Eli Lilly & Company operates in the healthcare sector, focusing on human pharmaceuticals globally. Its stock, labelled “LLY”, is traded on the NYSE and is exhibiting a bullish trend from its all-time low.

The company anticipates a rally following a double correction, which recently concluded with a low of $677.09 in April 2025. This upward movement is expected to progress within wave (V) towards $1155, as the price sustains above certain support levels from April 2025.

The resistance point is confirmed if the price surpasses $972.53, signifying potential continuation to higher levels. Short-term analysis indicates a rebound, remaining supportive as long as the price stays above the April 2025 low.

Statistics from other markets show that the EUR/USD pair is currently capped by resistance at the 1.1350 region, dealing with pressure from a weakening US Dollar. Meanwhile, GBP/USD briefly revisits the 1.3400 region due to the Greenback’s downward momentum.

Gold is maintaining strength, nearing $3,400 per ounce, driven by geopolitical risks. The Federal Reserve is expected to keep interest rates steady, despite pressure from President Donald Trump to reduce them. Several central bank meetings are scheduled, which may influence financial trends. Trading foreign exchange involves high risks, especially with leveraged positions.

What we see outlined is a clear directional move in Eli Lilly’s chart structure, marked by a wave progression following a corrective phase. The market recently found footing at $677.09, forming a reliable base from which the next wave, labelled (V), may extend. This context suggests accumulation is ongoing, suggesting price discovery is well underway towards the estimated high near $1155. With price holding firm above this April low, the trend remains upward unless breached with conviction.

The broker-confirmed resistance at $972.53 serves as a confirmation level; a break above that could imply renewed buying pressure, likely triggering fresh order flows that would adjust open interest dynamics in the options market. Positioning above this point permits higher implied volatility costs, which we’d have to factor in when structuring spreads or synthetic exposures.

Meanwhile, across asset correlations, the foreign exchange market continues to reinforce the theme of dollar weakness. The EUR/USD stalling beneath 1.1350 shows a ceiling for now, but downside is likely capped unless liquidity thins out or macro forces prompt a breakout. Interestingly, pound-dollar action near 1.3400 reflects similar USD softness, although the pullbacks seem less reactive to local data, and more driven by US-centric narratives.

Gold’s persistence near $3,400 supports the idea of safe-haven demand. Geopolitical instability and policy uncertainty play a larger role here, compounded by expectations that the Federal Reserve will not alter interest rates in the face of external pressures. While Trump insists on rate cuts, the Fed’s independence remains intact, at least for now. The potential knock-on effects into margin markets and hedged equity positions should not be ignored, particularly if this triggers demand for alternative assets.

Looking at monetary policy developments ahead, with several central banks lining up decision statements, liquidity layers across global assets may shift. This will naturally affect the implied volatility environment, especially on leveraged derivative structures. Whether this causes tightening or dispersion in option skews, the reaction will tell us how sentiment is adjusting.

From our view, the broader picture requires rebalancing positions to account for upward equity movement and weakening dollar signals. For now, the strength in Lilly’s stock aligns with a broader pro-risk stance in equities, and calls for recalibration of both directional trades and hedged pair exposures. Staying disciplined with risk parameters matters more than ever now, and we should be watching premium build-up and open interest concentration as we lean into the next trading cycle.

Taiwan’s central bank announced plans to inspect FX custodian banks following a sudden surge in the local currency. This move aims to restore market stability, with expectations of the Taiwanese dollar appreciating now largely diminished.

The USD/TWD rate stabilised after recent volatility, aided by central bank interventions and monitoring. Such actions often aim to manage market perception and maintain order. During the 2016 US election, similar chaos occurred, with significant local currency depreciation over a few days.

Bank Interventions and Market Impact

In response, the central bank restricted trades and advised banks on pricing, leading to market inactivity for hours. Banks were instructed to maintain previous day prices despite offshore market disparities, with the central bank settling end-of-day positions.

Foreign funds entering the country were subject to forced conversions into the local currency, which continued for years. Client contracts were affected, resulting in financial losses due to these enforced policies designed to control the market narrative.

Despite attempts to stabilise the situation, the long-term impact on the local currency was considerable. The currency faced potential exclusion from the MSCI basket, a challenge later circumvented by extending trading hours. Such measures left lasting effects on perceptions of the currency’s value.

