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While Europe is doing its best to dominate market attention, the familiar issues of oil prices, trade wars and the ‘will they, won’t they’ saga of the N. Korea/US summit remain in the headlines, according to analysts at Rabobank.

Key Quotes

“Oil prices are lower after the Russia and OPEC indicated  on Fridaythat they could boost production to compensate for lost supply from Venezuela and Iran. Earlier this month oil prices had risen to 3 year highs.     The EU’s top trade official Malmstrom is scheduled to meet her US counterpart Lighthizer in Paris  on Wednesday, two days before the temporary reprieve from US steel and aluminium tariffs are due to expire.   According to Reuters, last week Malmstrom stated that she did not think that an EU proposal to discuss opening its markets wider to US imports had convinced Washington to lift the threat of tariffs to curb EU steel imports.”

“Despite the uncertainty regarding the N. Korean/US summit, a team of US officials did cross into North Korean  on Sunday  for talks in preparation for a meeting between President Trump and Kim Jong Un.   The purpose of these preliminary meetings is reportedly to decide on the substance of a potential summit, or more specifically to see if an agreement can be made as to what “complete denuclearization” means.”

“Although the economic calendar is very thin today, the release of US PCE inflation and non-farm payrolls data later in the week will be watched closely for any signs that price pressures are building. This morning the Fed’s Bullard, who is not currently a voting member of the FOMC, suggested that the Fed should slow its pace of policy normalization to re-align inflation expectations.   The market is strongly positioned for a US rate hike on  June 13.”