EM ASIA CREDIT: MNI EM Credit Weekly

(MNI) London - Reuters reports comments from a spox from China's Foreign Ministry regarding trade concerns from the EU. Says that China, "hopes the EU can look at bilateral economic and trade relations comprehensively and positively". Says China "hopes the EU can uphold a more positive and practical China policy." Spox says that the EU "needs to reajust its attitude, not China and not China-EU trade relations." Claims that "the EU's public procurement market is far from being fair and open as the EU claims."

• These comments come amid an apparent deterioration in relations between Beijing and Brussels, only two weeks before a high-profile EU-China summit on 24 July. Even the Beijing summit itself signals the cooling of ties, with the second day of the summit focused on business ties cancelled and Premier Li Qiang set to helm the event rather than President Xi Jinping, according to Politico.
• Speaking to the European Parliament on 8 July, Commission President Ursula von der Leyen claimed that “China has an entirely different system, [it has] unique instruments at its disposal to play outside the rules,” that enables it “to flood global markets with subsidized overcapacity — not just to boost its own industries, but to choke international competition.”
• On 6 July, China announced restrictions on the purchase of medical devices made in the EU, in response to Brussels shutting China out of the bidding process for certain gov't contracts for medical devices. This tit-for-tat comes alongside more long-running disputes over EU duties on Chinese-made EVs and Chinese levies on EU spirits.  

SFIU5 96.00p with SFIZ5 96.05p, sold the strip at 5.5 in 4k.

Gilts tick higher alongside German & U.S. paper.

• Futures +10 at 91.71 vs. early highs of 91.83.
• Bears are in technical control. Initial support at yesterday’s low (91.42), while initial resistance comes in at yesterday’s high (91.98).
• Yields flat to 2bp lower, curve a little flatter.
• 2s10s registered the highest close since April yesterday (75.8bp), while 5s30s registered the first close above 140bp since ’17, but the spread is back below that level this morning.
• Continued digestion of the global trade/tariff backdrop and related ongoing negotiations between various countries and the U.S. continue to garner much of the macro focus.
• Meanwhile, the fragile fiscal situation continues to dominate domestically, with yesterday’s OBR release reaffirming well-documented areas of concern, likely factoring into the curve steepening seen on the day.
• The release of the BoE’s FSR headlines the UK calendar today, but shouldn’t reveal much in the way of meaningful, fresh information surrounding the future path of monetary policy.
• Elsewhere, the DMO will come to market with GBP4.5bln of the 4.50% Mar-35 gilt.
• Macro and cross-market matters should dominate for much of the day.