Intervention Patterns and Trading Dynamics

In light of the recent measures undertaken by the central bank, we find ourselves revisiting a familiar pattern—one where direct interventions attempt to temper volatility through a combination of regulatory inspections and price guidance. The decision to examine FX custodians signals a renewed attempt to regain footing after the sharp upward swing in the local currency unsettled trading desks. While the outcome has led to some degree of stability for the USD/TWD pair, it’s clear this normalisation comes not from market forces alone, but from decisive policy efforts designed to anchor sentiment.

Back in 2016, similar tactics were deployed when rapid depreciation tested institutional limits. In that instance, everything from trade suspensions to pricing freezes were implemented to alleviate pressure and reassert order. Banks were not acting purely on market logic; instead, they were complying with instructions that overrode conventional price discovery. In practice, this meant holding prices unchanged despite clear cues from offshore markets, choking liquidity during key trading hours.

The introduction of compulsory conversions for incoming foreign investment further tilted the FX equation. Those buying into the country were forced into local currency holdings, often without the flexibility typically afforded in open systems. For those running hedged portfolios or relying on predictable contract execution, these shifts altered exposure mechanics and introduced unwelcome basis risks. Over time, such compulsory settlement rules reshaped how confidence and value were assigned, both locally and abroad.

Without explicitly altering policy frameworks, the central bank’s approach nonetheless created fixed boundaries around acceptable trading outcomes. This reset plumbing in the forward and swap space, where residual pricing imbalances quietly hinted at underlying constraints. That disruption was amplified for market makers, particularly in light of the currency almost being removed from a major index. The fix? Merely shifting trading hours to appear in line with global requirements, not necessarily creating transparency or depth.

So where does that leave traders today? Past patterns suggest that intervention-heavy periods result in temporary calm, but often at the cost of true market elasticity. When execution becomes subject not to bids and offers but to informal guidance, arbitrage and algo models must adjust or be paused outright. Implied vols, especially those tied to short tenor structures, are likely to misalign with actual realised price action. Traders should prepare for flares of inactivity, followed by forced price swings around central reference points.

What matters now isn’t direction but range integrity—and whether liquidity providers will continue to quote aggressively when policy overlays remain in place but unspoken. From our desks, hedging flows must factor in the possibility of non-economic settlement conditions. That includes the potential for back-end curve flattening if forward points settle through administered criteria. There are clear precedents for this.

Spreads between onshore and offshore contracts are being monitored more closely, perhaps not overtly, but in a way that curbs excessive divergence. To manage risk effectively, we assess both the stated and unstated — including whether current silence from regulators signals satisfaction or the prelude to another round of recalibration.

Traders should centre attention on positioning data embedded in central bank settlements, inferred changes in order flow, and how deeply market directional bets have retreated. Balance sheets, especially for those on the sell-side, are likely to be more defensive until clarity materialises. If past cycles are instructive, they will hold tight ranges and wait for the next shift—and that may not come from the market itself.

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The AUD/USD pair has dropped to near 0.6450, falling from a high of 0.6500 due to decreased business activity in China impacting the Australian Dollar. Recent data showed moderate growth in Caixin Manufacturing and Services PMI in April, affected by US tariffs.

China faces increased import duties from the US, with a 145% duty on exports confining Chinese trading partners. This situation has significantly affected the Australian Dollar, which depends heavily on exports to China.

Reserve Bank Australia Rate Expectations

There is anticipation that the Reserve Bank of Australia may reduce its Official Cash Rate in the upcoming policy meeting, adding pressure on the AUD. Meanwhile, the US Dollar has regained ground, recovering to near 99.75 from 99.50, as attention turns to the Federal Reserve’s upcoming monetary policy announcement.

Monetary policy impacts the US Dollar significantly, with the Federal Reserve’s decisions on interest rates shaping its value. Quantitative easing and tightening are key methods used by the Fed to influence the currency. Quantitative easing generally results in a weaker US Dollar, while quantitative tightening usually has the reverse effect. These measures are typically employed in response to economic conditions, like the 2008 financial crisis.

Given the fresh drop in the AUD/USD pair to around 0.6450, the role of Chinese economic output remains decisive. With factory activity and services growth slowing, as seen in the Caixin PMI readings, we’ve seen the consequences appear swiftly in commodity-sensitive currencies. Such a development shouldn’t come as a surprise, especially when trade tensions are flaring. The 145% import duty hike imposed by Washington doesn’t simply stay within theoretical policy discussions—it filters through export-dependent economies almost instantly.

