Markets steady despite weak data and geopolitical crosscurrents

Summary

Podcast Summary: "Markets steady despite weak data and geopolitical crosscurrents"

Moving Markets – Julius Baer (May 22, 2026)
Host: Bernadette (A)
Guests: Lucia Czechulovic (B), Bentzion Bolvoy (C)

Episode Overview

This episode offers a timely look at global financial markets grappling with weak economic data and ongoing geopolitical tensions, notably in the Middle East. The hosts discuss key macroeconomic indicators across Europe, the UK, the US, and Asia, unpack recent equity and commodity market moves, and offer a focused update on recent currency and precious metals trends.

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Key Discussion Points & Insights

1. European Macro Picture: Weak PMI and Gloomy Sentiment

• Eurozone contraction: The composite PMI for May fell to 47.5, marking the fastest rate of contraction in around two and a half years (01:31).
  • "Business activity across the Eurozone is contracting at a varying pace. The composite PMI fell to 47.5 in May, signaling a definite slowdown... The services sector is really driving this decline... France is particularly weak, hitting its lowest level since 2020." – Lucia (01:31)
• Consumer confidence surprise: Slight uptick in Eurozone consumer confidence, but still well below historical and pre-conflict levels; other indicators remain downbeat (02:16).
  • "Consumer morale did improve, defying expectations. However, it's important to remember that confidence remains well below historical averages and pre-conflict levels." – Lucia (02:16)
• UK underperforms: UK composite PMI hits a 13-month low, with services sector struggling most, attributed to economic uncertainty and Middle East conflict fallout (02:55).
  • "The UK saw a significant slide in economic activity in May... The services sector took a particularly heavy blow, with business activity dropping to levels not seen since January 2021." – Lucia (02:55)

2. US Data: Mixed Signals

• Housing sector strength vs. manufacturing weakness:
  • Positive housing starts and building permits, resilient jobless claims.
  • Philadelphia Fed Manufacturing Index disappoints, regional manufacturing slows (03:39).
  • US manufacturing PMI shows best expansion in 4 years amid inflation concerns (03:39).

3. Equity Markets: Resilience Through Volatility

• Europe: Volatile trading amid Middle East news—Stoxx 600 closes slightly higher; sector-specific winners (e.g., satellites buoyed by SpaceX IPO news).
  • "European equities were fairly volatile, reacting to... the conflict in the Middle East. The Stoxx 600 eventually ended the day marginally higher..." – Lucia (04:16)
• US: Equities recover from intraday lows to close positive (04:16).

4. Oil: A Market on a Knife’s Edge

• Geopolitics driving volatility: Prices initially spike on news of Iran’s uranium decision, then retreat as diplomacy hopes rise; WTI just under $98, Brent around $104 (04:52).
  • "It was a classic case of volatility. Oil prices initially surged over 3%... However, prices quickly came back down as hopes for a diplomatic resolution resurfaced." – Lucia (04:59)

5. Corporate and Sector Updates

• Stellantis: Announces €60bn five-year investment plan, targeting €6bn in annual cost savings, 60% of spend earmarked for North America, 60+ vehicle launches planned (05:34).
  • "It's a bold plan focused on balancing growth with profitability." – Lucia (05:42)
• Quantum computing rally: US pledges up to $2bn in sector funding (IBM set for ~$1bn). Optimism tempered by early stage and technical hurdles (06:18).

6. Asia Pacific Markets and Japan Inflation

• Japan: Core inflation softens to 1.4% (lowest in four years). Weakens rate-hike prospects by Bank of Japan; positive market tone in region, supported by US-Iran diplomacy hopes (07:00).
  • "In Japan, inflation came in softer than expected... this weakens the case for the Bank of Japan to hike rates." – Lucia (07:00)
• Broader markets: Nikkei and Topix gain; US yields edge down; USD at six-week highs (07:00).

7. Day Ahead: Key Data to Watch

• German consumer confidence and GDP: Weak, but slightly above expectations; UK retail sales disappoint.
  • Upcoming: Germany's IFO business climate index for May is the key release ahead (07:43).
  • "The main release still to come is probably Germany's IFO Business climate for May. Otherwise it's a fairly quiet calendar." – Lucia (07:43)

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FX and Precious Metals Market Update (w/ Bentzion Bolvoy, 08:25)

8. Fed Watch: New Chair, Hawkish Sentiment

• Fed’s new chair Walsh perceived as hawkish:
  • "Walsh is in the seat now... markets are pricing in not a cut but even rather a hike. The greenback strengthened broadly this week, gaining against most G10 peers amid a hawkish repricing of rate expectations and rising treasury yields." – Bense (08:42)
  • "Nothing better than a bit of Shakespeare in the morning before breakfast." – Bense (08:42)

9. Key FX Moves

• USD/JPY: Yen back to intervention territory (~159). Bank of Japan’s interventions costly and mostly ineffective; US Treasury providing brief support (09:13).
  • "Tokyo's actions certainly mounted to an eye-watering sum and it seems was all for nothing... reminds me of Einstein's famous quote: insanity is doing the same thing over and over again and expecting different results." – Bense (09:13)
• EUR/USD: Under pressure due to soft growth, capping upside.
• GBP/USD ("Cable"): Weaker after UK political turmoil and poor PMI data.
• AUD/USD: Underperforms on risk-off tone and weak labor data (09:13).

