• Asian equity markets mostly traded with modest gains following a similar performance on Wall St. and with focus fully centred on the historical summit between US President Trump and North Korean Leader Kim Jong Un
• The meeting between the 2 leaders was seen as amicable in which the leaders shook hands several times and exchanged pleasantries
• UK PM May has headed off a Conservative rebellion ahead of today’s key Brexit vote by reaching out to Remainers in her party, according to reports
• Looking ahead, highlights include UK jobs, German ZEW, US CPI, APIs, UK House of Commons debates EU Withdrawal Bill

US-North Korea Summit

US President Trump and North Korea Leader Kim held a summit in Singapore in which they exchanged greetings and shook hands, while they were also seen smiling before entering a room for one on one discussions. The leaders then held a wider bilateral meeting with Trump joined by Secretary of State Pompeo and National Security Adviser Bolton, while Kim was joined by top North Korean aides, before the officials then conducted a working lunch. (Newswires)

US President Trump stated he has no doubts they will have a terrific relationship and noted a 'very very good, good relationship', while Trump also told Kim working together they will get it taken care of. Furthermore, Trump later commented that the summit went better than expected and that he expects a signing with Kim. (Newswires)

North Korean Leader Kim was heard to have said 'nice to meet you Mr. president' and stated the road to the talks was not easy but we're here after overcoming the obstacles. North Korean Leader Kim also said there will be challenges ahead but will work with US President Trump and that he believes this is a good prelude to peace, although reports noted that Kim didn't answer questions on denuclearisation. (Newswires)

US President Trump will sign agreement to acknowledge progress of talks and pledge to keep momentum going. (CNN)

ASIA

Asian equity markets mostly traded with modest gains following a similar performance on Wall St. and with focus fully centred on the historical summit between US President Trump and North Korean Leader Kim Jong Un. The meeting between the 2 leaders was seen as amicable in which the leaders shook hands several times and exchanged pleasantries, although the initial face-to-face was somewhat less awe-inspiring than that of the inter-Korean summit in April. In addition, after one-on-one discussions Trump suggested a ‘very very good, good relationship’ and Kim stated there will be challenges ahead but will work with US President Trump, although reports also noted that Kim refrained from answering questions on denuclearisation. ASX 200 (+0.1%) and Nikkei 225 (+0.6%) were positive with early outperformance seen in Japan amid a weaker currency, although some of the gains were pared due to pessimism that a swift agreement could be reached for the Korean peninsula. Elsewhere, Hang Seng (+0.3%) and Shanghai Comp. (+0.5%) have swung between gains and losses alongside a broad tentative tone across the region and after a tepid liquidity effort by the PBoC. Finally, 10yr JGBs were subdued amid a lack of conviction in the region and with an enhanced liquidity auction for longer-dated bonds largely ignored, which showed slight decline in the bid to cover and tighter accepted spreads.

PBoC injected CNY 50bln via 7-day reverse repos, CNY 20bln via 14-day reverse repos and CNY 30bln via 28-day reverse repos, for a net daily injection of CNY 30bln. (Newswires)
PBoC set CNY mid-point at 6.4121 (Prev. 6.4064)

UK/EU

UK PM May has headed off a Conservative rebellion ahead of today’s key Brexit vote by reaching out to Remainers in her party (Telegraph). Furthermore, UK Brexit Secretary Davis is said to back deal to buy-off Tory rebels on both wings of the party ahead of the EU Withdrawal Bill vote in the UK's lower house. UK solicitor general Baker that the government is discussing with lawmakers the replacement of an Upper House amendment on EU's customs union and that it is appropriate to have a customs arrangement with the EU. (Newswires) UK Conservative MP Grieve said to have tabled a compromise amendment on the Brexit deal and would likely rebel if it is rejected. (Newswires)

UK Foreign Secretary Boris Johnson reportedly supports plans for a GBP 15bln Brexit bridge that would connect mainland Britain with Northern Ireland. (Telegraph)

UK Chancellor Hammond is preparing to raise up to GBP 10bln in extra tax to help to boost the NHS on its 70th birthday. (Times)

Irish PM Varadkar said he will not accept a hard border in Ireland, adding that there is a small chance of no Brexit deal by October and that Article 50 could be extended for more Brexit talks. (Newswires)

German Chancellor Merkel agreed with the US to review trade ties and existing ties, while she noted it is clear the EU will respond to US tariffs on steel and aluminium. (Newswires)

FX

FX trade was indecisive with most majors choppy throughout the session as all focus was on the historical event in Singapore. Nonetheless, the DXY slightly firmed with USD supported prior to the summit, although the reaction to the actual meeting between the leaders was anticlimactic. Likewise, USD/JPY and JPY-crosses initially extended on gains before petering out, while AUD was also temperamental alongside mixed Home Loans and Business Survey data.

Australian Home Loans (Apr) M/M -1.4% vs. Exp. -1.8% (Prev. -2.2%). (Newswires)
Australian NAB Business Confidence (May) 6 (Prev. 10)
Australian NAB Business Conditions (May) 15 (Prev. 21)

COMMODITIES

Commodities were lacklustre overnight amid a lack of drivers for the complex and with all attention on the events in Singapore. As such, WTI crude futures were relatively flat with prices holding above the USD 66.00/bbl and copper was sideways amid a tentative risk tone on overnight trade. Meanwhile, gold was subdued with the precious metal below the USD 1300 level amid a firmer greenback and with participants also awaiting a widely expected rate hike by the Fed on Wednesday.

Iraq oil minister said to expect 'a tough but not very tough' OPEC meeting on June 22nd, while he added that Iraq will decide to boost output if there is consensus among other members. (Newswires)
 


US
Treasury yields were higher on Monday ahead of the FOMC’s policy meeting on Wednesday, where a 25bps is priced with virtual certainty. The complex was helped by continuing deflating of the political risk premium in Europe, analysts said, where over the weekend, the Italian finance minister said that the country has no intention of leaving the Euro area, helping the Bund/BTP spread to narrow. The US Treasury auctioned $32bln in 3yr notes, tailing by 0.1, and saw the same high yield as May’s auctions. Indirect participation was strong, taking down the largest share since January. Directs participation was below recent averages, while dealer take down was slightly above recent averages. The 10yr note auction stopped-through the screens by 0.3bps with cover the highest since January. Indirect participation was, however, well below the six month average, seeing direct participation almost double versus the previous month, though dealer participation was in line with recent averages. US 10YR T-notes futures (Sep 2018) at 5 ticks lower at 119-14.

US President Trump tweeted that White House economic adviser Kudlow suffered a heart attack and is at Walter Reed Medical Center. However, Kudlow was later reported to be in good condition after the mild heart attack and his wife stated he is doing fine. (Twitter)