US sovereign downgrade and Apple/Alibaba news are among the focal points; UST yields rise, curve steepens; US equity FUTs lag; USD weakens slightly.

- USD/JPY briefly traded below ¥145.

- US collateral requirements in focus after sovereign downgrade.

- US equity FUTs extended losses in Asia.

- Modest equity declines seen in Asia.

- Nvidia CEO Huang begins keynote address at Computex trade show in Taipei; Next-generation GB300 AI system coming in Q3 2025; Opens up AI servers to chips from other companies; DGX Spark 'in full production', will be ready in a 'few weeks'.

- Australia 3-year yield rises ahead of RBA decision Tues.

- China PBOC to set loan prime rate on Tues [Reminder May 7th: China PBOC Gov Pan said: To cut Key Policy Rate, RRR, LPR, SLF rates].

- No major impact seen from China Apr ‘data dump’.

- US/Japan talks in focus.
[Reminder from May 15th]: Japan Economic Revitalization Min and Top Trade Negotiator Akazawa: To visit US next week for trade talks - Japanese press.
[Reminder from May 13th]: Japan Fin Min Kato said: To attend G7 Finance Ministers meeting in Banff, Canada from May 20th; Hopes to meet with US Treas Sec Bessent to discuss FX - financial press.

-Regional tariffs?

- BOJ to meet with banks on JGBs [May 20th].

-ASX 200 opens -0.1% at 8,335.

-New Zealand Fin Min Willis: Budget will 'get debt curve bending down'; To propose 'thin' capitalization' rule change in budget.

-New Zealand Q1 PPI Input Q/Q: +2.9% v -0.9% prior; Output: +2.1% v -0.1% prior.

-New Zealand Apr Performance of Services Index: 48.5 v 49.1 prior.

-Hang Seng opens -0.8% at 23,156.

- Shanghai Composite opens -0.1% at 3,365.

-Xiaomi [1810.HK]: Founder: Plans to invest at least CNY50.0B on chip design, to invest >CNY6.0B on chip R&D in 2025 - Press.

-China NBS official Fu: Reiterates economic recovery foundation needs to be consolidated - comments on Apr data; China should continue to give 'full play' to the role of macro policies and promote the reasonable recovery of prices.

-CHINA Y/Y: 6.1% V 5.7%E; YTD Y/Y: 6.4% V 6.4%E.

-CHINA Y/Y: 5.1% V 5.8%E; YTD Y/Y: 4.7% V 5.0%E.

-China Apr YTD (ex-rural) Y/Y: 4.0% v 4.2%e.

- China Apr Property Investment YTD Y/Y: -10.3% v -10.0%e.

- China Apr New Home Prices M/M: -0.1% v -0.1% prior; Used Home Prices M/M: -0.4% v -0.2% prior.

-China Apr Surveyed Jobless Rate: 5.1% v 5.2%e.

- China President Xi: To hear more views from the public and community - Xinhua; To gather more views in preparation for new 5-year plan.

-China PBOC sets Yuan reference rate: 7.1916 v 7.1938 prior [strongest CNY fix since Apr 3rd].

-China PBOC Open Market Operation (OMO): Injects CNY135.0B in 7-day reverse repos; Net injects CNY92.0B v injects CNY30B prior.

- China May loan growth could improve 'substantially' - Chinese press.

-Nikkei 225 opens -0.5% at 37,583.

- Japan Mar Tertiary Index M/M: -0.3% v -0.2%e.

-Japan Fin Min: Not facing problem procuring funds from the market through debt issuance; Losing market trust in Japan's finances could trigger weak yen, excessive inflation that would have severe impact on the economy; Government should secure financial buffer for crisis readiness.

- Japan Economic Revitalization Min : Schedule of the next US/Japan trade talks not set yet.

-Japan PM Ishiba: Reiterates cannot accept US tariffs including for cars, seeking 'win-win' relationship with the US through investments key; Japan trade content 'very different' from China, UK.; Time limit for trade talks will not 'dent' Japan's trade interests.; Need to get rice price brought down to 'reasonable' level.; Does not side with view Japan can cut tax and use proceeds from debt issuance.; Japan's financial situation is 'worse than '.

- Japan Chief Cabinet Sec Hayashi: US and Japan continue to engage 'constructively' on trade.

- Japan Foreign Min Takeshi: Promoting rule-based trade is in Japan's interest.

- Japan Trade Min Muto: Well aware of concerns among businesses over trade.

-BOJ Dep Gov Reiterates recent inflation is impacted by cost push factors, to raise rate if economic outlook is realized.