10. Precious Metals

• General: Higher USD and yields put pressure on metals, but gold remains relatively resilient.
  • Gold up ~5% YTD; key support at 4450–4500 region (10:09).
  • Silver: Highly volatile; worst-performing major metal, dubbed “the Devil’s metal” for its swings.
    • "Silver does make me a bit worried... once again proving its name, the Devil's metal." – Bense (10:09)
  • Bense’s stance: Buy metals on dips; long-term bullish.
    • "Metals are certainly a buy and dip and would never ever sell without having them." – Bense (10:09)

11. Market Summary & Notable Currency Views

• Dominant trends: Hawkish macro, rising yields, firmer dollar, fading risk appetite (10:53).
  • Yen and silver specially volatile; yen attracts intervention risk, silver sees sharp retreat.
  • Minor currencies: South African Rand attractive for carry, Norwegian and Swedish krona look appealing but vulnerable in a risk-off mood.
    • "The South African Rand doesn't look too bad, provides a nice carry. Then there are the... Norwegian Crone and Swedish Kron which also look rather appealing." – Bense (11:14)
  • GBP and EUR: Expected to remain weak.
    • "And I also see no particular reason to hold the European shilling. Unless of course you do have needs." – Bense (11:14)

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Notable Quotes & Memorable Moments

• On currency market frustration:
  "This just really reminds me of Einstein's famous quote, insanity is doing the same thing over and over again and expecting different results." – Bense (09:13)
• On market tone:
  "Nothing better than a bit of Shakespeare in the morning before breakfast." – Bense (08:42)
• On silver volatility:
  "Silver does make me a bit worried... once again proving its name, the Devil's metal." – Bense (10:09)
• Host’s playful appreciation:
  "Impressed that you managed to get Einstein and Shakespeare in there." – Bernadette (11:44)

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Important Timestamps by Segment

• 01:16 – European macro data (PMI, confidence)
• 03:39 – US data: housing, Philly Fed, PMI
• 04:16 – Equity market reactions (Europe & US)
• 04:52 – Oil market update & geopolitics
• 05:34 – Company news: Stellantis and quantum computing
• 07:00 – Asia Pacific market review (Japan inflation)
• 07:43 – Key data releases for the day ahead
• 08:32 – FX & precious metals weekly roundup
• 09:13 – Major currency pairs and intervention attempts
• 10:09 – Precious metals commentary
• 10:53 – FX and metals market summary & actionable views

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Tone and Language

The tone is concise, insightful, and laced with moments of humor and personality—particularly in the FX and metals section with Bense's unique metaphors and literary references.

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Summary Flow for Non-Listeners

This episode is a comprehensive global snapshot as markets wrestle with weak economic signals but remain remarkably stable thanks to shifting expectations on interest rates and sensitive geopolitical headlines. The hosts and guests bring expert context to European, US, and Asian market data, while offering informed perspectives on equity, commodity, currency, and metals moves—seasoned with memorable quotes and analogies for good measure. An essential listen (or read) for anyone seeking a concise yet deep pulse-check on today's interconnected financial world.

Transcript

[A]

Welcome to Julius Baer's Moving Markets podcast on Friday 22nd May with me, Bernadette and Dairko. I'm looking forward to catching up on the latest financial markets news with my colleague Luzija Czechulovic this morning. And then we'll get into our weekly look at what's been going on in the currency markets this week. I'm going to be joined by Bentzion Bolvoy from our Zurich FX and Precious Metals sales team. A quick word before we start for our regular listeners. There will be no Moving Markets podcast on Monday as Switzerland has a holiday that that day. We will be back with our regular daily shows as of Tuesday and if you miss us on Monday, then you can tune into our latest View beyond podcast which will go live tomorrow and brings you more on currencies. In this episode, my colleague Jan Bopp sits down with Julius Baer's currency strategist, David Meyer and Norbert Rooker, head of Macro and Next Generation Research. They explore the origins and evolution of the petrodollar system, the impact of the US Shale oil revolution and the practical realities of de dollarization. So really one for currency f find it on the Moving markets channel from 8 o' clock tomorrow. It's called the View Beyond From Petrodollars to a New World Order. Now though, let's catch up with the latest developments in financial markets. Good morning, Lucia.

