Morning 6-28

Waiting game Continues today as Focus on trump-Xi meeting continues, Huawei is main sticking point. Month End quarter End Activity may provide a bit of Excitement due to order flows, U.S. Economic calendar shows PCE  and Chicago PMI

 Bond complex trading lower, Stocks little changed as markets expect very little in the way of resolution of trade conflict but also believe escalation unlikely to occur. Shake hands, smile, and kick can down the road appears to be the situation market is pricing. Quarterly Crop report is a big deal for grain complex today; the data is released at 11:00. OPEC meeting July 1-2 will keep oil sideways today as will meetings between putting and Saudi Arabia, always a possibility that production gets cut further as OPEC would like to see higher prices. A  21% chance  for 50 Bps cut at July fed meeting, regardless of what Fed bank   presidents are saying markets  ignoring them for now. Gold headed for best monthly gain since 2016(BBG) and All 18 U.S. Lenders passed latest stress tests thus allowing them to boost payouts, buybacks and Dividends, financials higher pre market. Nike missed estimates for first time in 7 years but said not feeling impact from trade war

BOSTON, June 28 (IFR) – More concern over China’s Huawei demands in restarting trade talks, is creeping into the pricing of treasuries and the yield curve, and that means more steepener flows. And this despite outright longs and steepeners positioning even more one sided with this week’s $113 bn in supply of 2s, 5s, and 7s.

Thus it is not surprising to see a big block flow coursing through the futures pits, and well before the regular futures open where investors and traders find enhanced liquidity. A real money manager bought 11,300 TYs (7s), while selling 2833 ultra bond futures (30s). The 7s/30s spread steepened to 65.3 bps from prevailing 64.4 bps prior to the big block trade.

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