June 6 Financial Breakfast: US-China Leaders' Call! Gold and Bitcoin Both Plummet, Tesla Falls 14%

U.S. President Trump and Chinese President Xi Jinping had a phone call, easing market concerns over trade tensions, leading to a rebound in the U.S. dollar and Treasury yields, while gold and Bitcoin both suffered significant declines. However, the poor performance of U.S. labor market data keeps the risk of "stagflation" looming. Additionally, the public dispute between Musk and Trump has intensified, causing Tesla's stock price to plummet by 14%, putting pressure on the stock indices. All three major U.S. stock indices fell, with the Dow down 0.25%; the S&P down 0.53%; and the Nasdaq down 0.83%, ending a three-day streak of gains. The China Golden Dragon Index rose 0.54%.

In terms of popular stocks, most large tech stocks declined, with Apple down 1.08%, Nvidia down 1.36%, Google up 0.10%, Amazon up 0.33%, Meta down 0.48%, and Tesla down 14.26%. Microsoft, however, rose 0.8%, bringing its market capitalization to $3.48 trillion, ranking first among U.S. listed companies.

The 10-year U.S. Treasury yield rose by 0.78%, while the dollar index fell by 0.11%; gold dropped by 0.6%, contesting the critical level of $3,360; WTI crude oil rose by 0.81%, but still faced resistance at $64.0 for four consecutive days; the dollar/yen rose by 0.57%, and the euro/dollar rose by 0.23%; Bitcoin fell by 3%, marking three consecutive days of decline, approaching the $100,000 mark, while Ethereum plummeted over 7%.

Macro News

U.S.-China Leaders' Call! Both sides agree to further trade negotiations

After the call between the U.S. and Chinese leaders, Trump stated on social media that he spoke with Xi Jinping for about an hour and a half, focusing most of the discussion on trade, describing the dialogue as very good and yielding positive results. He continued to say that the U.S.-China economic and trade teams would meet again soon and mentioned that no further issues regarding rare earths should be raised. The two sides did not discuss the Russia-Ukraine conflict or the Iran nuclear issue.

Trump later met with visiting German Chancellor Merz at the White House, stating afterward that he accepted Xi Jinping's invitation to visit China with the First Lady in the future, while hoping that Xi Jinping could visit the U.S. with the First Lady of China. Although no clear agreement was reached between the two sides, it demonstrated to the market that U.S.-China trade talks are moving in a positive direction, and future meetings between the leaders suggest that significant progress in trade negotiations is likely.

Musk: Tariff policy will lead to economic recession, Trump should be impeached

After a rapid fallout over the tax bill, Trump and Musk engaged in a public feud, with Musk posting on social media that Trump's tariff policy would lead to a recession in the U.S. economy in the second half of this year. Trump fiercely criticized Musk, calling him "crazy," and hinted that he might terminate Musk's government contracts with Tesla. Musk promptly responded by announcing that his space exploration company SpaceX would immediately initiate the retirement process for the "Dragon" spacecraft.

Trump claimed that Musk was unhappy after he rescinded the electric vehicle consumer tax credit policy of former President Biden's administration. Musk has been vocally criticizing Trump's massive tax and spending bill as "disgusting," accusing Trump of being "so ungrateful," stating that without him, Trump might have lost the electionTesla investor Ross Gerber believes that the spat with Trump is a disaster for Musk, predicting that Musk's actions will lead to a flood of shareholder lawsuits against Tesla.

The European Central Bank is about to end its interest rate cut cycle, and progress in EU-US trade negotiations is expected to accelerate.

The European Central Bank announced a 25 basis point cut in its three key interest rates, with the main refinancing rate lowered to 2.0%. This is the eighth rate cut since June last year and is in line with market expectations. The statement noted that the current overall inflation level in the Eurozone is close to the central bank's medium-term target of 2%. While price pressures continue to ease, the weakening peripheral economic environment is putting pressure on growth prospects, and the policy stance is shifting towards a more flexible path. ECB President Christine Lagarde stated at a press conference that the monetary policy cycle is nearing its end.

Reuters cited sources saying that a key aide to European Commission President Ursula von der Leyen has joined the EU negotiating team discussing trade agreements with the US government. European political observers believe this move indicates that the pace of negotiations will accelerate.

Silver prices break through $35, hitting a 13-year high.

Strong demand for physical metals, coupled with insufficient supply, saw silver prices rise above $35 per ounce on Thursday, reaching a 13-year high. Spot silver prices briefly rose to $36.08 per ounce, the highest level since February 2012, and are currently reported at $35.82 per ounce, up 2.5%. WisdomTree commodity strategist Nitesh Shah stated that silver prices are driven by fundamental factors, as silver supply is insufficient to meet increasing industrial demand, and with gold prices hitting new highs this year, speculative buying of silver has driven its price up. StoneX's Rhona O'Connell noted that the gold-silver price ratio has currently dropped to 93 times, far below the record high of 105 times in April, reflecting that silver prices are lagging behind gold prices, which is also beneficial for silver's performance.

Federal Reserve officials: Tariffs causing price increases are concerning.

Jeff Schmid, president of the Federal Reserve Bank of Kansas City, stated that tariffs are expected to drive prices up in the coming months, but he is uncertain how long the price increases will last, which he finds concerning. Schmid's comments suggest that he will support keeping the benchmark interest rate unchanged at the Federal Reserve meeting on June 17-18. Additionally, Patrick Harker, president of the Federal Reserve Bank of Philadelphia, stated that the economic outlook in the US is unclear, and the Federal Reserve's monetary policy must remain cautious.

US trade deficit narrowed significantly to $61.6 billion in April.

