year Government Bond Yield:
Japan’s 10-year yield fell to around 2.65%, reaching a two-week low. Lower global inflation concerns and uncertainty over the Bank of Japan’s next move supported the decline. Stronger retail sales and industrial production showed resilience, but the policy outlook remains cautious.
Gold:
Gold rose for a second session, trading near $4,580 an ounce as reports of a possible US-Iran ceasefire extension supported sentiment. The metal remains on track for a small monthly loss, as elevated rate expectations and weaker demand from India and China continue to limit gains.
Silver:
Silver climbed toward $76 an ounce and remains on track for a monthly gain of more than 3%. Hopes for a ceasefire extension supported the move, while inflation risks and higher-for-longer rate expectations kept traders cautious. UBS also lowered its forecasts for silver’s supply deficit and investment demand.
Dollar Index:
The dollar index stayed around 99, near a two-week low, but was still set to finish May about 1% higher. Progress in US-Iran talks, lower oil prices, and softer PCE inflation reduced some dollar support, while Fed expectations remained steady.
Euro:
The euro held near $1.165, heading for a monthly loss of around 0.8% against the dollar. Mixed Eurozone inflation data kept the market focused on the ECB, with prices still above target and June rate-hike expectations still alive.
British Pound:
The pound traded near $1.342, heading for a monthly decline of more than 1% against the dollar. Political uncertainty, weaker growth prospects, and lower expectations for further Bank of England tightening weighed on sentiment.
Japanese Yen:
The yen traded close to 159.3 per dollar after Japan’s finance minister warned that authorities could step in if excessive volatility continues. Markets are also watching for Finance Ministry data that may confirm late-April intervention, estimated at up to 10 trillion yen.
Eurozone Inflation:
Eurozone CPI will be closely watched this week, with annual inflation expected to rise to 3.3% from 3.0%. A stronger reading could support the case for a June ECB rate hike.
US Labor Market:
The week’s main focus is the US jobs report. Nonfarm payrolls are expected to rise by 95K, down from 115K, while the unemployment rate is forecast to stay at 4.3%. Average hourly earnings are expected to rise 0.3% month-on-month.
US Business Activity:
US manufacturing and services data will also guide sentiment. ISM Manufacturing PMI is expected to improve to 53.3, while ISM Services PMI is forecast to edge up to 53.8. Price components remain important because they show whether cost pressure is cooling or staying sticky.
Japan Data:
Japan reported stronger retail sales and an unexpected increase in industrial production. The figures point to a more resilient economy, although the Bank of Japan still appears cautious about near-term policy changes.
Monday, June 1:
New Zealand markets will be closed for the King’s Birthday holiday. In the US, S&P Global Manufacturing PMI, ISM Manufacturing PMI, and ISM Manufacturing Prices will be released.
Tuesday, June 2:
Eurozone CPI will be the main release, with inflation expected to accelerate to 3.3% year-on-year. In the US, JOLTS job openings are expected to remain broadly stable near 6.87 million.
Wednesday, June 3:
US ADP employment, S&P Global Services PMI, ISM Services PMI, ISM Non-Manufacturing Prices, and crude oil inventories will be in focus.
Thursday, June 4:
Brazilian markets will be closed for Corpus Christi Day. In the US, initial jobless claims are expected to edge lower to 211K.
Friday, June 5:
The US nonfarm payrolls report will be the main event. Markets will watch job creation, unemployment, and wage growth for signals on the Fed’s next policy move.
Reports suggesting that Iran could suspend discussions with the United States and consider restrictions on the Strait of Hormuz revived concerns about energy supplies, inflation, and global growth.
Detail Markets Stay Cautious as Yields Rebound (06.01.2026)Markets started the week on a mixed note as US-Iran talks remained uncertain and bond yields moved higher.
DetailThen Join Our Telegram Channel and Subscribe Our Trading Signals Newsletter for Free!
Join Us On Telegram!
