AM Notes: Risk sentiment still buoyant...

Quiet overnight session, with Asian equities catching up to the strong Wall Street performance...

07:35 BST

U.S. futures have seen some early buying in London nudging the indices higher.

Risk sentiment is still buoyant, dollar is still under pressure.

USDCAD is my leading USD indicator for now.

Retail are still positioned around 80/20 long and the pair sits just above the 1.20 level after a weak bounce.

Watching and waiting on this one as I don't see the R:R in being short, but don't think it's quite ready to pop yet.

News

The global minimum tax debate.

I really don't see an agreement being reached beyond 'we all agree to continue to talk more about doing something about this one day'.

Biden dropped the minimum from 21% to 15% to gather more support from the 139 countries currently negotiating at the OECD/G20 level

Danske say that the G7 finance ministers will meet in 10 days in person after which a final accord could be sealed at the Cornwall summit from 11-13 June.

Here's the problem 👇

U.K. Treasury refuses to back Biden push for minimum corporation tax (Telegraph):

Treasury demands crackdown on US tech companies as price for supporting White House threshold

Ministers are refusing to back a global overhaul of corporation tax championed by Joe Biden unless the White House supports their demands to crack down on US tech titans.

President Biden is thought to have won round most major Western nations in his bid to impose a global minimum  threshold for corporation tax, to prevent companies from sheltering profits offshore.

However, sources said that Britain has not yet given the proposal its backing because the Government is pushing for strict rules that specifically target Silicon Valley titans such as Google.

It is feared that if Whitehall backs the Biden minimum rate too soon, it will lose leverage for action on big tech.

The high-stakes gambit threatens ambitions to agree major changes to the international tax system ahead of next month’s G7 summit, to be hosted in Cornwall.

A Treasury source said: “A minimum tax that means tax is paid elsewhere that ought to be paid in the UK will not fund the UK’s schools and hospitals.

“We're not going to rush to sign up without a proper, more detailed deal on where tech companies pay their tax, something that you're confident can be pushed through Congress.”

Julian Jessop, a fellow at the Institute of Economic Affairs, said the proposals to tax firms by where revenues were generated could turn into a “bureaucratic nightmare”.

He added: "If the global minimum tax rate is too high, it would undermine healthy tax competition between countries. If it is too low, it would not have any significant impact anyway.”

June is going to be a monster month for news flows that could trigger volatility.

4th June: NFP's10th June: U.S. CPI11th-13th June: G7 meeting, Tax focus16th June: FOMC

Fed's Bullard & George stuck to the script yesterday: need to exit crisis before thinking about changing policy etc.

via Newsquawk 👇

Fed's Bullard (2022 voter) reiterated that we are going to see more inflation and that he thinks it is mostly temporary, but some will flow through to expectations, while he expects 2% inflation this year and next. Bullard also said there will come a time when we can talk more about changing monetary policy, but it is not the time while we are still in a pandemic. Furthermore, he added we will get there in the months ahead and can start thinking about altering asset purchases, but reiterated that when in a crisis, they need to exit it before thinking about changing policy. (Newswires)

Fed's George (2022 Voter) said it is difficult to distinguish between one-off bottlenecks and a broad lack of capacity, but added that she does not dismiss the risk of higher inflation and noted the Fed should not be rigid in its policy approach nor should it lose sight of potential changes to the economy amid the reopening. George also stated that she anticipates strong employment in the approaching months and expects labor constraints to ease with time but added that supply and shipping shortages could persist beyond this year. Furthermore, she stated that Fed policy will stay highly accommodative for some time and it will take time for the economy to establish its new normal. (Newswires)

Turkey removed one of four central bank deputy governors on Tuesday, two months after President Tayyip Erdogan fired the central bank governor. (Reuters)

Oguzhan Ozbas was removed from his post, and Semih Tumen was appointed to replace him, according to an overnight decree published in the official gazette.

Tumen currently serves as an adviser to Erdogan and is the head of the economics department at Ankara's TED University. He worked at various positions at the Central Bank of Turkey from 2002 to 2018.  

President Hassan Rouhani and his Chinese counterpart Xi Jinping discussed expanding Iran’s oil sales and non-oil exports to China in a phone call, Rouhani’s official website, president.ir says.

  • They also discussed expanding the presence of Chinese companies in Iran

  • Development of Arak nuclear reactor, whose modernization is part of the terms of the 2015 nuclear deal, was also discussed, statement says

  • NOTE: Iran-UN Monitor Pact Paves Way for Nuclear Deal Breakthrough (1)

  • NOTE: Oil Rallies Toward $65 With Iran Deal in Focus, Goldman Bullish

Looking ahead, German IFO this morning is the major release.

Forecasts

  • Business climate index ⬆ to 98.1 from 96.8 in April

  • Expectations ⬆ to 101.5 vs 99.5 in April

  • Current conditions ⬆ to 95.5 vs 94.1 in April

đź—Ł Fed's Evans, Barkin, Quarles, ECB's Lane, BoE's Tenreyro