Russia Sets out Punitive Terms at Peace Talks With Ukraine

Political

Commodity

Summary:

Trump has said the United States is ready to walk away from its mediation efforts unless the two sides demonstrate progress towards a deal.

Russia told Ukraine at peace talks on Monday that it would only agree to end the war if Kyiv gives up big new chunks of territory and accepts limits on the size of its army, according to a memorandum reported by Russian media.

The terms, formally presented at negotiations in Istanbul, highlighted Moscow's refusal to compromise on its longstanding war goals despite calls by U.S. President Donald Trump to end the "bloodbath" in Ukraine.

Ukraine has repeatedly rejected the Russian conditions as tantamount to surrender.

Delegations from the warring sides met for barely an hour, for only the second such round of negotiations since March 2022. They agreed to exchange more prisoners of war - focusing on the youngest and most severely wounded - and return the bodies of 12,000 dead soldiers.

Turkish President Tayyip Erdogan described it as a great meeting and said he hoped to bring together Russia's Vladimir Putin and Ukraine's Volodymyr Zelenskiy for a meeting in Turkey with Trump.

But there was no breakthrough on a proposed ceasefire that Ukraine, its European allies and Washington have all urged Russia to accept.

Moscow says it seeks a long-term settlement, not a pause in the war; Kyiv says Putin is not interested in peace. Trump has said the United States is ready to walk away from its mediation efforts unless the two sides demonstrate progress towards a deal.

Ukrainian Defence Minister Rustem Umerov, who headed Kyiv's delegation, said Kyiv - which has drawn up its own peace roadmap - would review the Russian document, on which he offered no immediate comment.

Ukraine has proposed holding more talks before the end of June, but believes only a meeting between Zelenskiy and Putin can resolve the many issues of contention, Umerov said.

Zelenskiy said Ukraine presented a list of 400 children it says have been abducted to Russia, but that the Russian delegation agreed to work on returning only 10 of them. Russia says the children were moved from war zones to protect them.

RUSSIAN DEMANDS

The Russian memorandum, which was published by the Interfax news agency, said a settlement of the war would require international recognition of Crimea - a peninsula annexed by Russia in 2014 - and four other regions of Ukraine that Moscow has claimed as its own territory. Ukraine would have to withdraw its forces from all of them.

It restated Moscow's demands that Ukraine become a neutral country - ruling out membership of NATO - and that it protect the rights of Russian speakers, make Russian an official language and enact a legal ban on glorification of Nazism. Ukraine rejects the Nazi charge as absurd and denies discriminating against Russian speakers.

Russia also formalised its terms for any ceasefire en route to a peace settlement, presenting two options that both appeared to be non-starters for Ukraine.

Option one, according to the text, was for Ukraine to start a full military withdrawal from the Luhansk, Donetsk, Zaporizhzhia and Kherson regions. Of those, Russia fully controls the first but holds only about 70% of the rest.

Option two was a package that would require Ukraine to cease military redeployments and accept a halt to foreign provision of military aid, satellite communications and intelligence. Kyiv would also have to lift martial law and hold presidential and parliamentary elections within 100 days.

Russian delegation head Vladimir Medinsky said Moscow had also suggested a "specific ceasefire of two to three days in certain sections of the front" so that the bodies of dead soldiers could be collected.

According to a proposed roadmap drawn up by Ukraine, a copy of which was seen by Reuters, Kyiv wants no restrictions on its military strength after any peace deal, no international recognition of Russian sovereignty over parts of Ukraine taken by Moscow's forces, and reparations.

UKRAINE TARGETS RUSSIAN BOMBER FLEET

The conflict has been heating up, with Russia launching its biggest drone attacks of the war and advancing on the battlefield in May at its fastest rate in six months.

On Sunday, Ukraine said it launched 117 drones in an operation codenamed "Spider's Web" to attack Russian nuclear-capable long-range bomber planes at airfields in Siberia and the far north of the country.

Satellite imagery suggested the attacks had caused substantial damage, although the two sides gave conflicting accounts of the extent of it.

Western military analysts described the strikes, thousands of miles from the front lines, as one of the most audacious Ukrainian operations of the war.

Russia's strategic bomber fleet forms part of the "triad" of forces - along with missiles launched from the ground or from submarines - that make up the country's nuclear arsenal, the biggest in the world. Faced with repeated warnings from Putin of Russia's nuclear might, the U.S. and its allies have been wary throughout the Ukraine conflict of the risk that it could spiral into World War Three.

A current U.S. administration official said Trump and the White House were not notified before the attack. A former administration official said Ukraine, for operational security reasons, regularly does not disclose to Washington its plans for such actions.

A UK government official said the British government also was not told ahead of time.

