I. Yesterday’s News
International News

1. China is “meeting many” Trump administration demands to cut its trade surplus with the United States, but a definitive deal to resolve deep trade differences could take a while to develop, White House economic adviser Larry Kudlow said on Friday. China offered to reduce its trade surplus with the U.S. by “at least $200 billion” . “The number’s a good number,” said Kudlow, adding that China would also need to lower non-tariff barriers and agree to a "verifiable process whereby the technology transfers and the theft of intellectual property stops." in the case of China telecommunications company ZTE Corp, "if there are any structural changes in their case, they will be very harsh," Kudlow told Fox Business Network on Friday, saying that trade talks with China "are going very well." He added: "If the talks don’t work, you can expect (Trump) to take some very tough measures on his own."

2. The anti-establishment 5-Star Movement and far-right League on Friday published their joint government program, promising a major spending spree that will likely put Italy on a collision course with the European Union.

3. Chancellor Angela Merkel will fly to China next week for a two-day visit that includes talks with President Xi Jinping and Premier Li Keqiang, a government spokeswoman said on Friday. Merkel will be in China May 24-25 to discuss political and economic issues with the Chinese leaders.

4. More than 100 people were killed and three seriously injured in a fiery crash of a Boeing 737 passenger plane in Cuba on Friday, Cuban broadcaster CubaTV reported.

5. Ten people were killed and 10 wounded in a shooting Friday morning at Santa Fe High School. Suspect was arrested.

6. S&P says switzerland ratings affirmed at 'AAA/A-1+' with its outlook stable.

Domestic News

7. China will continue to encourage investment by its companies in Portugal thanks to the Iberian country's "open attitude" to foreign investment, Chinese Foreign Minister Wang Yi said during a visit to Lisbon on Friday. "We will continue to encourage Chinese companies to invest," Wang said.

8. China has not offered to cut its trade surplus with the U.S. by $200 billion, contrary to reports, China's Foreign Ministry said Friday. Ministry spokesman Lu Kang said a daily news briefing, "This rumor is not true. As I understand, the relevant consultations are ongoing and they are constructive."

9. The Chinese government determined to shorten the time required for starting businesses, according to a document released by the General Office of the State Council. "The efficiency, transparency and predictability of the services should be increased, and the experience of starting a business should be improved, so as to reduce institutional costs and boost mass entrepreneurship and innovation," the document said.

10. Chinese commercial banks recorded a net foreign exchange purchase in April, and a net forex sale of 7.6 billion dollars in the first four months of the year, representing only 14 percent of the net forext sale of the same period last year, the country's forex regulator said Friday. The forex market supply and demand has been "relatively balanced" recently, a SAFE spokesperson said in a separate statement, noting overall equilibrium in cross-border fund flows.

II. Market Overview
FX
1. Global Market

The dollar rose to a five-month high against a basket of major currencies on Friday, helped by weakness in the euro as investors fretted about political uncertainty in Italy. The dollar index, meanwhile, rose to 93.83 on Friday, the highest since mid-March. In late trading, the euro fell to a five-month low of $1.1753. It has declined nearly 1.2 percent versus the dollar this week. On Friday, the dollar set a fresh four-month high against the yen but was last essentially flat.

2. Home Market

China's yuan slipped slightly in the morning session as the midpoint lowered following the dollar index. The yield on U.S. 10-year Treasury notes hit a near seven-year high of 3.128 percent in overseas trading, narrowing down the spread between the dollar and yuan and sending yuan lower. But foreign exchange purchase eased yuan’s losses.

Precious Metals

Gold prices rebounded on Friday, as the U.S. dollar eased after Italian political tension sparked a sell-off in the country's bond markets and investors sought a safe haven in bullion. Spot gold gained 0.2 percent at $1,292.12 per ounce, after hitting its lowest since Dec. 27 in the previous session at $1,285.41. The metal was heading for its biggest weekly decline since early December, down nearly 2 percent versus last week. U.S. gold futures for June delivery settled up $1.90, or 0.2 percent, at $1,291.30 per ounce.

Commodities
Crude Oil

Oil prices fell on Friday, but Brent crude marked its sixth straight week of gains, boosted by plummeting Venezuelan production, strong global demand and looming U.S. sanctions on Iran. Brent crude futures fell 79 cents, or 1 percent, to settle at $78.51 a barrel. The global benchmark on Thursday broke through $80 a barrel for the first time since November 2014. Brent, which has gained about 17.5 percent since the start of the year, rose about 1.9 percent this week. West Texas Intermediate (WTI) crude futures fell 21cents to settle at $71.28 a barrel, a 0.29 percent loss. The contract rose about 0.9 percent for the week, its third straight week of gains.

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

U.S. 10-year Treasury yields declined on Friday from a near seven-year high as buyers emerged following a bond market sell-off earlier this week spurred by worries about growing inflation and government borrowing. The yield on benchmark 10-year Treasury notes was down 4 basis points at 3.071 percent after touching 3.128 percent in overseas trading, the highest level since July 2011, Reuters data showed. On the week, the 10-year yield was on track to increase about 10 basis points, its biggest weekly gain in a month.

2. Chinese bonds

China’s cash bonds in the inter-bank market were little changed on Friday. The CFFEX’s 5-year T-bonds recorded considerable decline, while the 10-year bonds were traded in a tight range. Cash bonds steadied as the tax season’s disruption faded and liquidity eased. The auction of tier-1 50-year T-bonds was much lower than expected, posing limited impact on the market.

Stock Market
1. U.S. Equities

The S&P 500 ended lower on Friday after a choppy trading session as bank and chipmaker stocks weighed on the index and investors grappled with U.S.-China trade talks. The Dow Jones Industrial Average was essentially flat, ending the session at 24,715.09, the S&P 500 lost 7.16 points, or 0.26 percent, to 2,712.97 and the Nasdaq Composite dropped 28.13 points, or 0.38 percent, to7,354.34. All three major U.S. stock indexes posted a weekly loss.

2. Hong Kong Equities

Hong Kong stocks rose on Friday amid hopes that Beijing and Washington will reach a deal in the latest round of trade negotiations. The Hang Seng index rose 105.76 points or 0.34 percent to 31,047.91, while the China Enterprises Index gained 0.62 percent to12,355.13.

3. China Equities

China stocks closed 1.2 percent higher to an over one-month high on Friday, lifted by oil and chemical names. Technical correction is coming to an end, but the 60-day moving average (3,191) still posted some resistance. A further rally is expected if the level can be breached. The Shanghai Composite Index closed 39.02 points or 1.24 percent higher to 3,193.30 points, drawing near to previous high of 3,208.08 hit on April 11. The index rose 0.95 percent for the week. The blue-chip CSI300 index ended 1.01 percent higher at 3,903.06.