There’s a chain reaction here. Export strain lowers Australia’s growth prospects. This heightens the chance that Lowe and the RBA may shift towards a rate cut sooner than previously parsed from minutes. Investors have already dialled in some of this with downward pressure on yields, and we’re seeing portions of the curve flatten accordingly. Consequently, the Aussie is already pricing in softer forward guidance. This has implications for positioning—we should be wary of overstaying on the long side, especially if short-term macro releases from China remain underwhelming.

Impacts On US Dollar Resilience

Meanwhile, the greenback is showing resilience. The move from 99.50 to just shy of 99.75 is not monumental in isolation, but context matters. This nudge aligns with incoming expectations for Powell’s language around US monetary settings. If the Fed reaffirms patience but stays non-committal, market volatility could pick up. We might then be in an environment where the dollar trades more on relative weakness elsewhere rather than exceptional strength. That matters for balance sheets holding mixed exposures.

There’s an element of policy divergence reappearing in FX pricing. With the Fed pausing hikes amid slowing core inflation, but with potential quantitative tightening still on the table, we must monitor how strongly money markets respond. Should QT be emphasised or even expanded if the Treasury maintains a higher issuance pace, that may buoy the greenback further. In contrast, any signal from Martin Place suggesting sensitivity to labour market softening could pull AUD/USD below 0.6400 rather quickly.

What’s useful now is to consider options premiums. Implied volatility is beginning to adjust in response to central bank signals. If you’re navigating shorter-dated derivatives, take note of the skew—traders are beginning to lean into downside protection on the Aussie, which mirrors both rate expectations and external demand weakness. We don’t need to guess intentions; the pricing already tells us how sentiment tilts.

Technical indicators are worth respecting in this zone. The AUD/USD pair flirting with support at 0.6450 isn’t just a psychological number. Breaks at these levels in past sessions have often opened doors to sharper intraday moves, particularly when paired with lean liquidity hours in Asian trading. For us, the alignment between fundamental deterioration and technical fragility strengthens the case for cautious carry trades and closer stop placements.

Looking ahead, scrutinise yield differentials. US-Australian spreads are gradually inching wider, and that typically glides in favour of the USD. But it’s never about the headline alone—watch how credit risk premiums adjust alongside it. If risk appetite falters again on broader macro worries, safe-haven flows could offer the dollar an extra lift, even if Treasury yields stall.

Traders on either side of the pair should not ignore demand signals in base metals and energy. These wrap neatly into the wider AUD narrative. Steeper declines in copper and iron ore could accelerate the currency’s weakness. And for those hedging, that’s added incentive to extend volatility protection if exposures aren’t already delta-adjusted.

Ultimately, we track how expectations shift—not just absolute changes in policy. Traders might find that the softer movements around 0.6450 become more than just a technical floor. They’re an area that reflects the compressed weight of policy uncertainty, US-China tensions, and economic fragility. We’re now entering a stretch where any hint of a policy surprise, on either side, could become amplified in price action far faster than usual.

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April witnessed a lower-than-expected Swiss inflation rate, suggesting a potential June rate cut by the SNB. Markets are considering a return to negative interest rates due to the strong franc and global uncertainties affecting growth and price stability.

Despite Swiss inflation’s lower figures for April, EUR/CHF declined. Headline inflation was 0.0% y/y against a consensus of 0.2%, significantly under the SNB’s Q2 expectation of 0.3% y/y. Core inflation also fell from 0.9% to 0.6% y/y. This drop is attributed to declining energy prices and the strengthening CHF, which decreases imported inflation.

Price Pressures In Switzerland

Price pressures in Switzerland remain subdued, while trade war uncertainties and the strong CHF weigh on the manufacturing sector. Markets have priced over 30bp in cuts for the upcoming SNB meeting, with 45bp projected by 2025, indicating a potential return to a negative interest rate policy.

There is speculation about a policy rate cut to 0% in June. However, the recent data increases the risk of NIRP returning. The SNB might consider foreign exchange interventions before delving into negative rates.

This drop in Swiss inflation, both at the headline and core levels, highlights how the domestic economy remains under little pressure to raise prices, particularly when external factors—such as dropping energy prices—continue to play a deflationary role. With a year-on-year figure of zero for April, far below the central bank’s second-quarter projection, the space for loosening monetary policy is widening.

