Five Things You Need to Know to Start Your Day

(Bloomberg) --

U.S.-China tensions heat up, investors in risk-off moods and economies slowly get back to business. Here are some of the things people in markets are talking about today.

Conclusive report

President Donald Trump yesterday promised a “conclusive” report on the Chinese origins of the coronavirus outbreak after Secretary of State Michael Pompeo said there was “enormous” evidence the virus began in a laboratory in Wuhan. Acknowledging the death toll from the pandemic in the U.S. would be between 75,000 and 100,000, Trump also pressed for a reopening of the economy in the virtual town hall hosted by Fox News. Investors, already nervous about the damage the shutdown is doing to growth prospects, are worried that heightened tensions will lead to a reemergence of the trade war between China and the U.S.

Knucklehead risk

New Jersey Governor Phil Murphy warned that the pace of the state's relaxation of measures introduced to slow the spread of the virus would in part be governed by how much "knucklehead” behavior emerges. In Florida, state parks will reopen today along with restaurants and retail in most parts of the state. There were more signs of the damage already done to the retail sector by the shutdown with J. Crew Group Inc. filing for Chapter 11 bankruptcy this morning. In Europe, Italy and Spain have started to relax shutdown measures as PMI data confirmed the unprecedented output slump in the region in April.

Oil fear

The collapse of oil prices into negative territory last month has investors doing everything they can to avoid getting caught in a repeat performance. That risk aversion was highlighted when a $500 million oil exchange-traded fund in Hong Kong said its broker refused to let it increase holdings of crude futures. Other funds have already announced they are moving their holdings further out the futures curve. While massive build-ups in storage are the immediate problem facing traders, animosity between the U.S. and China risk hampering the global recovery. West Texas Intermediate for June delivery snapped a three-day increase to trade 8% lower, close to $18 a barrel.

Markets drop

The risk-off mood in markets continues this morning with most major gauges trading lower. Overnight the MSCI Asia Pacific ex-Japan Index dropped 2.6%. Japanese markets are closed for a three-day holiday. In Europe, the Stoxx 600 Index had dropped 2.6% by 5:50 a.m. Eastern Time as traders there returned from a three-day weekend. S&P 500 futures pointed to a lower open, the 10-year Treasury yield was at 0.597% and gold was higher.

Coming up…

March factory orders are expected to show a near 10% decline while the final print of durable goods orders numbers is expected to confirm the more than 14% plunge when the data is released at 10:00 a.m. In earnings today there will be close interest in the results from Tyson Foods Inc. as the U.S. meat industry has been thrown into turmoil by the coronavirus outbreak. Air Canada, Lowe's Cos Inc. and Shake Shack Inc. are among the other companies reporting. The Senate returns today.

What we've been reading

This is what's caught our eye over the weekend.

Odd Lots: Nouriel Roubini sees a bad recovery, then inflation, then a depression.
Bad start to May is a sign of things to come for markets.
Fears mount about inflation returning with a vengeance.
Ultra-rich families with cash on hand pile into private debt.
Buffett dumps airlines.
JPMorgan “volfefe index” finds Trump tweets drive Treasury moves.
The universe is expanding faster than it should.