| Good morning. France's fury, ECB report dismissed, Invesco-State Street talks and China's billion vaccinations. Here's what's moving markets. The U.S. is struggling to stem anger over Australia's surprise decision to abandon a multibillion-dollar submarine contract with France in favor of U.S. technology. France's foreign minister took aim at President Joe Biden after being blindsided by the pact, also involving the U.K., which aims to beef up against China. Jean-Yves Le Drian drew comparisons with the actions of Biden's predecessor, Donald Trump, while China also hit out. The European Central Bank dismissed a Financial Times report that said chief economist Philip Lane discused with analysts unpublished internal models suggesting the institution expects to reach its 2% inflation target by 2025. The newspaper cited the models as signaling that the ECB is on course to raise interest rates in just over two years. Bund futures dropped after the report. Invesco is in talks with State Street's asset management arm about a possible combination that would create an exchange-traded fund giant, the Wall Street Journal reported. While ETF leaders BlackRock and Vanguard are significantly larger, a merger would narrow the gap by forging a rival with a roughly 20% market share. Still, it's unclear what the terms of any deal between the two U.S. firms might ultimately look like, the WSJ adds. China says it's fully vaccinated more than 1 billion people against Covid-19 — over 70% of its total population and putting it in the lead among the world's biggest economies. Still, while shots from state-owned Sinopharm have been shown to stave off the highly infectious delta variant, China's vaccination push hasn't averted flareups of the illness in recent months, weighing on macroeconomic data. European stock futures are pointing upwards, with Asian equities snapping four straight days of losses. Automaker Peugeot reports earnings, while U.S.-listed Manchester United may update on how the signing of Cristiano Ronaldo could impact its books. Meanwhile, it's "triple witching" day, when the quarterly expiration of futures and options on indexes and stocks occurs, potentially leading to volatility. Finally, reservations for the new iPhones are set to begin. This is what's caught our eye over the past 24 hours. Despite the wave of commentary in recent months on Federal Reserve tapering -- which is only going to intensify into year end -- global demand for Treasuries looks as robust as ever. Foreign holdings of U.S. government debt rose to a record $7.5 trillion, according to the latest figures from the Treasury Department, thanks to a pick up in demand from Japan and China. Admittedly the data only goes to July, but demand at Treasury auctions over recent months has also continued to show robust foreign interest. Foreign purchases come even with benchmark Treasury yields expected to climb to 1.6% by the end of the year (from about 1.3% today), according to economists surveyed by Bloomberg. Some market strategists see yields rising to 2%. But a quick look at the yield curve has to call those forecasts into question. The spread between 5- and 30-year Treasuries has flattened to its lowest in over a year, as the rise in inflation expectations petered out. That suggests the bond market is not concerned about the recent climb in energy prices nor the risk of a disorderly taper. With a delay to an expected Fed tapering announcement next week still a possibility, yields could drift even further below consensus forecasts, with just over three months of the year left to go.  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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