| Want the lowdown on what's moving European markets in your inbox every morning? Sign up here. Good morning. Europe's tentative reopening continues, U.S.-China tensions are coming to the surface again and emerging markets face huge risks. Here's what's moving markets. Different Strategies With increasing nervousness among market watchers about potential second waves of Covid-19 infections, European countries' different strategies for easing lockdowns are in focus. The U.K., which takes its first baby steps out of lockdown on Wednesday after much criticism of the govermnent's guidance, is facing calls from scientists to do more to suppress the virus and contending with deepening political divisions. Sweden, meanwhile, is backtracking on its strategy following a jump in elderly deaths. And Goldman Sachs expects that Italy and Spain will lag Germany in their economic recovery, in part due to the stringency of their respective shutdowns. Tensions Relations between the U.S. and China are back in focus, with numerous potential sources of tension between the two. U.S. prosecutors said China can't be trusted with sensitive documents involved in the case against Huawei Technologies Co. regarding Iran sanctions. The Senate is moving towards a vote on sanctions on Chinese officials over human rights abuses against Muslim minorities. And Hong Kong's leaders are pushing a pro-China agenda, potentially setting up a showdown with U.S. President Donald Trump. All as China steps up soybean purchases to try to meet its trade deal pledges but U.S. officials question whether economic integration of the U.S. and Chinese systems is the ultimate end goal after all. 'Grand Scale' Federal Reserve officials said the virus and partial shutdown of the U.S. economy will deliver a hit of historic proportions and business failures on a "grand scale," along with an outlook for a slow recovery and and the likelihood that more fiscal support will be needed. Some bond traders are clinging to the idea of more radical action from the Fed, which may also curb bank dividends to ensure they conserve enough capital to deal with the crisis. A $3 trillion package was proposed by House Democrats, a sign of the size of fiscal support that could be on the way, while the U.S. deficit ballooned, with a record $737.9 billion deficit in the month of April alone. Emerging Pain Major economies are staring down a massive economic slump, but the pain will be just as bad for their emerging counterparts. Developing economies are set to pay the price for the surge in their debt piles since the last financial crisis, as they lack the fiscal headroom that developed governments have to fight the virus effects. Similarly, many EM central banks have already cut interest rates to near-zero and will be forced to consider new tactics to support their economies. And the U.S. election could pose risks should U.S.-China trade relations worsen, resulting in more tariffs on Chinese goods and subsequent yuan volatility. Coming Up… Asian stocks were mixed and European futures are pointing lower after a slump in the U.S. driven by pessimistic comments from top U.S. infectious disease official Anthony Fauci on the dangers of states reopening too quickly. Along with the U.K. GDP numbers and a plunge in the country's retail sales in April, the economic data today is topped by euro-area industrial production and U.S. inflation. The earnings calendar is also relatively busy, with updates coming from the building materials, software, pubs and travel sectors. And watch for any further reaction to Uber Technologies Inc. bidding to expand its food delivery platform with an offer for GrubHub Inc. What We've Been Reading This is what's caught our eye over the past 24 hours. And finally, here's what Cormac Mullen is interested in this morning Currency traders are bracing themselves for a summer of discontent. That's according to one gauge of risk from the FX options market — risk reversals on the Australian dollar-Japanese yen cross — which measure the difference in cost between bullish and bearish wagers on the pair. The spread between four-month and one-month "riskies" — a period which covers the summer months — has moved to the widest since 2017 in favour of bearish bets. Expectations for the Aussie-yen pair is a popular barometer of risk given Australia's exposure to global trade and the Japanese currency's role as a safe haven in times of market strife. The moves in the FX market suggests traders are worried about a potential second wave of the coronavirus and renewed lockdowns in the coming months — something which is only beginning to be contemplated in the equity market. U.S. stocks closed lower Tuesday after Anthony Fauci, the nation's top infectious disease official, said states reopening too quickly could set back the road to an economic recovery.  Cormac Mullen is a cross-asset reporter and editor for Bloomberg News in Tokyo. 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. 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