It is still on. President trump insists a phase one trade agreement with china is fully intact. Peter navarro claims his earlier comments were taken out of context after suggesting the deal was over. The European Commission is more confrontational. E. U. Lash out at beijing over hong kongs autonomy, disinformation, and foreign investor meant foreign investment. We are in brussels. Hard times for softbank. The Company Sells part of its tmobile stake, creating 21 billion dollars to help offset record losses in its investment business. We will have the details for you briefly. Just under one hour away from the start of cash equity trading in europe. Lets take a look at futures this morning after we closed down yesterday in the u. S. And the u. S. Managed to eek out some gains. They are trading solidly higher. Dax futures are up. 6 percent. Ftse futures up about. 25 . What do you see on the gmm . Anna we have certainly been whipsawed by those comments by Peter Navarro on trade and the ability to cling to that phase one trade deal. The upside of see that. A little bit of positivity for asian equities. Up in thesianpacific trading session. U. S. Futures taking a little bit of a let down. 3 to. 4 on the major u. S. Futures market. Whipsawed just like many of the other markets were whipsawed by those comments with Peter Navarro. Trade, he saidof that was taken out of context. President trump said the talks are fully intact with a deal on phase one, fully intact. Interesting to see that trade between the u. S. And china still has the ability to whipsaw these markets in the way that it did in the Asian Session, whether that was equities and treasuries, fx, or the vix. It seems the virus and everything to do with the virus is really dominating market thinking. Tohave this reference back the trade conversation between china and the United States. Lets get out today on bloomberg first word news update. Lets bring you some of the top stories we are covering here at bloomberg. China and russia criticizing the u. S. For a stunt at yesterdays nuclear talks. The negotiator tweeted china is a noshow. Not been due to take part in the talks. The officer responded it was an obscene, adding how low can you go . Russia condemned the move. The European Union and china sparred as they held a video conference. Tensions have grown since the last summit. Leaders criticized chinas plan to curb chinas autonomy. They discussed beijings handling of coronavirus and curves on Foreign Investors. In the united kingdom, Boris Johnson is set to announce the next steps for lifting the coronavirus block down. The move is expected to give the green light for cinemas and new zealand. In new zealand. The trimester will announce the social distancing rule. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Matt the china trade deal is fully intact. The president said on twitter, ensure investors it was not finished. He roiled markets by telling fox news the deal was over. His words were taken wildly out of context, he says. Futures are rising across the board. Lets get into the markets with our bloomberg mliv asia editor. Some markets were roiled during in asias session. A little bit of a roller coaster ride there. What are we looking at for the european session . Europe, the regions may be able to look past their riskoff trend we have seen in asia earlier, looking at the euro stocks futures which are up almost 1 , outperforming u. S. Equity futures, which were marginally lower. President donald trump said the phase one trade deal with china is fully intact. We have seen quite a bit of swings in futures in the volatile trade during the Asian Session along with the aussie dollar and crude oil. They have since pared some of the earlier losses. The Risk Assessment has been dented already. It may not fully recover through at least for today. The key takeaway perhaps for from riskon and riskoff trades is that this kind of market activity is something that we would need to get used to this year. Looks like markets are still hypersensitive to any major riskoff headlines, especially given trade tensions along with uncertainties for the recovery. It will continue to linger across the board for the rest of the year. Anna good morning to you. When we never on an election footing, it would seem. What are we expecting when we look ahead to the european session . Euro area pmi breaking through the morning. Some people say it is all about the data. We have to track recovery that way. Kindare not made for these of extraordinary times. What do we expect . Sungwoo todays pmi data for europe and some large nations including germany could contribute to setting transport risk assets. Rebounddata shows a big with the services pmi doubling. This shows how quickly people wanted to lead in economic risk assets,nd the given australia is highly dependent on commodities. Barometer for the state of the real economy. We can expect something similar in europe. Bloomberg survey of economists, manufacturing and services pmi are likely to show quite a bit of improvements from the previous month, although they are yet to bounceback into expansionary territory for now. Bloomberg economics expects the pmi readings to return to expansionary territory in june because we are seeing clear signs that that activity is across the region as the government relaxed virus containment measures. Today,n the mliv blog your question of the day, what moves most . 