I. Yesterday’s News
International News

1. U.S. President Donald Trump fired off a volley of tweets on Monday venting anger on NATO allies, the European Union and Canadian Prime Minister Justin Trudeau in the wake of a divisive G7 meeting over the weekend. Having left the Group of Seven summit in Canada early, Trump's announcement that he was backing out of the joint communique torpedoed what appeared to be a fragile consensus on the trade dispute between Washington and its top allies.

2. British factory output unexpectedly dropped in April at the fastest pace since 2012, due to weaker demand at home and abroad, raising concern that the economy's weakness in early 2018 is persisting. The official data published on Monday also showed the biggest trade deficit for goods since September 2016 after big falls in exports of aircraft, pharmaceuticals and machinery. Manufacturing output dropped by 1.4 percent month-on-month in April after a 0.1 percent decline in March -- a bigger drop than any economist had forecast in a Reuters poll. The broader measure of industrial output fell 0.8 percent on the month, but was up 1.8 percent on the year -- again weaker than all forecasts.

3. Japan's core machinery orders in April jumped the most since the start of 2016, reversing the prior month's decline and raising some hopes for durable growth in capital expenditure seen as crucial for a recovery in the economy after a contraction in the first quarter. Core orders, a highly volatile data series regarded as an indicator of capital expenditure in the coming six to nine months, rose 10.1 percent and handily beat a 2.8 percent gain forecast in a Reuters poll of economists. They fell 3.9 percent in March.

4. ZTE Corp's settlement with the U.S. Commerce Department that would allow China's No. 2 telecommunications equipment maker to resume business with U.S. suppliers was made public on Monday, days after the company agreed to pay a $1 billion fine, overhaul its leadership and meet other conditions. But the ban on buying U.S. parts, imposed by the department in April, will not be lifted until the company pays the fine and places $400 million more in escrow in a U.S.-approved bank, the agency said. ZTE must replace the boards of directors of two corporate entities within 30 days, according to a 21-page order signed June 8 and published on Monday on the Commerce Department website along with the settlement agreement. All members of ZTE's leadership at or above the senior vice president level also must be terminated, along with any executive or officer tied to the wrongdoing.

5. Chinese auto investors are increasingly pouring money into Europe rather than the United States because of intense U.S. scrutiny of their deals under the Trump administration, according to industry sources and M&A data. More than a dozen leading M&A bankers, lawyers and consultants told Reuters the number of mandates from Chinese clients to make investments in the European auto sector were increasing, while those for the U.S. sector were declining. This means a large group of investors are hunting assets in Europe, mainly Chinese state-owned auto firms, listed carmakers and private equity funds, the industry sources said. They include state-owned SAIC Motor Corp, BAIC Group and FAW Group Corp; and listed players Guangzhou Automobile Group , and Ningbo Joyson Electronic Corp, the people said.

Domestic News

6. China’s consumer price index (CPI) continued to rise in an expected pace in May, while the producer price index (PPI) growth picked up to a four-month high boosted by rise in upstream product prices and base effect. PPI is expected to come off highs and overall inflation will remain mild without much constraint on monetary policy.

7. China’s State Information Center chief economist Zhu Baoliang said that China’s GDP is likely to grow by 6.8 percent and 6.5 percent year on year in the first and second quarter respectively due to recovering economic cycle and limited downward room.

8. China's central bank said it will skip open market operations as liquidity levels in the banking system were "relatively high". The suspension of reverse repos for a second consecutive day led to a net withdrawal of 20 billion yuan from China's money market, as previous reverse repo contracts matured.

II. Market Overview
FX
1. Global Market

The U.S. dollar and euro on Monday were range-bound ahead of decisive meetings of both central banks this week and President Donald Trump's summit with North Korean leader Kim Jong Un in Singapore on Tuesday. The greenback was up 0.14 percent against a basket of six currencies during Monday's session, despite heightened worries about a global trade war following a spat at the Group of Seven summit in Canada between Trump and other leaders over automobile tariffs and other issues. The move was muted by uncertainty about the outcome of Trump's meeting with North Korea. The dollar index was steady at 93.580, rising further from a three-week low set last Thursday. In early trade the euro approached a near-two-week high of $1.1820. But the euro ultimately settled around $1.1785.