According to data from the US Census Bureau, the US trade deficit narrowed significantly by 55% to $61.617 billion in April, with market expectations at $66 billion; the trade deficit for March was revised to $138.3 billion.

During this period, exports amounted to $289.4 billion, up 3% month-on-month; imports totaled $351.0 billion, down 16.3% month-on-month. In April, the US trade deficit with China was $17.19 billion, narrowing by more than 4% month-on-monthThe U.S. trade deficit in April narrowed significantly to a record extent, mainly due to the largest decline in imports in history, indicating that some companies' large-scale advance procurement of goods before tariff increases has come to a halt.

The number of initial jobless claims in the U.S. unexpectedly surged to 247,000, reaching an eight-month high.

Data released by the U.S. Department of Labor on Thursday showed that for the week ending May 31, which includes Memorial Day, initial jobless claims increased by 8,000 to 247,000, far exceeding economists' expectations of 235,000. Last week, initial jobless claims unexpectedly rose to the highest level since October of last year, further indicating that the labor market is cooling.

As a more stable indicator of trends, the four-week moving average of initial jobless claims has risen to 235,000, also reaching a new high since October of last year. Economists expect that the non-farm payroll report for May, to be released on Friday, will show a decline in new jobs following strong growth in April, but the unemployment rate may remain unchanged at 4.2%.

Market Overview

U.S. Stocks: All three major U.S. stock indices fell, with the Dow Jones down 0.25%, the S&P 500 down 0.53%, and the Nasdaq down 0.83%.

European Stocks: European stock markets were mixed, with the German DAX 30 index up 0.19%. The French CAC 40 index fell 0.18%. The UK FTSE 100 index rose 0.11%.

Bond Market: The yield on the U.S. 10-year benchmark government bond is about 4.39%, up 4 basis points from the previous trading day.

Commodities: Gold rose 0.6%, priced at $3,353.8 per ounce. WTI crude oil rose 0.81%, priced at $63.25 per barrel.

Foreign Exchange: The U.S. dollar index fell 0.11%, reported at 98.7. The USD/JPY rose 0.57%, and the EUR/USD rose 0.23%.

Cryptocurrency: Bitcoin fell 3% in 24 hours, currently priced at $101,504. Ethereum fell 7.43% in 24 hours, currently priced at $2,407.

Hong Kong Stocks: The Hang Seng Index night market futures closed at 23,822 points, up 26 points, 85 points lower than yesterday's Hang Seng Index closing of 23,906 points, with a turnover of 21,071 contracts. The night market futures for the National Index closed at 8,647 points, 38 points lower than yesterday's National Index closing.

Global Company News

Stablecoin issuer Circle's IPO shares listed on the first day, with stock price soaring over 2.3 times.

Stablecoin USDC issuer Circle (U.S. stock listing code: CRCL) had its initial public offering (IPO) shares listed for trading on the New York Stock Exchange on Thursday, with the stock price at one point soaring over 2.3 times.

Circle's stock opened at $69.5, 1.24 times higher than the IPO pricing; it later peaked at $103.75, with an increase of 2.35 times; it closed at $83.23, still up 1.68 times. Circle Internet Group, headquartered in New York, previously announced an IPO pricing of $31, far exceeding the expected range of $27 to $28 this week, and the initial range of $24 to $26 last weekBased on the opening stock price before Thursday, the company's valuation is approximately $6.8 billion. USDC is the second-largest stablecoin in the market, second only to Tether's USDT.

Trump Media Company submits Bitcoin ETF application, plans to list on the New York Stock Exchange

The publicly traded Trump Media & Technology Group (DJT) announced on Thursday local time that it has submitted an S-1 registration statement to the U.S. Securities and Exchange Commission for the issuance of the "Truth Social Bitcoin ETF," which will be listed on the New York Stock Exchange after completing the approval process. The announcement stated that the ETF will directly hold Bitcoin and issue shares to investors, aiming to reflect the price performance of Bitcoin. Yorkville America Digital will act as the fund sponsor, responsible for regulatory compliance and operational management. Although the S-1 filing does not have an approval deadline, the New York Stock Exchange has already submitted a 19b-4 filing for this ETF on Tuesday, and the U.S. SEC needs to make a final approval decision within 240 days. Therefore, conservatively estimating, the Trump family's Bitcoin ETF will be listed before early next year.

U.S. threatens to blacklist Huawei chips, reports indicate no orders from major Chinese enterprises

According to reports, Chinese tech giants have temporarily not ordered Huawei's Ascend chips, with the main buyers of Ascend chips being Chinese state-owned enterprises. Sources indicate that after testing the Ascend chips, tech giants found that the chips consume a lot of power, are prone to overheating, have assembly drawbacks, and require modifications to existing data center facilities, resulting in high time and financial investments.

Additionally, the U.S. government's threat to potentially blacklist companies using Huawei chips has also deterred these tech giants from taking risks.

Uber considers using stablecoins as a tool for cross-border transfers

Uber CEO Dara Khosrowshahi stated that the company is considering using stablecoins as a tool for international transfers. In an interview with foreign media, Khosrowshahi mentioned that as a multinational company, Uber needs to make transfers between different countries, and using stablecoins as a transfer tool is cheaper. He believes that the practical benefits of stablecoins may exceed those of virtual currencies, and the company will study related application issues.

Today's Key News Preview

Germany April seasonally adjusted industrial production month-on-month

Germany April seasonally adjusted trade balance

UK May Halifax seasonally adjusted house price index month-on-month

France April industrial production month-on-month

France April trade balance

Eurozone Q1 GDP year-on-year revision

Eurozone April retail sales month-on-month

Canada May employment numbers

U.S. May unemployment rate

U.S. May seasonally adjusted non-farm payrolls

U.S. total oil drilling rigs for the week ending June 6