Leaders meet and bonds shriek

The Trump-Xi meeting did not deliver any tangible outcomes, with no shared approach to reopening the Strait of Hormuz. As energy-driven price pressures pile up against a still-resilient US consumer, inflation becomes the focus. Long-end yields surged and even Fed hikes came into investors' view.

• US: Kevin Warsh was confirmed as Fed chair this week, taking the helm from Powell, who will remain as a governor. Warsh will inherit a hot seat, with cost pressures now becoming quite apparent and little indication that demand is cracking amid robust AI-related capex and resilient consumer spending.

• Euro Area: ECB speakers highlight that the demand-drag channel of an energy shock can reduce the amount of tightening required, but not eliminate the need to tighten to contain the propagation of price pressures.

• United Kingdom: Political developments have dominated this week. A clearer path to a leadership challenge against the PM has emerged but our Research analysts expect this to take months to be resolved. While GDP data were strong for Q1, our analysts expect slowing to come and they look to next week's inflation and labour market data.

• Japan: The BoJ's emphasis on upside inflation risk over downside growth risk and its growing support for an early hike, including in June, was clear this week. Our Research analysts stick to their June rate hike call, while noting that political pressure at home and abroad still appears key.

• China: The Trump–Xi summit struck a cautiously constructive tone, with both sides emphasising stability but no major economic breakthroughs. Notable divergence persisted on core strategic interests Taiwan and Iran, consistent with limited deals so far. The next in-person meeting could be in September.

• Emerging Asia: India's gold import duty and retail fuel price hikes are likely to be followed by more austerity measures. Our Research analysts forecast pre-emptive monetary tightening by BoK starting from Q3 26. BI's policy decision is a close call, and our Research team expects a hold with risk of a 25bp hike.

• EEMEA: Despite rising energy-driven inflation and uncertainty, central banks across the region are signalling a cautious, slightly dovish bias, leaning towards extended pauses or potential easing later – although South Africa remains a clear outlier.

• Latin America: Tighter financial conditions across most of the region contributed to slowing, but not killing, credit growth. Some deterioration in quality has been observed as the debt service burden increases.