| Welcome to your morning markets update, delivered every weekday before the European open. Good morning. Asian equities started the week on a positive note, U.S. President Donald Trump announced some good news on Mexico, Boris Johnson reiterated his tough stance on Brexit, and central banks are flexing their muscles. Here's what's moving markets. Delayed Trump announced that tariffs on Mexican goods would be suspended indefinitely, although the Latin American country appears baffled by his claim that an agreement on agriculture was reached as part of a pact to stem immigration into America. On Trump's other trade war, the head of the International Monetary Fund, Christine Lagarde, reiterated her call for the U.S. and China to de-escalate the boiling tensions. The U.S. says its had constructive talks with China's central bank. Heroes They're the superheroes of the markets, OECD Secretary General Angel Gurria said at the weekend's G-20 meetings, describing central banks that he says are ready to take action to damp the impact of the tariff war. "The question is: How much armory do they still have, how many bullets, particularly silver bullets?" the philosophical Gurria added. The Bank of Japan and People's Bank of China have both been talking up their ability to add more stimulus if needed. Boris's Brexit The favorite to move into Downing Street, Boris Johnson, pledged a hard line on Brexit at the weekend, including the option of leaving without a deal, while adding he would scrap the Irish border backstop. The pound may slide to a two-year low if a euroskeptic like Johnson takes over as the U.K. prime minister, according to a Bloomberg survey of analysts. A list of candidates to lead the Conservative Party will be finalized today. Stocks Gain Asian stocks rose overnight and the peso surged the most in almost a year as Trump's agreement with Mexico was digested. The euro pared some of Friday's gain overnight despite Italy saying it will be able to comply with European fiscal rules, while in South Africa things aren't looking too rosy for the rand. Oil extended gains above $54 a barrel after after drilling activity data and Saudi Arabia saying it's sure OPEC+ output curbs will be extended. Coming Up... FTSE 100 member Ferguson Plc, a bellwether for construction suppliers that target the U.S. market, reports quarterly numbers. Meanwhile, U.K. lawmakers quiz Huawei executives on security as the nation weighs whether to allow the Chinese giant to have a role in next-generation broadband networks. Economic data is limited to industrial production from Italy. What We've Been Reading This is what's caught our eye over the weekend: And finally, here's what Cormac Mullen is interested in this morning Despite the slump in U.S. 10-year Treasury yields to the lowest since 2017 last week, hedge funds are refusing to back down from their bearish wagers on the global bond benchmark. Speculative net short positions increased for the week ended June 4, hitting their highest since November, according to the latest Commodity Futures Trading Commission data. Confidence the Federal Reserve will lower rates at least once this year is keeping pressure on yields and traders now see a quarter-point cut by the end of July as a given. The fast money brigade are likely betting the market has gotten ahead of itself on the pace of probable rate cuts. Fed funds futures now indicate almost 70 basis points of easing by the end of 2019. Any indication the U.S. economy isn't doing as badly as feared could lead to a rapid reduction in those expectations and a sell-off in Treasuries -- just what the hedgies are looking for. Like the actions of the Fed itself, their growing bearish bond wager has become very much data dependent.  Cormac Mullen is a Cross-Asset reporter and editor for Bloomberg News in Tokyo <GO> Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Before it's here, it's on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can't find anywhere else. Learn more. | 
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