Australia, 1. 95 , a record low. The yields coming down further, market fear driving this lower, according to the senior strategists. It moved back into safety, really more pronounced when you look at the currency markets. If you had to pick dollar or yen, it would be the yen. If you had to pick the dollar and yen against anything else, you would pick both. Past 102 thised morning. What a difference. Before i go, have a look at this, pushing up. We are looking at more weakness in the renminbi. Just a key data point at want to mention. We saw the private survey in services, improvement in june. In other words, more optimists than pessimists. Yvonne david, thank you. Australias trade deficit was that it had expected it may, coming in at 2. 2 billion aud, the equivalent of 1. 7 billion usd. Rba sets the the cash rate later today with no change expected. For more, lets get to paul allen in sydney. Paul, the economists were pretty much unanimous on no cut, but its a different story for august, right . Paul thats right. It is 100 in favor of the rba staying today, but fast to august and those positions reversed. Reason for this, aside from the political turmoil, its all about the cpi in australia. It was back in may that we had our first deflationary fall in seven years, quarterly data due out on july 27. The rba meets again a week after that. Theyre going to do it then. He did have interesting piece of data, the trade balance blowing up. 2. 2 billion deficit, up 2 . The aussie dollar was down. This is all part of a trend in australia of ever widening structural deficits, and it looks like we are set for a hung parliament, so dont expect policymakers to do anything about it. The onus will be firmly on the reserve bank to continue doing what they can to stimulate growth. Yvonne talk about that hung parliament, paul. The counting resumes today in australia, and this really code is there any indication of when we could expect a clear picture . Well, its possible a clearer picture will begin to emerge this evening, and if not this evening, then later in the week. 1. 1they have a big job, million and before they can be counted they need to be sorted into the appropriate electorate. Dontc saying today expect us to get through one million votes in a day. In the meantime, the postelection positioning continues, an Opposition Leader calling on the Prime Minister to resign, and even one of his own senators saying that there needs to be a debate on the leadership. Malcolm turnbull is vowing to push on. Yvonne all right. Thank you so much. Lets check in on some other stories making headlines. Is sent to be in exclusive talks with the french carrier, iliad. Aswould increase competition a tally of tribes to combine. They are hoping to win approval for the merger. Largestn chinas a lo Property Developer have slumped in changeup for a second straight day. They resumed trade for the first time this year monday following a sixmonth halt as its biggest shareholders fought for control. Of the company has announced a near 7 billion share sale in a bid to end the battle. Uks Ruling Conservative Party will ballot its mp on the five contenders to replace david cameron. Theresa may has the most thersements, and meanwhile decision to leave the eu may not be final after all. Thousand people want a second referendum, and there are indications that the remain campaign would win. A senior official in brussels says the u. K. Could stay in the bloc if it changes its mind. The recent rally in Precious Metals has push the price of gold and silver back to levels not seen for two years. Are,s a look at where we prices have softened just a bit from their peaks we saw this tuesday. Lets go to David Standing by the terminal to break it all down. Whats going on . David obviously, we are looking at softening. Silver is just below 20, but we are still looking at gains. I was looking through some of the rally inand commodities looks to the overheated at the moment, but if you had to pick a group, its Precious Metals. Are we overheated . The biggest a two day pop and silver prices since, what, 2011 . Inevitably you will get a lot of momentum indicators. Its showing that we might be a little bit overbought. Anything about 70, this redline right here, most people would say, yeah, too hi to quickly. Way into thisy, area that indicates, yes, overbought. It traces all the way back five years, the most overbought level since 2011. Which is perhaps why you were looking at the correction. That being said, do you buy gold or do you buy silver . There is one metric we like to use. Gold,es the price of divided by the price of silver, and it gives you a number in this case 66. That tells you is how much silver can you buy with an ounce of gold, just in case you go back 500 years to the barter system. This is a good metric to use. It shows you what has rallied more than the other. Keep in mind, both these Precious Metals are positively correlated; in other words, one tends to move for the other goes. That said, silver has seen a massive pop, gold a little bit. And has pushed this ratio to the lowest level going back two years ago. When we pushed over to these extreme levels, some people use it as an indication to use it, t o add on gold. Back to this note. Theyre looking at commodities, a little overdone, maybe