16 trillion in stimulus. What are you hearing in terms of responses . Pretty much an anonymous amount of stimulus. We have not had that much reaction from leaders yet. It continues to grind higher. Stocks may look stretched but ofen this abundance liquidity, thanks to the fiscal stimulus around the globe, theres a bit of room for equities. One of this years main themes in the equities market is u. S. Stocks have been outperforming most global peers. It is largely driven by the tech rally. Investors will be keen to see if that is sustainable in the second half of the year as well. In this regard, perhaps, todays pmi data out of the u. S. Will be critical in order to gauge the state of the recovery. Gold is one asset class investors are increasingly optimistic about, especially in the longer term. It will eventually improve the appeal of the precious metal as an alternative investment. The massive stimulus will only increase the means for gold. Runaway inflation is the long way up. He brightening longterm outlook for gold can it will be around for some time uncertainties over how always second wave of covid19 will play out going forward. It could wait on risk assets from time to time. Gold has reached the sevenyear high, showing the potential to shake off the doldrums of late. A wobblewithstanding in march. The gold price quite impressive. Thank you very much for joining us, our asia editor. Up next on the program, the white house sends markets on a roller coaster ride. We will discuss that with sungwoo park. President trump travels to is still onade deal after Peter Navarros earlier remarks that it was over. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are still 47 minutes away from the start of cash trading. Looking at futures that are up thans the board here, more three quarters of a percent in germany, more than two thirds in paris. Ftse futures gaining. 5 right now. Lets get the Bloomberg Business flash news, the top corporate stories from the bloomberg terminal. Softbank is selling part of its the 21 tmobile in billion deal. The sale is part of a broader push by the conglomerate to unload assets in order to finance buybacks and pay back debt. The company is dealing with steep losses in its vision fund after writing down the value of investments including we work and uber. Accounting scandal, wirecard explored a deal to enter the financial elite. Sources tell us the Payments Company considered a tie up with Deutsche Bank and even approach to the lender with the idea. Deutsche bank ended the preliminary talks while the bank had more than 1 trillion in assets. Its market value was less than that of wirecard as recently as april. Apple plans to sell Mac Computers with inhouse processors. The move signals an end to the 15 Year Alliance with intel. The change was announced at the Virtual Conference for software makers. Its all the most drastic changes to the iphone home screen since the products release. Similar to android, it will allow users to place which it that sit between the usual grid of apps. That is your Bloomberg Business flash. Anna . Anna lets talk about volatility in markets. It swept through markets. Trade advisor Peter Navarro saying to the china deal was over. It depends which part of the world you were in. Here in london, many the dollar surged and stocks fell sharply after these remarks from Peter Navarro. Sharps faced an equally recovery. Navarro walks back the comments, saying they had nothing to do with the phase i deal. President trump tweeted that the deal with china is fully intact. We are joined by the senior portfolio and our future portfolio manager. The treasury yield market that you focused on, that was moved just like many others, like s p futures, the vix, the yen, the dollar, soft commodities. All of these markets moving in tandem, reacting to a story around u. S. China trade. It is almost comforting, i suppose, that there are other narratives that will cut through the market thinking right now other than a second wave of the virus. It shows how sensitive the market is to headlines around u. S. China trade. The fact that trump walked back these comments so quickly illustrates that the u. S. Administration is trying to find a balance which is on the one hand, there is a partisan support for antichina rhetoric in the u. S. , but at the same time, we are coming out of a significant hit to growth, a meaningful recession. Be administration will trying to avoid any economic fallout that can result in a collapse of the phase i deal so it is quite a fine balance that trump and his administration are trying to walk at this point. Matt what do you think about treasuries down below 70 basis points . Jub the big discussion with the treasury much more related to the shape of the yield curve as opposed to the outright level in yields. The communication from the fed has been quite clear that policy rates will be at these levels for quite an extended period. Powell saying that the fomc are not even thinking about raising Interest Rates at this stage, and if we look at the dot plot, we have policy rates at the current level until the end of 2022, so there is extended Forward Guidance pinning the belly of the curve significantly and all of the action is in the backend, and that is where the discussion around the impact of the significant supply due to the fiscal expansion that we have had as a result of coronavirus, and possibly any very longterm inflationary impacts. That is what has been driving the backend. The big picture for developed market duration is we are in a low rate environment for an extended period and it difficult to see big moves in either direction. Do markets need to yield curve control or does talk of yield curve control almost achieve the same ends . Jub even talking about yield curve control does a lot of the work for the fomc. We think that if the fed was to adopt a yield curve control framework, it would be akin to what we have seen in australia, which is trying to pin the front end, to year to three year point, as opposed to what we have in japan. If we look at the way the curve apparently trades, you could argue that objective has already been achieved because you have five year treasury trading at only 30 basis points, so they are