Zelenskiy said the operation, which involved drones concealed inside wooden sheds, had helped to restore partners' confidence that Ukraine is able to continue waging the war.

"Ukraine says that we are not going to surrender and are not going to give in to any ultimatums," he told an online news briefing.

"But we do not want to fight, we do not want to demonstrate our strength - we demonstrate it because the enemy does not want to stop."

Source: Reuters

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Kevin Du

Economic

U.S. manufacturing contracted for a third straight month in May and suppliers took longer to deliver inputs amid tariffs, potentially signaling looming shortages of some goods.

The Institute for Supply Management (ISM) said on Monday that its manufacturing PMI edged down to a six-month low of 48.5 last month from 48.7 in April. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.2% of the economy.The PMI, however, remains above the 42.3 level that the ISM says over time indicates an expansion of the overall economy.

Economists polled by Reuters had forecast the PMI rising to 49.3. The survey suggested manufacturing, which is heavily reliant on imported raw materials, had not benefited from the de-escalation in trade tensions between President Donald Trump's administration and China.

Economists say the on-gain, off-again manner in which the import duties are being implemented is making it difficult for businesses to plan ahead. Another layer of uncertainty was added by a U.S. trade court last week blocking most of Trump's tariffs from going into effect, ruling that the president overstepped his authority. But the tariffs were temporarily reinstated by a federal appeals court on Thursday.

The ISM survey's supplier deliveries index increased to 56.1 from 55.2 in April. A reading above 50 indicates slower deliveries. A lengthening in suppliers' delivery times is normally associated with a strong economy. But in this case slower supplier deliveries likely indicated bottlenecks in supply chains related to tariffs.

In April, the ISM noted delays in clearing goods through ports. Port operators have reported a decline in cargo volumes.

The ISM's imports measure dropped to 39.9 from 47.1 in April. Production at factories remained subdued, while new orders barely saw an improvement.

The ISM survey's forward-looking new orders sub-index inched up to 47.6 from 47.2 in April. Its measure of prices paid by manufacturers for inputs eased to a still-high 69.4 from 69.8 in April, reflecting strained supply chains.

Factories continued to shed jobs. The survey's measure of manufacturing employment nudged up to 46.8 from 46.5 in April. The ISM previously noted that companies were opting for layoffs rather than attrition to reduce headcount.

Source: Kitco

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Adam

Stocks

Economic

Hedge funds bought global equities last week at the quickest pace since November 2024, Goldman Sachs said in a note, just as stock markets ended the month with their most positive May performance in decades.

The S&P 500 advanced just over 6% in May, its biggest monthly rise since November 2023 and its best gains for the month of May since 1990. The Nasdaq rallied about 9.6%, which was also its biggest monthly gain since November 2023 and its best May performance since 1997.

Hedge funds ended the week bullish in every global region, led by North America and Europe, the Goldman Sachs report said.

Technology companies attracted the highest interest, with hedge funds accumulating the largest weekly number of net long positions in the sector in over five years. Buying centered on firms integral to the artificial intelligence industry, including semiconductor manufacturers, technology hardware producers and electrical equipment companies, the report said.

North American tech companies were favoured by hedge fund trades, followed by European counterparts, Goldman Sachs said.

The pan European stock index returned more than 5% in May. Hedge funds bought European stocks for the third straight week and at the fastest pace in three months, the Goldman note said.

Companies in Spain, France, Finland, Germany, Sweden and Denmark were the most net bought markets this week, while Ireland, the Netherlands and Switzerland were the most net sold, said the Goldman report.

European stock sectors bought by global hedge funds last week included consumer discretionary, financial, health care and communications companies, the data showed.

Hedge funds mostly bought single stocks but also made some long trades in stock indexes too, said Goldman Sachs.

A long position expects an asset price to rise.

Source: Reuters

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Adam

Cryptocurrency

Bitcoin held its ground above $104,000 on Monday despite the U.S.-China trade tension and court-driven tariff drama that rattled global markets.

Last Friday, U.S. President Donald Trump accused China of violating a mid-May agreement to pause tariff escalation and announced a hike in import tariffs on steel and aluminum, from 25% to 50%, effective June 4.

The pause gave rise to a “Trump always chickens out” meme and its acronym TACO. The president has seemed eager to prove his critics wrong.

During a campaign rally at a U.S. Steel plant in West Mifflin, Pennsylvania, Trump said the tariff hike will “even further secure the steel industry in the United States,” while touting a deal between Nippon Steel and U.S. Steel as a win for American workers.

The geopolitical whiplash triggered nearly $1 billion in crypto liquidations, according to QCP Capital’s Monday update.

BlackRock’s iShares Bitcoin Trust ETF, fresh off a record 34-day inflow streak, saw $430 million in outflows on May 30, as per Farside Investors data.