stay away from base metals. They recommend getting into Precious Metals. Average price for silver, third 19rter, looking at 19 bal announce. A lot of things worth noting here. Silver is a little more precious this week. Yvonne all right. Dave, thank you. Our guest have given their opinions on brexit related plays. One says that gold could rise another 7 to 10 . Low Interest Rates are pushing people back into i equities, but low Interest Rates are the safe haven. It really does look like this is a situation which could persist for some months. Unless we have pullbacks. Ive got to say, looking at gold, for example, i think we have a real chance of getting back up to the next major technical resistance, about 1500, 7 to 10 . The Alliance Says its rally isnt over yet. While we still have those shorts in the market, we will see people move toward silver, which has implications as an industrial metal as well as inflation hedge. Why we have got those dovish tones, you still get the Precious Metals being the flavor for people, but people will look to silver because that is the one that has been underperforming, but i still think it has more legs. Ubs Wealth Management says the powerful trade around current levels for some time to come. Invokesand if the u. K. Article 50, we will see a return to the market, and we approach out our forecast against the u. S. Dollar and we think it will be to midpoint of the trading range. There has been talk about more stimulus coming in from the bank of england and the u. K. Government, and i think whats really yvonne that was the word from asia. Coming up later on, how millions of chinese are turning themselves into online stars. Believesour next guest Asian Companies will stay on skate if the u. K. Exits the eu. This is bloomberg. Hit by three suicide bombings on monday, the worst near medina, one of the holiest shrines in islam. The third explosion happened near the u. S. Consulate, extending a wave of attacks across the middle east. And china has jailed a former top aide with ties to presidency shintaro. He was convicted in a closeddoor trial on monday of taking bribes and illegally obtaining funds and abusing power. Hes the latest target of the Anticorruption Campaign that has extended to more than 100,000 officials. And three former barclays traders have been convicted of butl between 2005 and 2007, the jury could not read the verdict. Four years ago, he paid an 850 million fine in the scandal which led to an overhaul of the banking industry. Job and ceo lost his got around 9 billion in penalties imposed on the financial sector. Global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. Im rosalind chin; this is bloomberg. Back in on the markets with Matthew Sutherland at fidelity international. Great to have you. The optimism has edged a little bit. These vshaped recoveries and most of asia, but we only hit the ceiling. Highly breakthrough that . Its going to be a big challenge. We are in a world of great uncertainty. We dont know how brexit is going to pan out; there is a full spectrum of possibilities of what exit will look like for the u. K. The world is really like uncertainty. Volatility rises, and when volatility rises, the world goes risk off. We will stay in a world which is volatile and moving sideways until we get greater clarity. Yvonne if we need to adjust for the second half, how do you do so . Can we get even more defensive than where it is now, when everyone else seems to be pouring in on bonds and commodities . That can do. Therey of looking at it, have been going slightly sidewa ys at the margin. A little more utility, telecoms, cyclical names, just to take a bit of risk out of the portfolio. But basically, if you are picking good Quality Companies that have Good Business models, good management, and attractive valuations, that should see you in good stead. Yvonne if you take a look at bonds and stocks, these different pictures, Inflation Expectations derived from pictures, its falling. And we see that stocks have jumped. Do you see this as a dangerous disconnect . Is an interesting question. I dont think its a dangerous disconnect, no. I think there are all sorts of influences at play. Yvonne ok. So how do you hedge from the post brexit follow . Is it that you focus on the domestic story, particularly in Southeast Asia . Thats exactly what we are doing. The fact that asia has fared very well over the past week, when it was extremely risk off in general, asia did quite well, india was up every day, philippines were up. This is because asia is a much more domestic the focused continent now than it used to be. Used to be the place that made cheap stuff for the rest of the world, but now it is a continent making stuff for its own consumers, it overs growing its own growing middle class. That is why we like asian equities. Even though asian equities are arguably a risky asset class, they should perform quite well in the current environment. Yvonne Central Banks could possibly call markets a little bit. Could they actually stop the volatility bill . I think Monetary Policy seems to be increasingly discredited and seems to not be working anymore, at least in isolation. Thats where the imf is saying theres no point in doing just monetary, you need a combination of monetary and fiscal reform. If you have