I. Yesterday's News
International News
1. U.S. inflation expectations tumbled last month, with one key measure hitting its lowest level since early 2016, according to a Federal Reserve Bank of New York survey that could amplify the central bank's concern over a broad slump in prices. The survey of consumer expectations fell to 2.47 percent last month. The one-year measure slid to 2.59 percent in May, hitting a six month low. The sharp decline is the latest hint that a soft patch in U.S. inflation could expand and slow the Fed's plan to raise interest rates at a pace of about three times per year.

2. Britain's Theresa May told her party on Monday she would serve as prime minister as long as they wanted after a botched election gamble cost the party its majority in parliament and weakened London's hand days before formal Brexit negotiations. Lawmakers told Reuters that there were no dissenting voices and that the party had no appetite for a leadership election. While some members of her party have said she will have to go eventually, May is expected to stay on as prime minister at least for now.

3. The Bank of Canada will assess whether it needs to keep interest rates at near-record lows as the economy continues to grow, a senior official said on Monday, raising the prospect that a rate hike could come sooner than anticipated and lifting the Canadian dollar. In the bank's most upbeat comments on the economy, Senior Deputy Governor Carolyn Wilkins said first-quarter growth was "pretty impressive," while there were encouraging signs growth was broadening. The speech's hawkish tone is the first acknowledgement from the bank that the next move is likely to be a hike, said an economist.

4. Japan's core machinery orders fell more than expected in April, casting doubt on the strength of companies' capital spending and adding to concerns about the country's fragile economic recovery. The 3.1 percent fall in the core orders from a month earlier was much bigger than the 1.3 percent decline expected by economists in a Reuters poll, potentially dragging on economic growth in the current quarter.

5. Italy's maverick 5-Star Movement looked set to suffer a severe setback in local elections on Sunday, failing to make the run-off vote in the seven major cities up for grabs, exit polls said. If confirmed, the result could undermine the group's hopes of winning national elections, and suggest that like other anti-establishment parties across the European Union, it is losing steam.

Domestic News
6. China will expand its pricing reform in agricultural products, power, natural gas, medical service, rail transport, etc., regulate charging in operational services, and reinforce supervision on pricing and charging in monopolized sectors, in order to cut corporate burdens and deepen supply-side reform, said Zhang Manying, one price inspector of the National Development and Reform Commission.

7. China's slower economic growth is adding to the pressure on fiscal revenue and spending. Government revenue rose 3.7 percent in China in May from a year earlier, the lowest growth since this year, while spending increased 9.2 percent. In the first five months, interest payment rose almost 40 percent year-on-year, driven by growing interest paying by local governments.

8. China has marched into a transitional period, trying to build its economy on the new forward momentum, but that does not mean lack of sustainability in its steady and upbeat growth, said People's Daily. Out of the box of the stereotyped growth, China's economy still retains sufficient steam for sustainable growth.

9. Growth in financial science and technology is accelerating in China, but an existing imbalance requires building of a new ecology in the sector, said Sun Guofeng, head of the monetary institute of the PBOC.

10. China's central bank has been treading carefully to manage a policy dilemma of deleveraging while avoiding a liquidity crunch. The Financial News, a central bank-affiliated newspaper, said a credit crunch fueling a repeat of the market turbulence in June 2013 is highly unlikely as the overall liquidity condition in the banking system remained stable.

II. Market Overview
FX
1. Global Market
The dollar slipped against a basket of major currencies on Monday ahead of a spate of central bank meetings, starting with the U.S. Federal Open Market Committee on Wednesday. The dollar index, which tracks the greenback against six major currencies, edged down 0.1 percent after a spike in the Canadian dollar. The loonie gained 1 percent following remarks from Bank of Canada Senior Deputy Governor Carolyn Wilkins that the bank was considering reducing its monetary policy stimulus. The yen rose 0.5 percent against the dollar, pushing its gains to more than 4 percent versus the greenback since mid-May. Sterling fell 0.7 percent against the dollar, while the euro rose 0.1 percent.

2. Home Market
China's yuan rose against the U.S. Dollar, along with a stronger midpoint rates, but the trading range continued to narrow down. The FOMC meeting and forex buying by oil investors may pressure on forex prices. Overall, forex buying and settlement is about to balance.

Precious Metals
Strong speculative demand kept palladium near 16-year highs on Monday, though weak fundamentals are soon expected to take their toll on prices of the metal. Meanwhile, gold was little changed ahead of a U.S. Federal Reserve policy meeting on Tuesday and Wednesday. Spot gold was up at $1,265.02 an ounce. U.S. gold futures settled down 0.2 percent at $1,268.90. Palladium ended at $940 an ounce.

Commodities
1.Crude Oil
Oil edged up on Monday on signs of inventory declines in the United States and news that Saudi Arabia will limit volumes of crude to some Asian buyers in July and deepen cuts to the United States. Brent crude futures ended the session up 14 cents, or 0.3 percent at $48.29 a barrel. U.S. West Texas Intermediate (WTI) crude futures gained 25 cents, or 0.6 percent, to settle at $46.08.

2.Base Metals
Copper prices slipped on Monday ahead of a meeting of the U.S. Federal Reserve and economic data from top consumer China that could yield clues to future demand growth. Benchmark copper on the London Metal Exchange ended down 0.5 percent at $5,772 a tonne.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasury yields rose on Monday after tepid demand at a 10-year Treasury auction offset strong demand at a three-year auction, while uncertainty about the Federal Reserve's policy outlook on Wednesday limited the move higher in yields. Benchmark 10-year Treasuries were last down 3/32 in price to yield 2.211 percent, from a yield of 2.199 percent late on Friday. U.S. 30-year yields were last at 2.866 percent, compared to 2.853 percent late on Friday, ahead of Tuesday's auction. U.S. three-year Treasuries were last down 1/32 in price to yield 1.489 percent, compared to 1.478 percent late on Friday.

2. Chinese bonds
China's interbank debt market firmed on Monday along with treasury bond futures, with benchmark cash bonds yields up 3-4 bps. Cash bonds are expected to trade rangebound in the near term as strong expectations on interest rate hike by the Federal Reserve and following repo rates increase by China are fading, and on lack of other drivers.

Stock Market
1. U.S. Equities
Apple shares added to last week's drop on Monday to lead a market downturn as tech, still the best performing S&P 500 sector this year, succumbed under its own weight. The Dow Jones Industrial Average fell 36.3 points, or 0.17 percent, to 21,235.67, the S&P 500 lost 2.38 points, or 0.10 percent, to 2,429.39 and the Nasdaq Composite dropped 32.45 points, or 0.52 percent, to 6,175.47.

2. Hong Kong Equities
Hong Kong stocks fell the most in nearly two months on Monday, as a slump in tech shares triggered broader profit-taking. Sentiment was also hurt by worries that tighter credit in China could slow growth in the world's second-biggest economy. The Hang Seng index fell 1.2 percent, to 25,708.04, while the China Enterprises Index lost 1.0 percent, to 10,485.85 points.

3. China Equities
China's stocks fell on Monday, snapping a four-day winning streak. Most stocks dropped after failing to cross over the key resistance. An effective breakthrough over key technical mark can hardly expected without enlarged trading volume. A seesaw is foreseeable at the level. The Shanghai Composite Index closed at 3,139.88, down 18.52 points or 0.59 percent.