2. Home Market

China's yuan on Monday inched up against the U.S. dollar, while the People's Bank of China (PBOC) set the yuan's midpoint rate lower. A slew of risk events are expected this week, traders said. The Federal Reserve is likely to raise U.S. interest rates by 25 bps, but a timetable for the European Central Bank to roll back its massive stimulus is still unknown. Another market focus is a historic summit between U.S. President Donald Trump and North Korean leader Kim Jong Un on Tuesday. Yuan shows no direction as investors are cautious at the time point.

Precious Metals

Gold inched higher on Monday, as investors anticipated the U.S. central bank monetary policy meeting this week that is expected to boost interest rates, and ahead of a U.S.-North Korea summit. Spot gold gained 0.1 percent to $1,299.74 ounce. U.S. gold futures for August delivery settled up 50 cents, or 0.04 percent, at $1,303.20 per ounce.

Commodities
Crude Oil

Oil prices were little changed on Monday as comments from the Iraqi oil minister cast doubt as to whether the Organization of the Petroleum Exporting Countries would decide to boost output at its upcoming meeting. Oil had some support thanks to gains in the equities market, analysts said. Global benchmark Brent crude was unchanged to settle at $76.46 a barrel. U.S. West Texas Intermediate crude rose 36 cents to settle at $66.07, its highest level since June

U.S. Treasuries
1. U.S. Bonds

U.S. Treasury yields rose on Monday before the Federal Reserve is expected to raise interest rates on Wednesday, though the Treasury Department saw solid demand for $54 billion in new three and 10-year notes. Both the $32 billion three-year notes and $22 billion 10-year notes sold at lower yields than where they had traded before the auctions. Benchmark 10-year notes fell 8/32 in price to yield 2.963 percent, up from 2.935 percent on Friday.

2. Chinese bonds

The yields of the benchmark cash bonds steadied in the morning session, while the CFFEX bond futures were also little changed. Investors are likely to stay on the sidelines, awaiting the release of major economic reports in May, the Federal Reserve’s policy meeting, etc..

Stock Market
1. U.S. Equities

All three major U.S. stock indexes closed slightly higher on Monday as investors eyed the looming United States-North Korea summit on Tuesday in Singapore while shrugging off the weekend's factious meeting of the Group of Seven nations. Investors are also anticipating this week's meetings of three of the world's top central banks: the U.S. Federal Reserve, the European Central Bank and the Bank of Japan. The Dow Jones Industrial Average rose 5.78 points, or 0.02 percent, to 25,322.31, the S&P 500 gained 2.97 points, or 0.11 percent, to 2,782 and the Nasdaq Composite added 14.41 points, or 0.19 percent, to 7,659.93.

2.Hong Kong Equities

Hong Kong shares rose slightly on Monday, after U.S. president Trump said on Monday his historic summit with the North Korean leader could "work out very nicely" as officials from both countries sought to narrow differences on how to end a nuclear stand-off on the Korean peninsula. The Hang Seng index rose 105.49 points or 0.34 percent to 31,063.70, while the China Enterprises Index gained 0.05 percent to 12,172.03.

3. China Equities

Shanghai stocks closed lower for a third straight session on Monday, on investor concerns over the liquidity conditions in the market after new listings and the implementation of the China Depository Receipts (CDRs) policy. Major indexes touched its lowest level since last May during the session due to across-the-board selloff, suggesting a downward path in the near term. The Shanghai Composite Index closed down 0.47 percent at 3,052.78 points, down 14.37 points. The turnover of Shanghai A shares fell by over 10 percent to 143 billion yuan from 161.1 billion yuan.