UNITED STATES

U.S. stocks sank to their lowest levels in months after China retaliated with higher tariffs on a variety of American goods. The DOW and the S&P had their worst day since January 3 closing at -2.38% and -2.41% respectively. The NASDAQ was 3.41% lower its biggest tumble since December 4. The stocks are about 5% down each in the month to date, levels last seen during the tech bubble burst for the NASDAQ and May 1970 for the other two. Yield on 10Y USTs fell 9bps to 2.379% as demand for haven assets jumped with the news.

ASIA

China announced plans to up duties on American imports effective June 1 in a defiant stance to President Trump’s earlier call not to escalate the trade war. The tariffs will range from as high as 25% on some 2,493 goods while other products will be subject to duties ranging from 5% to 20%, the statement on the Ministry of Finance website detailed. Asian stocks meanwhile, sank at the start of trading before generally bouncing back somewhat to trade -0.59% and -0.42% respectively for the Nikkei and the CSI. The Hang Seng back up after yesterday’s holiday is faring weakest trading 1.69% lower having opened at -1.3%.

EUROPEAN UNION

The eurozone area is set for a central bank boost with an estimated 21 billion euros set to flow into regional government bond markets. This comes as the ECB reinvests proceeds from maturing securities, the largest amount since the bank ceased incremental asset purchases at the end of last year. Some 100 billion euros of bond coupons and redemptions from Germany, France, Italy and Spain are due. The euro was little changed at $1.1223, while yield on 10Y DBRs was down 2.5bps at -0.0708%.

TURKEY

The Turkish currency narrowed its losses against the dollar late Monday to close at 6.0586 having gone as high as 6.1313 in the afternoon. This followed reports that the Turkish government is considering a US request to delay the purchase of a Russian missile-defense system into 2020, a move that could ease tensions between the NATO allies. The request made last week, if considered would allow more time to resolve tensions that have strained relations between the two countries and threatened to result in more sanctions on Turkey. The US says the Russian missile defense system, the S-400, is designed to shoot down American and allied aircraft.

LATAM

President Mauricio Macri’s political frailty was exposed if the re-election of an opposition candidate to the position of governor for the key province of Cordoba is anything to go by. The ruling coalition lost to the incumbent Juan Schiaretti who took 54% of the vote with its two candidates taking 29% between them. Argentine sovereigns opened 1% lower on the news. The market, which believed Macri would be re-elected in the October elections, is no longer at ease with former populist president Cristina Fernandez rising in the polls. The economic crisis in the nation will further dent Macri’s bid for re-election with the currency the worst performing in the emerging market sphere this year.

RUSSIA

Oil production in Russia fell in early May in line with its OPEC+ target as the nation prepares to discuss the future of the deal while also contending with its contaminated-crude crisis. Calculations based on the Energy Ministry’s statistics put production at about 11.16 million barrels a day, falling below its target for the first time since the OPEC+ pact came into effect. RUSSIA 47s traded just about flat fetching 102.253 at close while the ruble traded lower against the dollar closing at 65.431