Next week's heavy schedule: China's May foreign exchange reserves, U.S. non-farm payrolls, European Central Bank decision, Powell's speech, Japan's government bond auction

Overview of Major Financial Events from June 2 to June 8, all in Beijing time:

Key Focus This Week: China will release the May Caixin PMI and foreign exchange reserve data, the U.S. will publish the May non-farm payroll report and April trade balance, the European Central Bank will hold its May interest rate decision, Jerome Powell will give a speech, the Federal Reserve will release the Beige Book on economic conditions, and there will be two Japanese long-term bond auctions.

Additionally, South Korea will hold a presidential election, Brian Brooks will chair the Financial Stability Oversight Council (FSOC) meeting, the OECD will release its latest economic outlook, Xiaomi will hold its 2025 Investor Day, the Switch 2 will be released globally, and Broadcom will announce its earnings.

With the Dragon Boat Festival holiday approaching, the A-share market will be closed from May 31 (Saturday) to June 2 (Monday), and will resume normal trading on June 3 (Tuesday).

China’s May Caixin PMI and Foreign Exchange Reserves

On Tuesday (June 3) and Thursday (June 5), S&P Global will release China’s May Caixin Manufacturing PMI and Services PMI, respectively.

Data from the National Bureau of Statistics shows that China’s official Manufacturing PMI rose by 0.5 percentage points to 49.5 in May, while the Non-Manufacturing PMI fell by 0.1 percentage points to 50.3, still above the critical point, indicating continued expansion overall.

Minsheng Macro indicates that the resilience of production is stronger than that of demand, which has a greater pull on the rise of the May PMI. The "ice-breaking" between China and the U.S. in May has also diluted export risks. However, the continued decline in the two major price indicators of PMI indicates that economic operational pressures still exist. Policy financial tools will become a key policy for "stabilizing expectations" in the near term, with a possible focus on key areas such as technological innovation.

On Saturday (June 7), China will release its May foreign exchange reserves.

Data released last month showed that China’s foreign exchange reserves have remained stable at $3.2 trillion for 17 consecutive months, with the central bank increasing its gold holdings for six consecutive months.

A relevant person in charge of the State Administration of Foreign Exchange stated that China’s economy is showing a positive trend, with strong resilience and vitality, which is conducive to maintaining the stability of foreign exchange reserves.

U.S. May Non-Farm Payrolls Expected to Slow, May Raise Rate Cut Expectations for June

On Friday (June 6), the U.S. will release the May non-farm payroll report.

Economists generally expect that the number of new jobs in May will decrease from 177,000 last month to 130,000, with the unemployment rate remaining steady at 4.2%, indicating a moderate slowdown in the job market.

Due to unexpectedly strong employment data last month, Wall Street expects the timing of rate cuts to be pushed back from June to July. As the last employment data before the Federal Reserve's June meeting, if the May non-farm payrolls slow as expected, it may reignite market expectations for a rate cut in June Swap market data shows that the probability of the Federal Reserve remaining "on hold" in June is currently as high as 98%.

U.S. Trade Balance Released, Has "Export Rush" Ended?

On Thursday (June 5), the U.S. released the trade balance for April.

The market generally expects that the U.S. trade deficit in April will narrow from $140.5 billion last month to $117.3 billion, indicating that the "export rush" effect has eased.

The survey data from the Institute for Supply Management (ISM) last month showed a decline in imports from manufacturers and service providers, suggesting that the strategy of rushing to import before tariff increases is coming to an end.

Moreover, the sharp expansion of the trade deficit was a major reason for the U.S. economy contracting for the first time since 2022 in the first quarter. From January to March this year, U.S. GDP fell by 0.3% quarter-on-quarter, with net exports dropping by nearly 5 percentage points, marking the largest decline on record.

ECB Rate Cut in June "Set in Stone"?

On Thursday (June 5), the European Central Bank announced its latest interest rate decision.

The market generally expects the ECB to continue cutting rates in June, with investors focusing on the wording regarding the future interest rate path. Given the tariff threats weighing on the Eurozone's economic growth outlook and increasing medium- to long-term inflation pressures, the ECB's monetary policy decision-making is becoming more challenging.

Over the past year, the bank has completed seven rate cuts.

Powell's Speech

On Tuesday (June 3), Federal Reserve Chairman Jerome Powell delivered opening remarks at an event.

At the monetary policy meeting in early May, Federal Reserve policymakers generally believed that the uncertainty facing the economy is higher than before, and it is prudent to remain cautious regarding rate cuts, waiting for clearer impacts from the Trump administration's tariffs and other policies before considering action.

Minneapolis Fed President Neel Kashkari recently stated that the biggest risk facing the U.S. economy is the uncertainty surrounding significant new policies, and it is unclear whether the situation will be sufficiently clear by September. The Fed "must look at the data and also consider the progress of trade negotiations."

This week, Federal Reserve Governor Christopher Waller, Federal Reserve Governor Lisa Cook, Dallas Fed President Lorie Logan, Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, and Philadelphia Fed President Patrick Harker will also deliver public speeches, releasing the latest monetary policy signals

The Federal Reserve Releases Economic Conditions Beige Book

On Thursday (June 5), the Federal Reserve released the national economic conditions survey report "Beige Book" compiled by 12 regional Federal Reserves.

The Beige Book released last month indicated that as economic uncertainty increases, particularly regarding tariffs, the outlook in several regions has "significantly worsened."

In terms of inflation, prices have generally risen across U.S. regions, with businesses expecting input costs to increase due to tariffs; regarding employment, overall employment in the U.S. has remained stable or slightly increased.

