I. Yesterday’s News
International News

1. U.S. President Donald Trump made a stunning concession to North Korean leader Kim Jong Un on Tuesday about halting military exercises, pulling a surprise at a summit that baffled allies, military officials and lawmakers from his own Republican Party. At a news conference after the historic meeting with Kim in Singapore, Trump announced he would halt what he called "very provocative" and expensive regular military exercises that the United States stages with South Korea. That was sure to rattle close allies South Korea and Japan. North Korea has long sought an end to the war games. Trump and Kim promised in a joint statement to work toward the "denuclearization" of the Korean Peninsula, and the United States promised its Cold War foe security guarantees. But they offered few specifics. The presidential Blue House said it needed "to find out the precise meaning or intentions" of Trump's statement, while adding it was willing to "explore various measures to help the talks move forward more smoothly."

2. U.S. monthly consumer inflation rose moderately in May as gasoline price increases slowed, suggesting the Federal Reserve could continue to gradually raise interest rates this year. The Labor Department's inflation report was published ahead of the start of the Fed's two-day policy meeting on Tuesday. Steadily rising inflation and a tightening labor market are seen encouraging the U.S. central bank to hike rates for a second time this year on Wednesday. The Consumer Price Index increased 0.2 percent last month. In the 12 months through May, the CPI accelerated 2.8 percent, the biggest advance since February 2012. Excluding the volatile food and energy components, the CPI rose 0.2 percent, that lifted the year-on-year increase in the so-called core CPI to 2.2 percent, the largest rise since February 2017. The dollar was little changed against a basket of currencies while prices for U.S. Treasuries fell slightly. Stocks on Wall Street were trading higher.

3. ZTE Corporation announced that it has reached a new settlement agreement with the U.S. Bureau of Industry and Security (BIS) which will see it pay a fine of $1.4 billion. It also said that it would work to resume operations as soon as possible after the ban gets lifted, and would republish its first-quarter financial results after assessing the impact of the ban and the settlement agreement. As part of the deal, ZTE promised to replace its board and executive team within 30 days, open itself up to U.S. inspections of its sites and improve public disclosure of its supply chain. It said trading in its A shares would resume on June 13.

4. OPEC said the oil market outlook in the second half of 2018 is highly uncertain even though the producer group's figures show a global glut has ended, suggesting talks next week on relaxing a supply cut deal won't be straightforward. In a report on Tuesday, the Organization of the Petroleum Exporting Countries said those inventories in April fell to 26 million barrels below the five-year average. That's down from 340 million barrels above the average in January 2017. OPEC in the report was cautious on the outlook for the rest of 2018, citing a faster-than-expected rise in non-OPEC oil production and the chances of global demand weakening.

5. Confidence among German investors slumped to its lowest level since September 2012 Tuesday, as financial players were spooked by a transatlantic war of words over trade. The ZEW institute's regular poll of economic expectations for the coming months lost 8.2 points for a reading of -16.1. ZEW’s gauge of current conditions slipped to 80.6 from 87.4.

Domestic News

6. China's total social financing (TSF), a broad measure of credit and liquidity in the economy, dropped sharply to a 22-month low of 760.8 billion yuan ($118.80 billion) in May from 1.56 trillion yuan in April, data from the central bank showed on Tuesday. The credit contraction was deeper than expected as regulators continue to roll out measures to improve supervision and risk control in the financial sector, sending corporate financing into negative territory and credit growth slower.

7. China welcomes the first-ever U.S.-North Korea summit on Tuesday, Foreign Minister Wang Yi said, expressing hope that Washington and Pyongyang will work together to achieve denuclearization on the Korean Peninsula. China wants Trump and Kim to "establish mutual trust" and "overcome difficulties" to establish a peace mechanism on the Korean Peninsula, Wang added.

8. China's top economic planner has signed a memorandum with China Construction Bank to set up a fund investing in strategic emerging sectors. In addition to the national-level development fund, the two parties will also establish underlying funds to attract private capital. The target fund volume is expected to be about 300 billion yuan (46.85 billion U.S. dollars), according to a statement released by the National Development and Reform Commission (NDRC).

9. The Report of Financial Inclusion Development in China said digitalization plays an vital role in pushing forward the financial inclusion development , but the financing ability and it usage remains the largest cap.