- Bank of Japan (BOJ) announcement related to outright bond buying operations: Leaves bond buying amounts unchanged.

-Japan sells ¥3.2T vs. ¥3.2T indicated in 12-Month Bills; Avg Yield: 0.5702% v 0.5292% prior; bid-to-cover: 3.08x v 2.78x prior.

-SMFG [8316.JP] expands alliance with Jefferies [JEF] to Asia-Pacific from the US - press.

-Kospi opens -0.5% at 2,613.

-South Korea sells 10-year pre-issuance bond: Avg Yield: 2.665%.

-South Korea sells 10-year bonds: Avg Yield: 2.695%.

-South Korea Conservative Presidential candidate Kim Moon-Soo: ‘Open’ to increasing contribution to US troops’ cost.

- Foxconn [2317.TW]: Builds AI Factory in Partnership With Taiwan and NVIDIA [time frame uncertain].

- plays rise in Asia [May 17th: US FDA issued long-awaited approval of NVAX CV19, Novavax’s COVID-19 vaccine, for use only in adults 65 and older, or those 12 to 64 who have at least one health problem that puts them at increased risk from COVID-19; Centers for Disease Control and Prevention were set to debate if yearly COVID vaccines still should be recommended for everyone or only certain people at higher risk; May 16th: EMA announced Emergency Task Force (ETF) recommends updating COVID-19 vaccines to target new LP.8.1 variant ].

-Thailand Q1 GDP Q/Q: 0.7% v 0.5%e; Y/Y: 3.1% v 2.9%e.

-Thailand Q1 Unemployment Rate: 0.9% v 0.9% prior.

-Thailand completes ~$2.0B bond switch - Press.

-Taiwan said to consider commodity tax on passenger cars amid trade talks with the US - Local press.

-(US) CUT US RATING TO Aa1 FROM Aaa; RAISES OUTLOOK TO STABLE FROM NEGATIVE [the US is now rated below AAA at all of the 3 major ratings agencies] [May 16th].

-(US) 10-year Treasury yield rises above 4.50%, +2.4bps; US 5-year CDS at 53.5bps, flat vs Fri; 2-year Treasury yield at 3.993%, -2bps; 30-year Treasury yield: 4.988%, +3.5bps.

- (US) Equity FUTs open lower: Nasdaq FUTs -0.8%, S&P 500 FUTs -0.7%.

- US said to consider for ‘many’ nations as opposed to individual duty rates; cites earlier comments from US Treasury Sec Bessent - Press.

-US Treasury Sec Bessent: Moody’s is a lagging indicator [commented on credit rating downgrade]; Notes Trump said if you do not want to negotiate then it will spring back to the Apr 2nd level – NBC interview.

- Pres Trump: To set tariff rates for US trading partners “over the next two to three weeks"; Lack capacity to negotiate deals with all of its trading partners ; Bessent and Lutnick will be sending letters to countries to say what they have to pay to do business in US [May 16th].

-(US) House Panel said to approve Trump tax cut bill, setting up a possible vote on passage this week - Press.

-Apple [AAPL]: US govt officials have raised concerns about Apple deal to make AI available on iPhones in China - press.

-Nvidia [NVDA]: Announces DGX Spark and DGX Station Personal AI Computers powered by NVIDIA Grace Blackwell, Desktop Supercomputers Place Accelerated AI in the Hands of Developers, Researchers and DataScientists; Systems Coming From Leading Computer Makers Including ASUS, Dell Technologies, HP and Lenovo.

-Nvidia: Unveils NVLink Fusion for Industry to Build Semi-Custom AI Infrastructure With NVIDIA PartnerEcosystem.

- Nvidia: Plans to ship new AI chip to China next quarter - Nikkei.

- BGC: FMX Futures Exchange (“the Exchange”) has launched U.S. Treasury futures contracts.

- (US) Mexico Navy ship [Cuauhtemoc] crashed into Brooklyn Bridge on Saturday evening [May 17th]; the ship was sailing on 'Good Will Tour'; At least 22 people were injured, half of them 'critically'.; The ship is said to have lost power before the crash; US officials are investigating the crash; The bridge is said to have not been damaged.

- Portugal PM wins election (as expected), to take at least 89 seats out of 230; 4 seats are still not decided.

- (RO) Romania centrist candidate Nicusor Dan won round 2 of the presidential election – Press.

- (UK) May Rightmove House Prices M/M: 0.6% v 1.4% prior: Y/Y: 1.2% v 1.3% prior.