From Morgan Stanley

 Yesterday, China reacted to the US Treasury report on FX policies of major trading partners by saying “the US is not in position to decide whether a country is a currency manipulator”. Meanwhile, the US Pentagon is seeking funds to reduce the US reliance on China’s rare earths. It seems the tone has become less constructive. China is unlikely to head for a compromise at this stage, suggesting that it may require the US to make the first step in improving relations. Late last year, it was the falling equity market prompting President Trump to reach out to President Xi.

 Stock Bouncing a bit today  Spoos in middle of range +6 handles, Dax +.3% Shanghai -.3%. Treasuries Lower, Bunds steady some of the overnight weakness caused by a big move lower in JGB has, Japans benchmark bonds as yields move higher due to some concern regarding BOJ bond buying program. Dollar index sideways stuck in a tight range as markets await the second Look at Q1 GDP, a Number that should not have much lasting impact on today’s trade. The Vice chair of the fed Clarida speaks at 11:00 to the economic club of New York Attention must be paid. President trump will be speaking later today as he gives commencement to the Air Force graduates so as usual all eyes will be on news wires to hear anything regarding China in Speech and to reporters. I believe treasury complex a bit too aggressive in pricing in rate cuts by Fed so a bit of a pullback in prices today. Be aware that Chatter is growing that Trade war is turning into something bigger, which is much scarier.

 Oil Sideways WTI steady to higher as API reported a bigger draw then expected and Brent Down .9% Crude Oil Brent spread trading higher with a vengeance today after yesterday’s swift turnaround. Copper -.6% grains a touch higher this morning as all sorts of worries regarding the size of US crop outweigh any statements that China has stopped goodwill purchases of US soy .

Tonight at 8:00 China PMI will be watched to see health of Economy

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