achieving a lot of the objectives the why cc would accomplish but without formally adopting that framework so it does beg the question of why the to would look to an extent tie their hands at this stage. Unless we see a significant deterioration in the growth outlook, in the macro outlook, and they want to really cement that Forward Guidance. Matt if you look at spreads to bunds, we are seeing a real tightening from where we were one year ago, two years ago, and that has taken a little bit of that has taken a little bit of the enticement out of Foreign Investors to buy the dollar, in order to get treasuries. We have seen may be the dollar coming down a little and weakening. Do you think we are going to see that continue . On a lot of that depends the speed of the recovery out of coronavirus. One of the key attractions for the dollar over the last couple of years has been the yield advantage that u. S. Assets have had that has eroded significantly. Now, its much more about Global Growth, which we know the dollar typically goes up when Global Growth declines and vice versa, and also risk aversion. Safe havenike a asset. We saw that in march that even other typical safe havens like the yen and treasuries were actually losing money at the same time as equities were going down. The dollar was really the only firm risk reducing through that period. With the banks trading close to 30, 35, theres a lot of risk aversion out there. Until that subsides, there is likely to be some continued support for the dollar. As the growth recovery broadens out as we come out of the q4, we couldq3, expect the dollar to have a gentle downside bias. Is related risk aversion likely to be in place at least in the short term. To talk aboutmore with you. Jub hurren from aviva investors stays on the program. Coming up later on bloomberg television, bloomberg invest his hosting some of the biggest names in finance, politics, and economics, starting from 6 00 p. M. London time, we will speak with the ceo of pimco, followed coceo, andle group finally, u. S. Treasury secretary Steve Mnuchin will be joining bloombergs David Rubenstein. Do not miss that later on bloomberg television. Matt welcome back to Bloomberg Markets european open. We are still 37 minutes away from cash trading across europe. But we do see markets which have really moved overnight in asia. Now, we are looking at futures that are higher in europe. Lets get back to jub hurren from aviva investors. Let me ask you first about this this visibility issue that we have had throughout the coronavirus. Its been really difficult for companies and investors to get any clarity to make forecasts and to make investments. Is that improving over the last few months . Jub i think visibility is improving but its at a very gradual pace. There is a wide range of distributions in terms of how the growth recovery can actually materialize. We are seeing a lot of progress being made in terms of some sectors looking to tentatively open up and we see that in some better data over the last couple of months. We look to see what we get from the pmis today in terms of science for a further recovery here in europe, but there are some sectors that are still left with some very Big Questions, particularly things like airlines, hospitality, other forms of travel, and any sectors that require a lot of people to congregate together in one place. Those are the sectors where there remain very Big Questions and returning to normality may require a vaccine which we think will be some time before that is available. Visibility is improving. That is one of the reasons why we have seen volatility come down in markets over the last couple of months. Obviously, we have also seen at least there is a process by which governments can tackle the virus, so lockdowns, getting case numbers to low levels, then gradually reopening. Ae road to recovery has been gradual one so far. Matt but you have been able to shift your strategy to some extent, right . We spoke with you at the beginning of may, and you were mainly investing in investmentgrade credit, and now, you have been able to shift towards not only cyclical investments, but also, towards higheryielding investments, rather than Investment Grade going into high yields. Is that because visibility has improved, that you are now able to make these place these bets, lets say . Jub jub its partly visibility improving jub it is partly visibility improving. We will see a sequential recovery in coming quarters. Aere there has been significant improvement in visibilities has been on the Monetary Policy side, and we think that the extent of policies we now have in place with the fed and the ecb both directly behind the credit asset class. That does act as a material backstop for Credit Investors here and we have seen 80 billion year to date into credit markets and thats obviously after some pretty significant outflows in q1. If that technical picture where we can have much greater confidence and much greater visibility that is really helping to offset some of the more fundamental fears investors have at this point. Anna sorry, we have to go to break. Thank you for joining us, jub hurren, fixed income at aviva investors. This is bloomberg. Welcome back to the european open. 30 minutes away from the start of cash equity trading. Still green arrows in terms of futures. Could be a riskon morning after President Trump seemingly settled the deal in terms of the u. S. Trade relationship with china for now at least. Lets get a look at what is happening today. We will. London time get the eurozone preliminary pmi readings for june. Numbers for france and germany come at 8 15 and 8 30 a. M. Respectively. In the early afternoon, u. K. Prime minister Boris Johnson will announce lockdown easing plans, the relaxing of social distancing rules is expected to be the m