Yet BTC remained composed, signaling a reset in leverage rather than investor panic.

At the moment, Bitcoin is trading at $104,158, a slight increase of 0.1% over the past 24 hours, as per CoinGecko data.

“Risk reversals have begun to normalize… [and] perp funding has turned flat,” the QCP wrote, suggesting muted short-term price swings.

Institutional interest has not waned eithe.; Japan’s Metaplanet added another $114 million in BTC post-selloff, bringing holdings to 8,888 BTC, worth over $925 million.

QCP referenced the TACO acronym, which has become popular among Trump’s critics, but noted that Friday’s escalation indicated he may be aiming to defy that perception.

With no major policy catalysts before July 8, BTC may stay rangebound between $100K and $110K, QCP noted, citing high open interest at those levels.

Arthur Azizov, founder and investor at B2 Ventures, told Decrypt that the tariff headlines were contributing to market churn, but not a structural shift.

Azizov called the tariff “likely to trigger some market volatility, particularly in risk assets like crypto,” but added, “that doesn’t necessarily mean we’ll see a sharp immediate drop in Bitcoin or other digital currencies.”

“Over time, we've already seen multiple headlines about tariffs, their delays, reversals, and policy shifts — all of that has caused some market swings, but for long-term investors, it hasn’t made a huge difference in the big picture,” the expert said.

China Responds to Trump Claims

On Monday, the Chinese Embassy in Washington posted a statement from China’s Ministry of Commerce on X, calling Trump’s claims “groundless” and warning of “forceful measures” in response.

The ministry said China had upheld the Geneva deal, while the U.S. imposed “discriminatory” actions including AI chip bans, visa revocations, and software restrictions.

China is the world’s largest steel exporter, but sends little to the U.S. due to a 25% tariff imposed in 2018. It ranks third in aluminum supply, making the new 50% tariff a direct blow to the nation.

A federal appeals court temporarily reinstated Trump-era tariffs on May 29, pausing a trade court ruling that had blocked them as unconstitutional.

On Sunday, Trump claimed on Truth Social that if judges were to rule against his tariff powers, it “would allow other Countries to hold our Nation hostage with their anti-American Tariffs.”

Source: decrypt

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Adam

Commodity

Futures tracking the prices US manufacturers pay for aluminum and steel surged after President Donald Trump said he will double tariffs on the metals this week.

Contracts linked to the prices that manufacturers pay to get aluminum delivered to the US Midwest jumped 54% to the highest since at least 2013 on the Comex exchange in New York on Monday — offering an early glimpse of the much higher costs for American factories, with import levies set to rise to 50% from Wednesday.

Aluminum used in everything from beer cans to engine blocks and window frames was priced at a premium of 58 cents a pound, or about $1,280 a ton, in the Midwest over benchmark London contracts. That suggests US buyers could end up paying about 50% more than international competitors to get hold of the metal.

US Aluminum and Steel Prices Surge as Trump Doubles Tariffs_1

US Aluminum Premiums Surge on Trump Tariff Hike

Trump hopes the increased levies will protect margins for domestic mills and spur investment in new production capacity, and shares of US steel and aluminum makers surged in after-hours trading after the announcement on Friday. But construction companies have warned that levies on steel and aluminum — which Trump had already raised from 10% to 25% — will increase the cost of critical building materials.

Comex steel futures were up more than 8% in early trading on Monday — and while both contracts are relatively illiquid — the moves indicate that the commercial burden of the tariffs will weigh most heavily on the US aluminum market. More than 80% of the aluminum used in the US is supplied via imports, while less than 20% of the country’s steel is sourced from overseas, according to Morgan Stanley.

“We expect prices to rise — the US does not have enough domestic capacity of either,” analysts at Citigroup Inc. said in an emailed note. For aluminum in particular, the tariffs have “mostly just functioned as a tax on consumers thus far.”

Benchmark aluminum contracts on the London Metal Exchange traded 0.6% higher at $2,458 a ton as of 3:18 p.m. local time. Copper was up 1.1% in London and more than 4% higher on Comex, as analysts said the heightened levies make it more likely that Trump will follow through with plans to place tariffs on the metal.

“The market also appears to be pricing a higher likelihood of copper tariffs, with COMEX outperforming LME,” Morgan Stanley analysts led by Amy Gower said in an emailed note, noting that US buyers have been front-loading imports ahead of potential tariffs. “For now, the COMEX premium is likely to continue pulling material to the US, drawing down ex-US inventories and keeping ex-US markets tight.”

Source: Bloomberg

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Devin

Economic

When the initial tariffs were announced on April 2, it was like the plug was pulled on the US economy. Suddenly international trade with anyone seemed completely uneconomical. Stocks immediately fell off a cliff.