The Swiss franc has continued to strengthen, broadening the gap between Swiss and European inflation dynamics. That appreciation puts additional pressure on Swiss exporters, and by extension, the entire manufacturing base, which remains sensitive to currency volatility. It’s clear that as the franc rises, imported goods become cheaper, dragging inflation even lower. That puts the policy bias firmly toward easing, especially in light of the global industrial slowdown and persistent geopolitical tensions, which both compound downside risks to growth.

Risk Management And Market Positioning

We see the forward market already adjusting. With more than 30 basis points in cuts priced into the monetary futures curve ahead of the Swiss National Bank’s June meeting, participants appear to be erring on the side of caution. The projection of 45 basis points trimmed by mid-2025 reflects not just domestic weakness, but also pessimism about global recovery momentum.

In the face of these developments, the SNB may explore pre-emptive steps before reaching again for negative rates. Forex interventions stand out as a possible tool. It’s not the first time the bank has defended its currency position this way, and with the current appreciation cycles, the likelihood looks high. A stronger franc, while beneficial for inflation control, creates hurdles for the export-led sectors, and the central bank often responds when that balance shifts too far.

For those involved in rate-sensitive instruments, particularly in the Swiss derivatives space, it pays to monitor both headline inflation updates and the language surrounding SNB communications. It would be prudent to stress test rate exposure under deeper negative rate assumptions, especially in the front end of the curve. Given how the April data deviated from the central bank’s already-muted expectations, the risk scenario no longer feels stretched.

Jordan’s team has historically acted decisively when inflation undershoots the target range. The moves in the FX market suggest investors are interpreting the data in just that way: as a green light for early easing. The way that EUR/CHF continued to weaken, even after a soft inflation print, reflects ongoing strength in the franc that hasn’t been softened by dovish expectations alone. That tells us there are deeper structural forces anchoring expectations of CHF firmness.

In positioning terms, we shouldn’t underestimate the messaging. If the SNB signals discomfort about currency strength, or says little in the face of data softening, futures volatility could rise quickly. Option skews in rates may already be beginning to price in tail risks. Thus, incorporating premium protection or volatility-targeting strategies in the SNB horizon may offer better convexity.

Lastly, positioning along the front end will depend largely on whether markets perceive the SNB as leaning more on FX tools or policy rates. The former may delay rate cuts, but not avert them. Either path points to a flatter curve, and so the recent repricing dynamics favour carry-neutral positioning that benefits from downward moves rather than maturity extension.

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The UK services sector experienced a downturn in April 2025, with the Final Services PMI at 49.0, down from 52.5 in the prior month. This is the first contraction in one-and-a-half years, as new work orders declined and export sales saw the fastest fall since February 2021.

Expectations for business activity have hit a two-and-a-half year low, with global financial market turbulence, such as US tariff announcements, affecting order books. Input prices rose due to increased National Living Wage rates and National Insurance contributions, marking the steepest rise since summer 2023.

final composite pmi figures

The Final Composite PMI also declined to 48.5 from 51.5 previously, indicating weaker conditions across the services and manufacturing sectors combined. Business expectations for the year are low, with 22% of firms predicting a decline in activity in the next 12 months, a rise from 14% in March. This outlook reflects concerns about prolonged global economic challenges and heightened risk of recession.

The recent contraction in the UK services sector marks a meaningful shift in sentiment, particularly as we witness a drop below the 50.0 line on the PMI scale—a threshold that separates expansion from decline. The April Services PMI sitting at 49.0 follows over a year of minor gains, suggesting that forward indicators no longer support a steady recovery. New work falling away is more than a short-term flicker. Export orders deteriorating at the fastest pace in over four years signals something deeper than seasonal variation or transient shocks.

From our point of view, the reduction in export demand has likely been intensified by instability outside Britain’s borders. The exposure to external disruptions—most evidently the tariff changes in North America—has filtered through into sentiment on both sides of the supply chain. Forward momentum has been eroded as firms struggle to predict how global trade terms will unfold heading into summer.

Cost pressures present another obstacle that can’t be ignored. Rising wages under the updated National Living Wage legislation, combined with higher employer contributions to National Insurance, are squeezing margins. These aren’t isolated or one-off adjustments; businesses must now earn more to stand still, and many of them won’t.

broad decline with shared softening

The broader Composite PMI, which incorporates both services firms and manufacturers, fell to 48.5. This mirrors a shared softening that isn’t confined to one part of the economy. The decline in this consolidated reading removes hope that industry strength might balance out the softness in consumer-facing activities. Instead, it reinforces that the contraction is not localized, but widespread.