The report also mentioned that consumers rushed to purchase vehicles and non-durable goods before the price increases related to tariffs, while the number of international tourists has declined. Additionally, non-automotive consumption has overall decreased.

With tariff policies continuing to be filled with uncertainty, the term "uncertain" is expected to remain prominent in the Beige Book.

Will the Two Japanese Long-term Bond Auctions Continue to "Cool Down"?

The Japanese Ministry of Finance will hold auctions for 10-year and 30-year government bonds on Tuesday (June 3) and Thursday (June 5), respectively.

The Japanese bond market has recently experienced continued volatility, with two key ultra-long-term bond auctions suffering a "Waterloo," setting a record for the worst subscription rates in history, raising concerns about supply-demand imbalances, and causing Japanese bond yields to continue to rise.

In this context, investors will closely monitor the upcoming two long-term bond auctions; if they perform worse than expected, it may further push up Japanese bond yields and amplify global liquidity tightening risks.

Notably, on Tuesday (June 3), Bank of Japan Governor Kazuo Ueda will deliver a speech, and attention will be paid to his stance on the volatility in the bond market.

Broadcom's Earnings Report is Coming Soon

On Thursday (June 5), Broadcom will release its Q2 earnings report for fiscal year 2025.

In the earnings report released last quarter, Broadcom projected Q2 revenue to reach $14.9 billion, a 19% year-over-year increase, exceeding analysts' expectations of $14.59 billion; it is expected that Q2 AI semiconductor revenue will reach $4.4 billion.

As one of the major suppliers of data center infrastructure, Broadcom not only provides customized AI chips for Google but also supplies key components for network infrastructure that supports AI software development. The AI boom once pushed Broadcom's market value to exceed $1 trillion.

Among the 31 analysts tracking the stock, 28 have given a "strong buy" rating, while 3 have given a "hold" rating. The average target price for the stock is $242.19, indicating a strong upside potential of 26.7% compared to the current stock price.

Other Important Data, Meetings, and Events

• On Monday (June 2), the U.S. will release the May ISM Manufacturing Index.

Economists generally expect the May ISM Manufacturing Index to rise from last month's 48.7 to 49.2, recovering from a near five-month low but still remaining below the expansion-contraction threshold.

• On Wednesday (June 4), the FSOC meeting will be held. U.S. Treasury Secretary Janet Yellen will host a meeting of the Financial Stability Oversight Council (FSOC) on June 4. Officials from top financial regulatory agencies such as the Federal Reserve and the U.S. Securities and Exchange Commission (SEC) will be in attendance.

Public information shows that the FSOC was established in 2010 to monitor and manage systemic risks to prevent future financial crises and maintain the stability of the U.S. financial system.

• CATL's weekly options will be launched on Monday (June 2).

On May 16, the Hong Kong Stock Exchange announced that CATL's monthly options will be launched on May 20, 2025, the same day CATL's shares are listed, while the weekly options contracts will be launched on June 2, 2025.

• South Korea will hold a general election on Tuesday (June 3).

A total of 7 candidates are competing in this election, and early voting has already begun.

On April 4, the Constitutional Court of South Korea passed a ruling to impeach President Yoon Suk-yeol, resulting in his removal from office. According to the law, South Korea must hold a new presidential election within 60 days.

According to the latest poll results released by the South Korean polling agency "Realmeter" on the 28th, in a survey conducted from the 26th to the 27th regarding presidential candidate support rates, Lee Jae-myung of the Democratic Party leads with a support rate of 49.2%, followed by Kim Moon-soo of the People Power Party at 36.8%, and Lee Jun-sik of the Reform Party at 10.3%.

• On Tuesday (June 3), the Organisation for Economic Co-operation and Development (OECD) will release its latest economic outlook report.

The OECD will analyze major short-term economic trends and prospects in the report. The outlook covers a range of variable forecasts for all member countries, the Eurozone, and some non-member countries.

In the mid-term economic outlook released in March, the OECD predicted that the expansion of major economies would slow, uncertainty would rise, and emphasized the risks of further divergence and potential policy choices that could affect future resilience.

• On Thursday (June 5) at 0:00, the Switch 2 will be released globally.

According to Global Times, compared to the previous generation, the Switch 2 has achieved a comprehensive upgrade in hardware performance, game lineup, and interactive experience. The launch lineup includes the open-world racing game "Mario Kart World," the destruction-driven game "Donkey Kong Bananza," and "Kirby: Air Ride."

It is reported that the Switch 2 will be available in both Japanese and international versions, with the Japanese version priced at 49,980 yen (approximately 2,421 RMB), supporting only Japanese and Japanese account services, and requiring conditions such as being an NSO member for over 1 year and having over 50 hours of gameplay to participate in the lottery purchase; the international version is priced at 69,980 yen (approximately 3,390 RMB), with no regional restrictions and supporting 16 languages.

Nintendo explained that this move is to address the depreciation of the yen and the issue of scalpers reselling across borders, but analysts are concerned that it may affect global sales targets

• On Tuesday (June 3), Xiaomi Group will hold its 2025 Investor Day.

During this Investor Day event, the company's management and heads of various business departments will share the latest updates on corporate strategic direction and business development with the public, and there will also be arrangements for investors to visit the Xiaomi automobile factory.

At last year's Investor Day event, Xiaomi's founder and management, including Lei Jun, Lu Weibing, and Lin Shiwei, delivered keynote speeches on the company's business strategy and participated in Q&A sessions with investors.

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