ASIA BACK-FOOT , BONDS ON DEMAND, FX SUBDUED VS DOLLAR

ECONOMY

On Wednesday , Asian equity stumbled and global bonds rallied as investors fretted over the outlook for world growth with trade tensions between Washington and Beijing showing no signs of abating.
U.K., Tory leaders contested for Prime Minister Theresa May’s spot, who is leaving her post on June 7.
Risk aversion has increased globally in recent days as fears of world recession resurface amid disappointing macro data in major economies. Wins for eurosceptic parties in EU elections as well as snap poll in Greece and political turmoil in Austria have added to the gloomy outlook.
Italy’s dispute with the European Commission over its budget is also a major overhang for world markets.
U.S. data on Monday showed a gauge of manufacturing activity unexpectedly fell to -5.3 in May from +2.0 the previous month.
Japan will host a Group of 20 finance ministers and central bankers’ meeting on June 8 and 9.
Analysts at Citi reckon punitive measures against China’s Huawei and other tech firms, as part of the tariff battle, could undermine global productivity growth.
we expect Asian central banks bias will remain on the accommodative side.

Global bonds rallied overnight with U.S. Treasury yields falling further to 2.2693%, the lowest since September 2017.
German Bund yields are also on a slippery slope since the EU elections.
India 10 year treasury yields fall up to 7.149%.

The dollar index, which measures the greenback against a basket of six currencies, was up 0.4% at 97.828.
The euro fell for a third straight day to $1.1670 to inch closer to a recent two-year low of $1.1110.
The British pound too was weaker at $1.2656 after falling for two sessions in a row over political turmoil about it exit from the European Union.
The greenback was higher against the safe-haven Japanese yen, with USD/JPY up 0.04% to 109.40.

Oil prices were subdued after rising almost 1% in the previous session after flooding throughout the Midwest constrained crude flow from the main U.S. storage hub in Cushing, Oklahoma. Brent crude was last off 20 cents at $68.44 per barrel, hovering near a key $70 mark. U.S. crude eased 31 cents to $58.83 per barrel.
Bullion and futures of gold slipped on Tuesday as investors showed their preference for the dollar as a hedge to the U.S.-China tariffs showdown, diminishing the yellow metal's standing as the original safe haven.