I. Yesterday’s News
International News
1. Standing side-by-side with Vladimir Putin, U.S. President Donald Trump on Monday refused to blame the Russian leader for meddling in the 2016 elections, casting doubt on the findings of his own intelligence agencies and sparking a storm of criticism at home. On a day when he faced pressure from critics, allied countries and even his own staff to take a tough line, Trump said not a single critical word about Moscow on any of the issues that have brought relations between the two powers to the lowest ebb since the Cold War. Instead, he denounced the “stupidity” of his own country’s policy, especially the decision to investigate election interference following the findings of U.S. intelligence agencies. Trump’s performance at a joint news conference stirred a wave of condemnation in the United States, where the White House has struggled for months to dispel a suggestion that Trump was unwilling to stand up to Putin.

2. The United States launched five separate World Trade Organization dispute actions on Monday challenging retaliatory tariffs imposed by China, the European Union, Canada, Mexico and Turkey. The retaliatory tariffs on up to a combined $28.5 billion worth of U.S. exports are illegal under WTO rules, U.S. Trade Representative Robert Lighthizer said in a statement. "These tariffs appear to breach each WTO member's commitments under the WTO Agreement," he said. "The United States will take all necessary actions to protect our interests, and we urge our trading partners to work constructively with us on the problems created by massive and persistent excess capacity in the steel and aluminum sectors." Lighthizer's office has maintained that the tariffs the United States has imposed on imports of steel and aluminum are acceptable under WTO rules because they were imposed on the grounds of a national security exception.

3. Prime Minister Theresa May bowed to pressure from Brexit supporters in her party on Monday, accepting changes to her plans for leaving the European Union in an attempt to salvage her over-arching strategy. But by bending to the will of hardline Brexit campaigners she exposed her vulnerability in parliament, where both wings of her party attacked each other, highlighting the deep divisions that have so far hampered progress in talks with the EU. May has vowed to stick to her plan to negotiate the closest possible trade ties with the EU, saying her strategy was the only one that could meet the government's aims for Brexit. But her plans have been criticised by pro-EU Conservative lawmakers, with one former minister calling it the "worst of all worlds", while eurosceptics say the strategy will keep Britain firmly in the bloc's sphere of influence. Brexit supporters had targeted the government's customs legislation, hoping to toughen up her plans to leave the EU. Instead of facing them down and fuelling tensions, her spokesman said the government would accept their four amendments. Parliament voted 318-285 to pass the bill. It will now go to the upper house of parliament before becoming law.

4. The Commerce Department said on Monday U.S. retail sales rose 0.5 percent in June as households boosted purchases of automobiles and a range of other goods, cementing expectations for robust economic growth in the second quarter. Data for May was revised to show sales rising 1.3 percent, instead of the previously reported 0.8 percent gain. Signs of a strengthening economy, together with a tightening labor market and firming inflation, likely will keep the Federal Reserve on track to continue raising interest rates this year. The dollar slipped against a basket of currencies. Stocks on Wall Street were lower. U.S. Treasuries fell, with the yield on the interest rate-sensitive two-year note rising to a near 10-year high.

5. Minneapolis Federal Reserve Bank President Neel Kashkari, who does not vote this year on Fed policy but takes part in the U.S. central bank's regular discussion of interest-rate policy, said Monday that the flat yield curve means interest rates are close to neutral. "This suggests that there is little reason to raise rates much further, invert the yield curve, put the brakes on the economy and risk that it does, in fact, trigger a recession," he said in a blog post. "If inflation expectations or real growth prospects pick up, the Fed can always raise rates then." Still, Kashkari's view is not shared by many of his policymaking colleagues, who have generally downplayed the warning signal he sees in the flattening yield curve. They instead point to the behavior of yields in shorter-term markets that they say points to no particularly elevated risk of recession, and warn that the bigger risk is in raising rates so slowly that inflation surges out of control.

Domestic News

6. China on Monday posted second-quarter GDP growth of 6.7 percent from a year ago, the lowest figure since the third quarter of 2016, lightly lower than 6.8 percent in the first quarter of 2018. The official reading was in line with expectations from analysts polled by Reuters. Industrial output for June matched the slowest growth rate since March this year at 6.0 percent and missed forecasts of 6.5 percent expansion. Other data showed retail sales rose 9.0 percent in June from a year earlier, in line with market forecasts. First-half growth in fixed asset investment was a record low, also in line with expectations from analysts polled by Reuters.

7. China and the European Union on Monday exchanged market access offers for a bilateral investment agreement currently under negotiation, with both sides calling the proposed treaty a top priority in relations. The two sides made the announcement in a joint statement issued during an annual China-EU leaders meeting in Beijing.

8. China lodged an additional complaint with the World Trade Organization (WTO) on Monday over tariffs of 200 billion U.S. dollars implemented by the United States based on a trade investigation against China under Section 301, the Ministry of Commerce said in an online statement.

9. Donald Tusk, the European council president, has called on Europe, China, the US and Russia to work together to avoid trade wars and “prevent conflict and chaos”. Tusk called for World Trade Organisation reform.