Looking at expectations, a rising number of firms are now bracing for falling output over the year ahead—up nearly ten percentage points from the previous month. That’s an indicator we place weight on, as it implies decisions around hiring, investment and inventory are likely to recalibrate accordingly. In our experience, this aligns with a more defensive stance across operations, meaning fewer risks will be taken for growth.

So, if you operate in areas where directionality matters—such as those informed by momentum indicators or short-dated rate path expectations—this change in tone deserves attention. An uptick in volatility driven by uncertainty usually opens more frequent pricing gaps. Markets tend to reprice when forecasts shift materially. Strategic positioning might gain from applying more weight to forward-guided sectors outside discretionary services. Short-term direction in interest rate futures could point towards softening policy outlooks. But we’d watch closely to see whether central messaging catches up with this data—or continues to lean on previous assumptions.

And although some focus may cling to seasonal distortions or scheduled policy announcements, we prefer to anchor on trend data. This downward move is not a blip against a strong backdrop. It suggests there is less confidence just beneath the surface, and that market participants are now recalculating risk exposures based on more limited upside. Any models that rely heavily on optimism over real income growth may require re-tuning.

Sharp policy divergence could complicate things further. We’ve seen before how sudden headlines alter flows and crowd conditions, so being ahead—or at least not caught behind—would matter here. Instruments linked to relative growth or implied rate spreads are likely to react before slower markets reprice. In that regard, it isn’t helpful to discount pessimism as a passing phase when business leaders are already adjusting staffing, spending and production plans in line with what they see just ahead.

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Lower oil prices are leading to a reduction in drilling activity in the US. The Dallas Federal Reserve Energy Survey indicates that oil producers need an average price of $65 per barrel to profitably drill new wells, while West Texas Intermediate is trading in the mid-$50s.

The US oil rig count has declined to 479 from a peak of 489 in April. Well completions and frac spread counts are also decreasing. Even if drilling continues, production is not assured as producers may delay completing wells due to the low-price environment, increasing the inventory of drilled but uncompleted wells (DUCs).

Impact On Natural Gas Supply

A decline in US oil activity impacts natural gas supply, as much of it is associated with oil production. This could pose a challenge, particularly with the expected rise in US LNG export capacity and stronger gas demand.

Lower oil prices have begun to impact drilling activity across the US. Based on the Dallas Fed’s latest figures, most producers require around $65 per barrel to make new wells financially feasible. With West Texas crude currently pricing in the mid-$50 range, firms are left operating below breakeven. This disconnect between market prices and drilling economics has now translated into fewer rigs running—standing at 479, which is down from the 489 rigs logged back in April.

The slowdown doesn’t just stop at rig counts. The number of well completions is tapering off, and fracture spread data suggests a similar slowdown on the service side. Even where wells continue to be drilled, companies appear more reluctant to finish them immediately. Delaying completions—the final steps needed to push a well into production—adds to the inventory of DUCs (drilled but uncompleted wells), effectively deferring output into a later time horizon. From our perspective, the shift here is less about halting activity, and more about shifting timing in response to thin margins.

There’s an added layer here. A reduction in oil drilling doesn’t just restrict crude output. Because a substantial portion of natural gas in the US is co-produced during oil extraction (what’s known as associated gas), this pullback has implications for natural gas supply. That connection becomes even more relevant when considered alongside rising demand expectations—particularly from the liquefied natural gas export segment, which is slated to expand. Project timelines for new LNG facilities suggest a ramp in gas consumption by the latter half of next year, which means any constraints in associated gas output may tighten the market before then.

Changing Natural Gas Market Dynamics

What’s more, this dynamic shifts the calculus for natural gas exposure. If associated gas volumes decline and demand climbs as expected, spot and prompt month contracts could begin to reflect tighter fundamentals, especially through winter strip pricing. From where we stand, this isn’t just a transient adjustment—it’s a change in the supply curve that merits close attention over the next several weeks.

On the options side, skew may begin to reflect increasing interest in upside gas exposure, particularly in calendar spreads and risk reversals that are positioned to benefit from tightening supply into seasonal demand peaks. Those with open interest in the front months may want to examine price sensitivity in blocks correlating with updated LNG commissioning schedules.