[B]

Good morning, Bernadette.

[A]

Yesterday saw a flurry of economic data releases alongside ongoing geopolitical tensions. So why don't we start with the macro picture in Europe? We saw some concerning PMI numbers yesterday, didn't we? Perhaps you could elaborate on those for us.

[B]

Yeah. Business activity across the Eurozone is contracting at a varying pace. The composite PMI fell to 47.5 in May, signaling a definite slowdown. And this isn't just a minor dip. It's the fastest rate of contraction in roughly two and a half years. The services sector is really driving this decline, although manufacturing is offering a little bit of respite thanks to businesses building up inventories as a precaution. France is particularly weak, hitting its lowest level since 2020.

[A]

Yeah, and staying with Europe. Why don't we turn to consumer confidence? Surprisingly, we saw an uptick in Eurozone consumer confidence in May. Is that a counterpoint to the gloomy PMI data?

[B]

Well, it was somewhat surprising, yes. So consumer morale did improve, defying expectations. However, it's important to remember that confidence remains well below historical averages and pre conflict levels. It seems consumers might be cautious, optimistic, but Overall, sentiment is still subdued. Other indicators like the Economic Sentiment Indicator and Employment Expectations Indicator actually painted a bleaker picture, plummeting below their long term averages.

[A]

Okay, and staying in Europe. But moving to the uk, the story appears even more challenging with economic activity looking decidedly downbeat.

[B]

Yes, that's right. The UK saw a significant slide in economic activity in May, with the composite PMI falling to its weak, weakest level in 13 months. The services sector took a particularly heavy blow, with business activity dropping to levels not seen since January 2021. Firms are citing economic hesitancy, weaker investment and delayed consumer spending linked to the Middle east conflict. Even the relatively stable manufacturing sector is benefiting only from temporary factors like front loading orders to avoid future price hikes.

[A]

Yeah, and across the pond, the US presented a mixed bag of data. Housing data was surprisingly robust, but the Philly Fed Index disappointed.

[B]

Yeah, exactly. The housing starts and building permits exceeded expectations, indicating continued strength in that sector. Initial jobless claims were fairly steady too, suggesting a resilient labor market. However, the Philadelphia Fed Manufacturing Index plunged unexpectedly, signaling a weakening in regional manufacturing activity. But on the other hand, PMI data showed US manufacturing activity expanded in May by the most in four years as consumers strive to get ahead of mounting price pressures.

[A]

And so Lucia, how did equity markets react to all of this?

[B]

Yesterday, European equities were fairly volatile, reacting to the shifting news flow regarding the conflict in the Middle east. The Stoxx 600 eventually ended the day marginally higher, but it was choppy session. We saw some positive moves in certain sectors like satellites. The company Utelsat, for example, jumped 22%. And this was thanks to all the noise around SpaceX upcoming IPO. Meanwhile, in the US, equities finished in positive territory, recovering from earlier weakness, but closing slightly off their intraday highs.

[A]

Okay, we have to talk about oil, don't we? Prices initially spiked yesterday, but then retreated. What's the story there?

[B]

Well, Bernadette, it was a classic case of volatility. So oil prices initially surged over 3% when reports surfaced that Iran's Supreme Leader directed his country to retain its enriched uranium, complicating negotiations. However, prices quickly came back down as hopes for a diplomatic resolution resurfaced. And this morning, WTI is just below $98 a barrel and Brent around 104 when I last checked. But yeah, the oil market is still clear sensitive to any news relating the Iran conflict.

[A]

Okay, let's turn to company specific news. Stellantis announced a substantial five year strategy. What are the key takeaways there?

[B]

So the company is committing a massive 60 billion euro investment and targeting 6 billion euro in annual cost savings by 2028. A huge emphasis is placed on North America receiving around 60% of investment. They're planning over 60 new vehicle launches and streamlining through our unified platform. It's a bold plan focused on balancing growth with profitability.

[A]

Yeah, we'll have to see how that plays out. We also saw a surge in quantum computing stocks following use of US funding plans, right?

[B]

Yes. The announcement of up to $2 billion in funding being allocated to nine companies of the quantum computing sector generated excitement. IBM is expected to receive around $1 billion. And this funding shows that quantum computing is view strategically crucial with potential applications across numerous sectors. However, it's important to remember that this technology is still very early stage and it faces significant hurdles before becoming widely practical.

