POWER: UK June Eyes 6% Rise On Week

(MNI) London - State-run Xinhua reports excerpts from a white paper from the State Council Information Office regarding US trade and economic relations. The report claims that "in recent years, the rise of US unilateralism and protectionism has seriously interfered with the normal economic and trade cooperation between China and the United States."

• In response to US tariffs, "China has no choice but to take strong countermeasures to resolutely defend its national interests. At the same time, China has always adhered to the basic position of resolving disputes through dialogue and consultation,"
• Xinhua: "These restrictive measures, which use tariffs as threats and coercion, are a mistake on top of a mistake, and once again expose the typical unilateralism and bullying nature of the United States. They not only violate the laws of the market economy, but also run counter to multilateralism,"
• Xinhua: "It is hoped that the United States and China will meet each other halfway, follow the direction indicated by the call between the two heads of state, and in the spirit of mutual respect, peaceful coexistence and win-win cooperation"
• Earlier, Foreign Ministry spox Lin Jian said on the emerging trade war that "China will take necessary measures to resolutely safeguard its lawful rights and interests. If the United States ignores the interests of the two countries and the international community and insists on fighting tariff wars and trade wars, China will surely fight till the end," 

• Some Steepening unwind after Bund and the longer end Buxl recovered from their earlier lows.
• Nonetheless, the German 2s/10s managed to print its Steepest level since December 2018 at 94.033, while the German 5s/30s has found some resistance just short of 97.395, the 2021 high, printed a 96.448 high.

Gilts sell off, adjusting to the overnight move in Tsys.

• Futures break yesterday’s low, basing at 91.08, before a recovery to 91.30.
• Support at the Mar 28 low (91.03) was untested. That level protects the Mar 27 base & key support (90.55).
• Yields 9bp lower to 15bp higher, aggressive curve steepening seen.
• 10s30s is set for the first close above 80bp since August ’16, while 2s30s is on track for the steepest close since ’17.
• Flattener plays in the former were a preferred position into the Spring Statement, given expectations surrounding a shortening of WAM. Exiting of related legacy positions could be factoring into today’s steepening.
• GBP4.5bln of 4.375% Mar-30 gilt supply is due today.
• MPC member Lombardelli didn’t provide much in the way of market-pertinent commentary.
• A reminder that BoE’s Breeden will speak at an MNI Connect event on Thursday, covering “UK economic and financial stability prospects."