Given that drilling economics are unlikely to improve quickly under current price levels, the likelihood of a swift rebound in rig activity seems low. That provides a more stable underlying environment for directional trades, at least in the near term. If well completion slowdowns continue, gas markets may start to respond earlier than consensus currently suggests. As always, pricing disconnects tend to correct themselves more sharply when traders are caught off guard.

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The New Zealand Dollar (NZD) is likely trading between 0.5930 and 0.5980 against the US Dollar (USD). In a longer-term perspective, the NZD is anticipated to fluctuate within the range of 0.5890 to 0.6005.

The resistance level at 0.6000 was not breached during the recent advance. Given current momentum, the NZD is expected to remain within the 0.5930 to 0.5980 range for now.

Short Term Outlook

In the 1-3 weeks outlook, NZD is seen as part of a consolidation phase. If it does not drop below 0.5890, it might retest last month’s high, near 0.6030.

The information provided includes forward-looking statements with associated risks and uncertainties. It should not be construed as a recommendation to buy or sell the assets mentioned. Conduct thorough research before making any financial decisions. Investing carries significant risks, including possible loss of the principal amount.

What we’ve seen recently in NZD/USD price action is a period of low volatility, with price respecting a tight band between 0.5930 and 0.5980. The upper resistance level at 0.6000 held firm during the last push higher, suggesting that upward momentum hasn’t been strong enough — yet — to trigger a breakout. On the daily charts, attempts to gather pace above 0.5980 have been consistently met with selling pressure, which tells us that traders are holding back from aggressive long positions until cues are clearer.

We can interpret this as a market in pause mode, where buyers aren’t particularly enthused, but sellers haven’t gained enough confidence to break it down either. Essentially, pressure is building, but the direction remains undecided in the short term.

However, over the next week or so, unless the pair dips clearly below 0.5890, that consolidation structure is still holding up. That’s likely why last month’s high around 0.6030 remains a valid potential point of focus. So long as that lower threshold is maintained, we could easily see a renewed attempt toward testing those upper marks.

Market Sentiment and Analysis

From a derivatives angle, keeping option strategies balanced might be warranted — straddles or strangles could benefit if a movement out of the current compression begins. On the other hand, directional bets would need tight stops given the whippy, range-bound nature of recent trading.

We recognise that the market is watching for broader macro signals, especially from offshore economic releases and central bank commentary. Those clues could wear heavily on the NZD, especially in thin sessions. That risk heightens the need to monitor how global rates or commodity sentiment — often influential for antipodean currencies — shift in the days ahead.

There’s also a psychological level forming near that 0.6000 area. Having failed to hold above, it may deter new longs from entering with confidence. It will take a clear and sustained breakout to make that zone support, rather than resistance.

From where we stand, most of the activity appears to be short-term positioning and rotation. No broader theme has taken over just yet. Until we see a decisive move on either side of 0.5890 or 0.6005, it’s difficult to justify aggressive exposure without hedging.

That said, we’re keeping a close eye on implied volatility moving forward. It has compressed noticeably, and when that happens following a tight trading range, we often get an expansion phase right around the corner. Whether that expansion fuels a bullish or bearish leg is unclear at present, so positioning selectively becomes essential.

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The chairman of the Swiss National Bank (SNB), Martin Schlegel, stated that the possibility of reintroducing negative interest rates has not been dismissed. He acknowledged that negative rates are generally unpopular, but emphasised that the SNB is ready to implement them if needed.

Schlegel also mentioned expectations for a decrease in Swiss inflation. The implication of these remarks suggests a potential move towards negative interest rates by the SNB.

The Central Bank’s Strategy

Schlegel’s remarks, while measured, offer a clear signal about how the SNB may respond if inflation does not settle near its target in the near term. From our perspective, the phrase “ready to implement” goes beyond posturing—it lays a technical and psychological foundation for investors to begin modelling future rate scenarios that include negative territory. We would note that such forward guidance, though carefully worded, tends to have a tangible effect on forward rate pricing and optionality skew.

What this tells us, in simple terms, is that the central bank is not looking to surprise the market with abrupt decisions, but would prefer tightening or easing to occur via expectations. That said, there’s a strong argument that Swiss policymakers are signalling flexibility in order to retain control over the franc, especially should global disinflationary trends strengthen. While inflation in Switzerland has remained relatively subdued compared with European peers, the readiness to act pre-emptively shows a bias towards stability over higher core returns.

