China withdrew its economic growth target for 2020, highlighting the impact of Covid-19, which sent crude oil and metal prices lower. In addition, it proposed a national security law to end "secessionist and subversive activities" that would challenge Hong Kong’s autonomy and threatens to further damage relations with the U.S. US Senator Pat Toomey described this decision as "deeply troubling".

The return of tensions between Beijing and Washington, in the run-up to a new round of trade negotiations, shows that the economic war between the two leading world powers is returning to the forefront. This confrontation is becoming less and less muted. When the United States is openly campaigning for its companies to cut ties with their Chinese subcontractors, we are already well beyond the reversible customs barriers that made investors sweat in 2018.

Also in China, the annual session of parliament started today with many announcements. In particular, the leaders have planned to strengthen lending to small businesses and have launched a vast infrastructure investment plan of more than $500 bn. This is expected to result in a public deficit exceeding 3.6% of GDP.

Although the gradual reopening of economies in Europe and the USA has helped reduce the contraction in activity, the slowdown is still very much present. The flash PMIs published yesterday by Markit all came out below 50, with the service industry still at the back of the pack.

Meanwhile, the Department of Labor released yesterday the statistics regarding new U.S. jobless claims. Although these were down from the previous week, they were still high at 2.438 million registrations. In total, 38.6 million Americans have lost their jobs since the start of the epidemic.

Today on the agenda, we have U.K. Retail Sales and the publication of the minutes of the last ECB meeting. Earlier today,, the Bank of Japan left its rates unchanged in parallel with the announcement of a special financing plan of ¥75bn.