10. The Chinese central bank has taken one day liquidity injections via reverse repos to five-month hight via 300 billion yuan in sales. The People’s Bank of China sold a total of 170 billion yuan in 7-day reverse repos and 130 billion yuan in 14 day reverse repos. No reverse repurchase agreements matured today, suggesting the same amount of net injection this day.

II. Market Overview
FX
1. Global Market

The dollar fell on Monday as investors pared long bets on the greenback and rebalanced their positions ahead of Federal Reserve Chairman Jerome Powell's first congressional testimony. Powell will testify on the economy and monetary policy before the U.S. Senate Banking Committee on Tuesday, followed by testimony on Wednesday to the House of Representatives Financial Services Committee. He is likely to reiterate the Fed's gradual monetary policy tightening, although any suggestion of caution on trade could unravel the market's appetite for risk, analysts said. In late trading, the dollar fell 0.2 percent against a basket of six major currencies to 94.526, sliding for a second straight session. The euro, meanwhile, rose 0.2 percent against the dollar, to $1.1708, after weakening half a percent last week.

2. Home Market

Spot yuan bottomed up against the U.S. Dollar in the morning in brisk trading, while  midpoint rate weakened to the lowest in 11 months. Yuan slipped to its lowest level in two weeks after Beijing reported slightly softer economic growth data. But it managed to regain the ground as investors sold dollars to lock in profits.

Precious Metals

Gold steadied on Monday as weak physical demand in top-consuming regions and the expectation of higher U.S. interest rates weigh, despite the bullion-priced U.S. dollar losing steam. Spot gold closed at $1,240.07 per ounce. U.S. gold futures for August delivery settled down $1.50, or 0.1 percent, at $1,239.70 per ounce. Silver lost 0.1 percent at $15.77 per ounce. Palladium declined 2.2 percent at $916.47 an ounce, earlier dipping to $914.75, its lowest since April 9.

Commodities
1.Crude Oil

Oil prices slumped more than 4 percent on Monday, with Brent reaching a three-month low, as Libyan ports reopened and traders eyed potential supply increases by Russia and other producers. Brent crude futures fell $3.49 to settle at $71.84 a barrel, a 4.63 percent loss, while U.S. West Texas Intermediate (WTI) crude futures fell $2.95 to settle at $68.06 a barrel, a 4.15 percent loss. Brent's dive pushed it to a session low of $71.52 during the session, its lowest since mid-April.

2.Base Metals

Copper eased along with most other metals in London on Monday after data showed that China's economy expanded at a slower pace in the second quarter, pointing to weaker demand. Benchmark copper edged down 0.7 percent to $6,192 per tonne on the kerb, hovering near one-year lows. Prices are down about 14 percent in 2018. Aluminium added 1.1 percent to $2,054 per tonne. Zinc closed 4 percent lower at $2,474 per tonne.

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

U.S. Treasury yields increased on Monday with the two-year yield hitting a near decade peak as domestic retail sales recorded growth for a fifth straight month in June, supporting the view of solid economic growth in the second quarter. On light summer volume, the benchmark 10-year Treasury yield was 2.7 basis points higher at 2.858 percent after hitting its highest in more than a week. The 2-year yield notched up nearly 2 basis points at 2.603 percent after touching its highest level since August 2008.

2. Chinese bonds

Liquidity in inter-bank market remained accomodative as the Chinese central bank took massive day liquidity injections on Monday ahead of the incoming tax season. The impact of tax season, as a result, did not tighten supply till the afternoon bell under the large repos.

Stock Market
1. U.S. Equities

U.S. Stocks were mixed on Monday with the Dow Jones closing slightly higher. But the S&P 500 ended slightly lower on Monday following a drop in oil prices that weighed on energy shares and offset a jump in financials as Bank of America's results reinforced expectations of a strong U.S. earnings season. The Dow Jones Industrial Average rose 44.95 points, or 0.18 percent, to 25,064.36, the S&P 500 lost 2.88 points, or 0.10 percent, to 2,798.43 and the Nasdaq Composite dropped 20.26 points, or 0.26 percent, to 7,805.72.

2. Hong Kong Equities

Hong Kong's benchmark index ended little changed on Monday, as China posted a moderate second-quarter economic slowdown that was in line with expectations. At the close of trade, the Hang Seng index fell 14.22 points or 0.05 percent at 28,539.66 points. The Hang Seng China Enterprises index ended 0.39 percent lower to 10,704.26.

3. China Equities

China stocks ended down for the second consecutive session on Monday, dampened by heavyweights after the lackluster economic data, although in line with market consensus, cast a doubt on the country's economy in the second half of the year. An extended bottoming is expected without sufficient upward momentum, and under the pressure profit-taking after recent rebound. The Shanghai Composite Index closed down 17.14 percent or 0.61 percent at 2,814.04 points , while the blue-chip CSI300 index fell 0.59 percent to 3,472.09 points. The turnover of Shanghai A shares fell to 129.3 billion yuan from the last Friday’s 146.2 billion yuan.