Given this positioning, we are likely to see increased pricing of optionality around the zero lower bound in Swiss rate derivatives. Euro-Franc cross-currency basis spreads may begin to reflect a mild premium for downside protection. That sort of movement—if observed in the coming sessions—could be interpreted as dealers trying to reduce exposure to a steeper front-end cut curve.

We should point out that talk of pushing rates below zero again, even nominally, will not sit well with all investors. However, what matters more right now is not whether the policy is well-liked, but that it is part of the SNB’s viable toolkit. With that in mind, short-dated vols in CHF-linked contracts warrant a closer look, as they are priced quite benignly at present which may not fully reflect tail risks introduced by Schlegel’s comments.

Potential Market Impact

In practical terms, those managing CHF interest rate structures may need to reassess existing flatteners. There’s a non-negligible combination of event risk linked to both the SNB’s upcoming meetings and external rate paths, particularly from the ECB. It’s also worth noting that when central bankers float policy shifts in interviews or panel discussions rather than official minutes, it’s often a soft form of forward guidance. That means it should be weighted accordingly in our models.

Positioning shifts may occur quietly at first. We’ve already seen similar prior episodes when forward guidance alone triggered repricing without any actual change in policy. As rate curves adjust, and as long as inflation expectations remain anchored, the return of negative policy rates—even if only modestly discussed—should push attention to hedging against downward yield surprises.

We’d be remiss not to evaluate whether carry trades involving Swiss instruments are still offering favourable asymmetry. With Schlegel describing negative rates as still “on the table,” a number of FX-linked expressions may begin to tilt towards defensive positioning. Watch two-year OIS differentials in particular.

All of this, taken together, suggests that an active reassessment of low-rate sensitivity may be prudent. Not because we expect an immediate decision, but because the cost of protection now versus potential repricing later creates a fairly explainable incentive to start buying optionality early. Even subtle changes in tone from officials have a tendency to cascade through the rate space in a slow but relentless way.

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OPEC+ is set to implement another aggressive supply increase. Effective from June, this move marks a shift in their policy. Recent decisions suggest further supply increases may be likely in the upcoming months. This change has prompted a revision of oil forecasts, predicting a reduction in prices.

Saudi Arabia is leading the charge for larger supply increases, aiming at members producing above their targets. OPEC+ surprised the market in April with an unexpected increase of 411k barrels per day for May. Recently, they announced a similarly bold increase for June. Originally, OPEC+ aimed to bring back 2.2 million barrels per day over an 18-month timeline.

Supply Dynamics Affected By Tariff Risks

Demand uncertainties persist due to tariff risks, adding to supply-side unpredictability. The group will determine future output levels on a monthly basis. Saudi Arabia’s tolerance for low prices over time is a key factor. With current prices below their fiscal breakeven of US$90 per barrel, Saudi Arabia might need to adjust their budget or seek debt solutions. The increasing gap between their fiscal needs and market prices suggests potential spending cuts or debt market engagement.

What this means is that the wider group of oil-exporting nations, together with key Gulf producers, is no longer holding back supply in the way we became used to. More oil is coming to the market, and it’s happening faster than previously communicated. The original plan was to add 2.2 million barrels per day in stages over a year and a half—but decisions taken in April and recently in May have brought that forward. In plain terms, there’s more oil sloshing around than people were expecting even a few weeks ago.

The market felt the impact of that surprise. We noticed downward pressure on crude prices almost immediately after the early signals of stronger-than-expected output. A fresh bout of supply from key exporters into a market still navigating weak demand data left little room for pricing strength. Brent futures drifted lower, and implied volatility in options markets has picked up. The forward curve flattened. In short, the floor under prices got a bit weaker.

It’s not just the volume of new barrels that matters—it’s the pace and timing of these decisions. The monthly nature of these updates keeps uncertainty alive, especially for short-duration contracts and those positioned in the front end of the curve. For traders watching implied vol levels or looking for hedging signals, this kind of pacing creates sharp micro-adjustments in expectations. With each monthly review, the potential for another change in supply sits in the background, influencing risk pricing.

Impact Of Tariff Risks On Demand Side

Tariff risks on the demand side are also noticeable. Unclear trade terms, especially between major economies like the US and China, are making end-user demand in certain sectors look shakier. That’s feeding into a murky demand outlook, which, when combined with more barrels—and from members previously not compliant with production limits—leans bearish. It’s not about fear, but recalibration. Price forecasts have already responded and implied options skew has shifted slightly more neutral after spiking in late Q1.