[A]

All right, now let's also look at what happened in Asia Pacific overnight. I see we got Japan inflation data. Perhaps you could tell us what the data showed and how markets have performed in the region overnight. Lucia?

[B]

Yeah. So in Japan, inflation came in softer than expected. Core inflation eased to around 1.4%, which is the lowest level in over four years. And that weakens the case for the bank of Japan to hike rates. In terms of markets, it was generally a positive session. Japan's Nikkei and Topics both traded higher and we saw gains across the broader region as well. Sentiment is currently being supported by hopes around the U.S. iran, diplomatic efforts. Now elsewhere, U.S. treasury yields edged slightly lower overnight while the dollar remained close to six week highs.

[A]

All right then, it's here. Finally looking to the day ahead, what data points should investors be paying attention to?

[B]

So we've already had a bit of data out of Europe this morning. In Germany, consumer confidence for June came in weak, but a touch better than expected. German GDP was also released and was pretty much in line with forecasts. And in the uk, retail sales for April disappointed and came in below expectations. Now looking ahead, Bernadette, the main release still to come is probably Germany's IDFU Business climate for May. Otherwise it's a fairly quiet calendar. And right now we are seeing US Futures trading slightly higher.

[A]

That's good news. Thank you very much for your input today, Lucia. Much appreciated.

[B]

Thanks for having me, Bernadette.

[A]

So we've heard a lot about equities and oil. It's time to get into what's been going on in the currency markets this week. Good morning, Bense.

[C]

Good morning, Bernadette.

[A]

So we have to start with the Fed and its new chair. He's got no mean feat ahead of him. To cut or not to cut or even hike.

[C]

That is the question indeed, Bernadette. I must say, nothing better than a bit of Shakespeare in the morning before breakfast. But in all fairness, Powell's official term ended just a week ago. Walsh is in the seat now. He has been thought of as the man with the axe, yet now it seems markets are pricing in not a cotton but even rather a hike. The greenback strengthened broadly this week, gaining against most G10 peers amid a hawkish repricing of rate expectations and rising treasury yields.

[A]

Okay, so aside from that, what were the key themes this week then?

[C]

I mean, if we start somewhere, it really must be the end. The Dollar Yen is back in its previous intervention zone, just dancing around the 159 level. Tokyo's actions certainly mounted to an eye watering sum and it seems was all for nothing. Finance Mr. Katayama yet again reiterated their willingness to intervene, while Treasury Secretary Basin's backing of the bank of Japan provided only brief relief. Now to be frank, this just really reminds me of Einstein's famous quote, insanity is doing the same thing over and over again and expecting different results. And I will just leave it with that. Now looking over the Euro dollar, it did come under pressure, yes, again mainly due to growth. Where is capping upside? Cable softened after the political turmoil. UK PMI Delta also made its stance on the pair. Aussie dollar also underperformed, hit by a risk of tone and weak domestic labor data.

[A]

And what about in the metals market, Benson?

[C]

Well with dollar and yields up, metals also got to bleed as well. Now don't get me wrong, I'm certainly a big fan of metals also on the music front, but gold is still up about 5% year to date and for me this 4500, 4450 has been the support and it seems to be holding and the newbies forming. On the other hand, silver does make me a bit worried. It certainly took the spotlight by being the worst performing metal, once again portraying its extreme volatility and once again proving its name, the Devil's metal. I do know that I sound like a broken record, but to me metals are certainly a buy and dip and would never ever sell without having them.

[A]

All right then. So to sum up well, a hawkish

[C]

macro backdrop led by rising yields, a firmer dollar and fading risk appetites dominated both FX and precious metals markets this week. The yen and silver stalled the show with intervention risk in yen and significant volatility in silver following its sharp retreat from January highs.

[A]

Okay, we're almost out of time, but anything else to add Bensay, if you

[C]

don't mind going off the beaten track? The South African Rand doesn't look too bad, provides a nice carry. Then there are the scandals Norwegian Crone and Swedish Kron which also look rather appealing. However, I really must highlight if risk off is really on the table, those currencies are certainly the ones to take a beating. As previously noted, the pound is weaker versus the dollar and I think it will head lower. And I also see no particular reason to hold the European shilling. Unless of course you do have needs.

[A]

Super. Thank you very much for the update today. Bense. Impressed that you managed to get Einstein and Shakespeare in there.

[C]

Thank you, Benedet.

[A]

Well, that's it for today's podcast. Thank you all for listening and of course my thanks to Luzi and Bense for joining me today and bringing us so much information. Have a great weekend everyone and we'll be back with Moving Markets on Tuesday 26th May. So join us then. Meanwhile, good luck today and goodbye for now.

[D]

The information and opinions expressed in this podcast constitute marketing material and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal information.