| Want the lowdown on what's moving European markets in your inbox every morning? Sign up here. Good morning. U.S.-China tensions simmer, there's uncertainty in Lebanon and stock futures are higher. Here's what's moving markets. Balancing Act Beijing appears to be trying to find a balance between sounding tough on the U.S. and avoiding triggering detrimental action by President Donald Trump. China is ditching expensive Brazilian soy bean purchases and replacing previously done deals with American supplies, according to people familiar with the transactions. And, while it said Monday it would sanction 11 Americans in retaliation for similar measures imposed by Washington, its list didn't include any members of the Trump administration. Some banks in Hong Kong are already stepping up efforts to avoid sanctions violations, while protestors have a new tool: Stock-market trading accounts. Lebanon Uncertainty It's unclear how long it will take to form a new government in Lebanon after the country's prime minister of seven months confirmed the resignation of his administration. Hassan Diab blamed a corrupt political elite for sabotaging his tenure in a speech following last week's explosion in Beirut. Even before the fatal incident, Lebanon was struggling, amid a need to undertake reforms required to unlock international funding. Rate Views Turkey's lira held Monday's decline after President Recep Tayyip Erdogan said he wants interest rates cut further, even after a series of cuts this year amid central bankers' attempts to fight the economic impact of Covid-19. "God willing, they will go down further," the leader -- a firm believer that high borrowing costs fuel inflation -- said in a televised speech on Monday. Separately, currency traders may eye comments from the Bank of England's Dave Ramsden, who told The Times in an interview that the central bank will accelerate and step up quantitative easing if the economy slows and markets wobble again. Stocks Gain European futures are higher and Asian stocks rose the most in a week with eyes on the U.S. after some states hit hard by Covid-19 including New York, California and Texas reported falling hospitalizations. Meanwhile, President Donald Trump, who was abruptly pulled from a briefing Monday following a shooting near the White House, said he's "very seriously" considering a capital gains tax cut. The impasse on Capitol Hill over coronavirus relief continues. Coming Up… Earnings reports are due from Holiday Inn-owner InterContinental Hotels Group Plc and online fashion retailer Zalando SE. Meal kit-provider HelloFresh SE raised its 2020 forecast as more time spent at home helps its business. In data, U.K. unemployment is expected to have crept up in June and we'll also get a reading of the German ZEW economic sentiment index. 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 The bond market may be having a moment. There hasn't been any significant moves yet but there has been a few interesting shifts in pricing and a notable change in sentiment. The once seemingly relentless decline in U.S. real yields has stopped for now with the 10-year inflation-protected Treasury yield set for its third straight increase as of early Tuesday morning. Traders are dialing back their expectations for a negative-rate policy from the Federal Reserve with Fed funds futures for December 2021 retreating below 100 for the first time since June. That indicates the market expects interest rates to remain in positive territory through all of next year, though traders remain priced for a move below zero in the first half of 2022. And a slew of strategists have come out in the past few days with bearish commentary on Treasuries, from Barclays to Citigroup to UBS. None of this means a turning point is imminent, but it does call for heightened caution. A rapid move higher in yields would upset a lot of investment apple carts, and spark a rotation in equities that investors are likely not yet positioned for.  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. | 
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