Over the next several days and weeks the administration put in place various exceptions and carveouts and delays, and, as of today, the US economy mostly looks and feels like it did on April 1. The economy didn’t come to a sudden stop.

But today there’s more evidence that we’re seeing the economy leak air or lose momentum. We got the new ISM, and it showed ongoing softening in the manufacturing sector. New orders came in at 47.6, which is above the 47.2 from the month before, but anything below 50 means contraction. That seems right. Things are slowing down, but not as fast as they were in April. Same with employment. The number came in at 46.8 (contraction) but above the 46.5 in April. The overall headline number came in at 48.5, which was actually worse than last month’s 48.7.

Here is the commentary from today’s report. I highlighted some of what seemed notable:

Meanwhile, we got April construction spending today and that actually showed a 0.4% decline versus an expected rise of 0.2%. And the March number was revised from -0.5% to -0.8%.

Meanwhile, as we wait for the Non-Farm Payrolls report, something to watch is that last week we saw Continuing Jobless Claims hit their highest level since late 2021, signaling, well … it’s obvious what that’s signaling.

It doesn’t look like the US economy is falling off a cliff. But the big question remains whether the Federal Reserve can or will react to softening in a timely manner in an environment where trade policy continues to be so volatile.

I said last week in our episode with Mike Cembalest that it feels like the market is hopping from big narrative to big narrative. One day (as Joe mentions above), it’s all about strict tariffs bringing the US economy to a shuddering halt. The next day it’s about bond vigilantes, or the end of American exceptionalism, or tax cuts, etc.

This isn’t really irrational behavior on the part of investors. What’s coming out of the Trump administration are big sweeping policies that have potentially big consequences. But with so much back and forth, and with so much of the final policy outcomes still up in the air, investors are basically forced to flit from thing to thing to thing.

It also takes time for policies to actually work their way through the system, which is why there’s been so much obsessing over the hard versus soft data lately. The sentiment surveys have been pretty bad (although they picked up after many of the tariffs were delayed), but the hard data has yet to really start deteriorating. So who knows how much impact all the policy drama has been having on the actual economy?

Anyway, in the spirit of narrative-of-the-moment spotting, Brent Donnelly over at Spectra Markets puts forth a new candidate: jobs.

As he points out, we’re getting not one, not two, not three, but FOUR employment data points this week (already coming hot on the heels of the continuing jobless claims last week). They are: Jolts on Tuesday, ADP on Wednesday, Initial Jobless Claims on Thursday, and Nonfarm Payrolls on Friday. These will be big entrants in the hard versus soft data debate, and could provide valuable hints about how quickly the Fed might need to respond to a weakening in the employment picture.

Speaking of weakening, the employment portion of today’s ISM rose slightly compared to last month, but is still firmly in contractionary territory. More worryingly, companies are still reporting that their preferred method of reducing headcount is through layoffs (rather than, say, hiring freezes and attrition). That’s an “indication that staff shrinking continues to be urgent,” says the ISM’s Susan Spence.

All of this is a really good reason to focus on the jobs data this week.

President Trump wants Apple to build iPhones in the United States. Apple itself has tried to extricate itself from the Chinese supply chain in various ways. But for the most part, the company remains deeply interwoven with China in a way that seems impossible to get out of. On this episode, we speak with Patrick McGee, San Francisco correspondent for the Financial Times and the author of the new book Apple in China: The Capture of the World’s Greatest Company. We talk about how the company became so enmeshed in China, and why any way out seems unfathomable today.

Source: Bloomberg Europe

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Adam

Economic

JPMorgan Chase CEO Jamie Dimon said on Monday that the rising U.S. national debt is a "big deal" that could create a "tough time" for the bond market that causes spreads to widen, he told Fox Business’ "Mornings with Maria" program.

The comments echo his earlier warnings about potential market turmoil, citing rising U.S. government spending.

"If people decide that the U.S. dollar isn't the place to be, you could see credit spreads gap out; that would be quite a problem," Dimon said. "It hurts the people raising money. That includes small businesses, that includes loans to small businesses, includes high yield debt, includes leveraged lending, includes real estate loans. That's why you should worry about volatility in the bond market."

Shifting U.S. economic policies have sent bond markets tumbling in recent weeks.

Dimon, 69, is one of the most prominent voices in corporate America and has regularly been consulted by administrations during times of crisis. His name was floated for senior economic roles in government during the 2024 presidential campaign, including Treasury Secretary, but he stayed put at the bank.

Dimon has been running the biggest U.S. lender for more than 19 years, outlasting many other CEOs.

When asked about the timeframe for his succession, Dimon said "it's several years," adding, "there will be an appropriate time and then I may stick around for a couple of years as chairman or executive chairman... I love what I do."