Looking at Saudi Arabia more deeply, the endurance of lower prices is something we’re watching closely. With prices anywhere near current levels, they are flirting with a fiscal shortfall. Their state budget assumes oil at around US$90 a barrel, and anything shy of that implies a widening deficit. This becomes even more relevant if they remain committed to holding production high. That balance—supporting broader OPEC+ output while managing domestic financial stability—forces choices. They can either trim spending or increase debt issuance. Either option carries implications for oil policy.

For those of us positioning over the next few weeks, especially in derivatives tied to prompt delivery, we are factoring in this shorter cycle of policy direction. The era of long phases of supply consistency appears to have changed. Now, we must watch announcements more frequently and prepare for fast pivots. Curve positioning is adjusting accordingly. Call skew in medium-dated options has eased back, while put interest is growing modestly as traders attempt to guard against a further leg lower in flat price.

With monthly meetings determining future volumes, and price action increasingly driven by policy moves rather than inventory or consumption shifts, it’s essential to keep models flexible. Options markets are likely to stay active, especially near key expiry points. Continuing this trend of volume expansion, unless curtailed by internal dissent or macro shocks, should remain a pressure point for longs.

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The EU’s Trade Commissioner, Maros Sefcovic, has proposed the removal of tariffs on industrial goods. The aim is to accelerate trade discussions with countries like India.

An additional €170 billion of US exports might face tariffs, underscoring the challenges in current trade dynamics. The EU is prepared to employ all available tools for trade defence.

Zero For Zero Tariffs

This proposal of 0 for 0 tariffs is not new, having been known for weeks. However, a breakthrough has yet to be achieved in negotiations.

French Finance Minister Lombard recently discussed the idea of mutual zero tariffs with Scott Bessent. Bessent mentioned that achieving such an agreement is a realistic possibility, sustaining ongoing hopes for progress.

What the above content highlights is a potential shift in the European Union’s trade strategy. Sefcovic is suggesting the complete removal of tariffs on industrial products—something that would make it markedly easier for countries outside of Europe, such as India, to sell their goods within the EU. In return, the EU would expect equivalent access to those markets. This “0 for 0” tariff model—as it’s often referred to—has been floating around for some time now. It’s not a novel idea, and despite being broadly discussed, nothing concrete has been finalised.

We’re also being reminded of unresolved tensions, particularly with the United States. Washington may soon see €170 billion worth of its exports affected by tariffs from the EU. This large figure doesn’t just show that the issue is alive—it warns that further policy moves could happen fast. Brussels has openly stated it is prepared to use every trade measure at its disposal, meaning this isn’t just diplomatic theatre. There’s a real edge to it.

Financial Market Implications

The conversation held by Lombard and Bessent adds more shape to this picture. The French minister’s remarks during his exchange with Bessent made clear that Europe is actively seeking to keep these talks moving. Bessent, who has extensive experience in this field, said the agreement isn’t out of reach. That cannot be ignored—it doesn’t guarantee action, but it does point to a belief among major financial voices that progress is still on the table.

For those of us keeping an eye on the implications in derivative markets, these back-and-forth motions suggest volatility rather than calm ahead. When tariff regimes are left in flux, pricing models need to adjust. Trade policy shifts affect input costs, output distributions, and thereby influence corporate earnings. That then moves indexes, and so the effect is felt widely across positions, especially in contracts that are sensitive to macroeconomic flow.

We must pay very close attention to not just whether 0-for-0 tariffs advance, but also to how discussions with key Asian counterparts evolve—India being the flag bearer at this stage. If a meaningful reduction in barriers is agreed upon, models that assume friction in supply chains might have to be rebalanced. There’s also the chance that retaliatory American moves could add another layer of complexity for instruments referencing manufacturing sectors in Europe.

What matters in the short term is how protectionist or outward-facing policies look to be moving in the next fortnight. Any discernible tilt will affect pricing assumptions. The interplay between regional earnings and FX adjustments also opens up questions about hedging and risk appetite. For now, whatever open positions we carry should factor in that policies can shift on headlines. Only strategies that can still stand if negotiations stall, or if talks open unexpectedly, are worth holding.

Monitor statements from trade and finance officials with particular focus on timing. Delay is common in such matters, but not always priced in. When momentum changes, so should your exposure.

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