II. Market Overview
FX
1. Global Market

The dollar rallied against a basket of currencies on Tuesday ahead of Wednesday's Federal Reserve policy decision, while the British pound whipsawed after Prime Minister Theresa May defeated a rebellion in parliament over Brexit plans. The pound strengthened 0.3 percent against the dollar to $1.3424 after parliament voted to back the government on several amendments to the EU withdrawal bill. It then retraced its moves and finally settled around $1.3373. The dollar index, which measures the greenback against a basket of six currencies, was last at 93.808, just below the day's high of 93.911, boosted further by U.S. President Donald Trump's stunning concession to North Korean leader Kim Jong Un on Tuesday about halting military exercises.

2. Home Market

China's yuan slid slightly against the U.S. Dollar in thin trade in the morning session, while the People's Bank of China (PBOC) set the yuan's midpoint rate lower for the third consecutive day. Market participants were cautious, awaiting the outcome of a landmark meeting between the United States and North Korea and the incoming Federal Reserve policy meeting.

Precious Metals

Gold prices remained locked just below $1,300 an ounce on Tuesday as investors waited for clues on the pace of U.S. interest rate rises following the impending conclusion of a Federal Reserve policymaking meeting. A Fed statement and press conference expected on Wednesday could push gold out of the tight range of about $1,290 to $1,305, in which it has been trapped since mid-May. Spot gold fell 0.3 percent at $1,295.57 per ounce, earlier hitting $1,292.60, a one-week low. U.S. gold futures for August delivery settled down $3.80, or 0.3 percent, at $1,299.40 per ounce.

Commodities
Crude Oil

Oil prices were mixed on Tuesday, with U.S. crude settling higher before falling in post-settlement trading, and Brent slipping as investors prepared for a key meeting of the OPEC producer group next week. Brent crude futures fell 58 cents to settle at $75.88 a barrel, while U.S. West Texas Intermediate crude futures climbed 26 cents to $66.36. In post-settlement trading, however, WTI turned negative while Brent extended losses after data from the American Petroleum Institute showed a surprise build of 833,000 barrels in U.S. crude stockpiles. Analysts had expected a decline of 2.7 million barrels.

U.S. Treasuries
1. U.S. Bonds

U.S. Treasury yields rose on Tuesday ahead of Wednesday's widely expected hike in interest rates by the Federal Reserve and after inflation data met economists expectations. Benchmark 10-year notes fell 1/32 on the day in price to yield 2.961 percent, up from 2.957 percent on Monday. The U.S. Treasury saw fair demand for $14 billion in 30-year bonds on Tuesday. The debt sold at a high yield of 3.100 percent, near where the bonds had traded before the auction.

2. Chinese bonds

The People's Bank of China has injected 100 billion yuan into the money market through open market operations, including 50 billion yuan of seven-day reverse repos, 20 billion yuan of 14-day reverse repos, and 30 billion yuan of 28-day reverse repos. That means a total net injection of 30 billion yuan.

Stock Market
1. U.S. Equities

U.S. stocks ended slightly higher on Tuesday, boosted by gains in technology and utilities shares, though investors were cautious ahead of the Federal Reserve's policy decision. The Fed is widely expected to raise interest rates for the second time this year when it concludes its policy meeting on Wednesday. Investors are focused on how the Fed characterizes its monetary policy, looking for hints if it would move to raise rates three or four times this year. The Dow Jones Industrial Average fell 1.58 points, or 0.01 percent, to 25,320.73, the S&P 500 gained 4.85 points, or 0.17 percent, to 2,786.85 and the Nasdaq Composite added 43.87 points, or 0.57 percent, to 7,703.79.

2.Hong Kong Equities

Hong Kong stocks ended higher on Tuesday, after U.S. President Donald Trump and North Korean leader Kim Jong Un signed a 'comprehensive' deal aimed at the denuclearisation of the Korean peninsula, while Washington committed to provide security guarantees for its old enemy. The Hang Seng index closed up 39.36 points or 0.13 percent at 31,103.06 points, while the China Enterprises Index ended 0.28 percent higher at 12,206.57 points.

3. China Equities

Shanghai stocks recovered from early losses to end higher on Tuesday, bottoming up after a three-day losing streak, as sentiment improved after U.S. President Donald Trump and North Korean leader Kim Jong Un signed a 'comprehensive' deal. Asia Pacific stocks rallied across the board, buoyed by consumer sector. But a correction can only be expected in the second half of June due to great uncertainties in this event-packed week. The Shanghai Composite Index ended up 0.89 percent or 27.02 points at 3,079.80 points. The turnover of Shanghai A shares rose to 154.3 billion yuan from 143 billion yuan.