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FX Weekly - Dollar risks move back to centre stage

Markets are refocusing on rate spreads, real yields and US structural risks as oil-price concerns fade. A Warsh-led Fed could raise policy uncertainty and add to the risk premium in Treasuries. Fed/ECB divergence supports our view that EUR/USD can move towards 1.20 by year-end. US fiscal and external vulnerabilities point to further dollar weakness over the medium term.

Gas Market Monitor - Gas markets find relief as Europe races to refill storage

Europe’s reliance on LNG has increased since 2022, raising its exposure to global LNG disruptions; the US supplied 58% of European LNG imports in 2025. European gas prices initially surged on the Iran conflict but later eased as Asian demand weakened and US LNG inflows increased. The US-Iran agreement provided further relief, pushing TTF prices around 15% lower, although short term prices remain higher than long term ones. High injection-season prices have discouraged storage filling, leaving EU storage at a seasonal low of 44.7%. Stable Norwegian and US inflows, returning Qatari supply, and weaker Asian competition should allow Europe to reach around 75% storage by October. However, renewed conflict, supply disruptions, adverse weather, or project delays could slow replenishment and keep prices elevated. We expect gas prices to remain above seasonal averages, averaging 46 EUR/MWh in Q2, 43 EUR/MWh in Q3, and around 48 EUR/MWh during the heating season.

Top of Mind - A new chapter for the Fed

Kevin Warsh is about to chair his first FOMC meeting, after being confirmed against a political background. Warsh inherits a difficult policy environment where the US is hit by three concurrent shocks: tariffs, the energy supply shock and the AI investment boom. These shocks put pressure on his ability to pursue his goals. In this webinar, Rogier Quaedvlieg, Larissa de Barros Fritz and Georgette Boele will walk you through their assessment of the Warsh’s likely policy aims, as well as their feasibility given current economic constraints. They will also discuss the potential implications for rates and the dollar.

US and Iran strike a deal - What’s next?

A new Fed Chair in a more fragile Treasury market

Fed Chair transitions have historically been followed by higher Treasury yields, as markets reprice policy uncertainty and the incoming Chair’s reaction function. This post-transition rise in Treasury yields is still yet to materialize. Any repricing under Warsh may be more persistent than in past transitions because he takes over an already fragile Treasury market. Warsh’s preference for lower rates may support the front-end of the curve, but concerns about political pressure, reduced transparency and conviction-based policymaking could keep term premia and long-end yields under upward pressure. Even a gradual reduction in the Fed’s balance sheet would matter for Treasuries, because it raises free float and shifts more duration risk onto investors with less stable demand. Rising Treasury issuance and a worsening fiscal backdrop mean that higher yields increasingly feed back into debt-servicing costs, rollover risk and term premia. The shift away from foreign and official buyers toward more cyclical domestic investors makes Treasury demand less stable, reducing the market’s ability to absorb growing supply without higher term premia.

ECB suggests more hikes to come

The ECB raised interest rates by 25bp at the June Governing Council meeting as was widely expected. Its communication and forecasts suggested that there will likely be more rate hikes to come.

ECB to hike this week and signal more on the cards

The ECB Governing Council meets this week to decide on its monetary policy, where it will also have aid of updated projections on the economy and inflation. We expect the ECB to raise its key policy interest rates by 25bp as well as signalling that further monetary tightening is on the cards going forward.

Global industry: Still solid, but with more divergence and disturbances

Global manufacturing PMI for May steady at four-year high. However, we see more divergence between countries/regions. The supply side held up better than the demand side in May. Disturbances drive our global supply bottlenecks index further into ‘excess demand’ territory. Cost price pressures from global industry are on the rise.

Services drives May eurozone inflation rise

Eurozone inflation picked up in line with expectations to 3.2% in May, from 3% in April, while core inflation surprised to the upside, rising to 2.5% (ABN/consensus: 2.4%) from 2.2%. Energy continues to be the biggest driver of inflation, but held steady in May at 10.9% y/y, as a rise in petrol prices was probably offset to a greater extent than expected by falling diesel prices. Indeed, as we pointed out in our latest Global Monthly, the gap between diesel and petrol – which widened as refineries struggled to replace lost Middle Eastern diesel supply – has now largely normalised as European refineries filled the gap. Food inflation also unexpectedly fell back, to 2% from 2.4% in April, though there was considerable variation across countries this month (for instance, France saw a big rise in food inflation).

Hoarding rage drives fastest Dutch manufacturing growth in years

The hoarding behaviour as a result of the war with Iran is driving the growth of the Dutch manufacturing sector to its fastest pace in almost four years, according to the Nevi Dutch Manufacturing PMI. Buyers fear shortages and higher prices, and therefore buy extra parts and materials.