Trucks wait in line as shipping containers stand in a terminal at the Yangshan Deep Water Port in Shanghai, China, on Friday, March 23, 2018. The trade conflict between China and the U.S. escalated, with Beijing announcing its first retaliation against metals levies hours after President Donald Trump outlined fresh tariffs on $50 billion of Chinese imports and pledged there’s more on the way. Photographer: Qilai Shen/Bloomberg

Five Things You Need to Know to Start Your Day

(Bloomberg) --

The world’s biggest economies warn of fallout from the trade war, which threatens to spill into currencies after Trump comments roiled markets. Here are some of the things people in markets are talking about today.

G-20 Warnings

Trade tensions threaten global growth as the engines of leading economies fall out of sync, the world’s top finance chiefs warned on Sunday. Global growth remains robust and many emerging-market countries are better prepared to face crises, but risks to the world economy have increased, finance ministers and central bankers from the Group of 20 nations said at the end of their summit in Buenos Aires. Trade dominated discussions over the weekend after U.S. President Donald Trump threatened on Friday to levy tariffs on additional imports from China worth billions of dollars. French Finance Minister Bruno Le Maire urged the U.S. to return to reason and said the EU would not negotiate trade issues "with a gun to the head."

Currency War? 

U.S. Treasury Secretary Steven Mnuchin has tried to put to rest concerns of a currency war erupting. That came after Trump charged that China is “manipulating” its  currency that’s been “dropping like a rock,” suggesting to market participants that the U.S.-China trade war is now broadening to include currencies.   Mnuchin, when asked whether investors should be concerned about the prospects of a currency war, said “no,” declining to elaborate during a press conference in Buenos Aires on Sunday. The yuan has been sliding for six weeks and hit its lowest in more than one year against the dollar last week. 

Coming Up…

Australia CPI and South Korea’s GDP are among the bigger ticket economic items out of Asia this week. Further afield, the U.S. economy probably sprinted ahead in the second quarter at the fastest pace in almost four years, while the European Central Bank sets monetary policy a month after announcing interest rates may remain unchanged for at least a year. Among earnings, Alphabet gets Big Tech started on Monday, with the Google parent expected to show gains from mobile search, YouTube and cloud sales. Facebook and Amazon are due later in the week. Exxon and Shell, and Bristol-Myers and Eli Lilly headline Big Oil and Big Pharma earnings. UBS reports on second-quarter performance on Tuesday. 

Muted Start Eyed

Markets looked set for a muted start in Asia on Monday after the greenback's bruising on Friday. Equity futures are lower in Japan and Australia, while Hong Kong equities signaled marginal gains. With Trump's latest salvo in the trade war sinking the dollar at the end of last week, all eyes remain on developments in the tensions with China and on the earnings season.

BOJ’s Dilemma

As the clock counts down to the Bank of Japan’s July 31 policy announcement, officials are looking for ways to keep their stimulus program sustainable while reducing the harm it causes in markets and on the profitability of commercial banks. A series of recent media reports suggest that the gathering could deliver anything from allowing for a more natural rise in long-term interest rates to no change and a mere assurance that policy makers are considering the side effects. The speculation fueled a slide in 10-year Japanese government bond futures during U.S. trading on Friday.  The dilemma for Governor Haruhiko Kuroda is that even as cries to change policy grow louder, persistently weak inflation dictates the need to maintain stimulus. Winding it back would strengthen the yen, further undermining efforts to spur higher prices, while also hitting Japanese exporters. Kuroda declined to comment on the speculation.

What we've been reading

This is what's caught our eye over the last 24 hours.

©2018 Bloomberg L.P.