those pillars that maybe you have a chance. I think its a little depressing that even though centralbank activities almost got us to where we are today, all your hearing around the place is further easing, further easing, further easing in response to this crisis. Its good for markets, that is a good for the Global Situation . Yvonne jpmorgan if you take a look at where yields are going, it suggests that you need to raise the chance of a global recession. Is that priced in . No, global recession is not priced in, and we dont see that happening, to be fair. A consensus might say the u. K. Might go into a recession, but not the whole of europe, and certainly not the world. Most people have taken them about half a percent off the Global Growth targets, but nothing like recession. The u. S. Is growing pretty consistently, and we have got some inflation coming through, which is a positive. Yvonne the one point we havent mentioned is china. Thats where we see, in terms of the domestic story, there is still a lot of unknowns, headways into the second half with l flows, weakening yen. Where are you on that story now . Has it changed . Generally, its a mixed story. The that part is not particularly positive, and we would like to see further action to control the growth, but there are number of really positive things that we are hoping will get less attention, and those things are the change in the economy from a cheap manufacturing place to something much more sophisticated in terms of manufacturing. They have moved up the manufacturing value curve and also the shift from manufacturing to services, which is not always captured and statistics or gdp data. China is now a place where services are a bigger part of the economy the manufacturing. Yvonne yeah. In terms of asia, we see bull markets already at the heart of it. Indonesia turning into a bull market as well. You mentioned the tax amnesty last week. What kind of impact to that have on gdp . Could that really reflect in stocks . I think it is already reflecting and stocks. One reason indonesia performed well was undoubtedly because of that. It helps the governments finances and should help the consumer. A lot of the stocks we like our consumption stories, which is true across the region, because of this growth in the middle class in asia. Thats the real story for us, and indonesia is definitely a country which would give it. Yvonne thank you so much. Stick with us. Betty sutherland, joining us from fidelity. Coming up, tensions escalate in the South China Sea as there are formal protests launched against china. This is bloomberg. Yvonne welcome back. A formal protest after a chinese frigate entered waters around islands claimed by tokyo and beijing. Its the first time a warship has joined the game of cat and mouse around the chain. Last month, tokyo made another formal protest on what it saw as chinese incursion on territorial waters, calling the ambassador on june 9. This is the latest evidence of heightened tensions between starting sixan, days of naval exercises in waters claimed by vietnam. Lets get our Southeast Asian correspondent, has haslinda amin. Hais china flexing its muscles again . Haslinda well, call it defiance, college provocative. China is turning a deaf ear to the complaints from vietnam, conducting exercises just days before the hague. The naval drills will be around the islands, set to involve about 100,000 square kilometers, an area that is controlled by china, but claimed by vietnam as well. This is where you will find woody island, where china is said to have about 1000 personnel, also surfacetoair missile systems. As you can imagine, tensions are rising. Vietnam is insisting that china stops the exercises, that it should stop threatening regional securities. It also says china is infringing its sovereignty it again,but china is clearly not listening. In fact, it issued its own warning, saying that no other ships will be allowed in the area while the drills are running. Here we go again. Yvonne this cat and mouse game just continuing. Is the South China Sea becoming a flash point . Haslinda the risk is there, if tensions escalate even more. There could be global consequences. There were competing claims of the South China Sea. Its only in recent years that tensions have been rising. The situation is made a bit more complicated with the involvement of the u. S. , supporting asian allies to counter chinas expanding claims. It says it is upholding freedom of navigation, that lawful trade should not be hindered. Here lies whats at stake 5 trillion in ship bound trade passing through the South China Sea every year. Strategic waters, no resolution in sight. Yvonne intentions and tensions remain high. Lets take a look at how markets are trading here today in sydney, where we are about an hour away from the rba decision. Say that Glenn Stevens will keep the cash rate at 1. 75 , but of course, we also did get that trade deficit that came out higher than expected for the month of may. Australia shares down close to 1 in sydney. Were seeing asian stocks for the first time in a week as we continue to see the concerns after brexit continuing. Shares are down 4 10 of 1 lets go to hong kong. Were seeing the msci asiapacific index retreating from a threeweek high, Energy Stocks leading the losses, hang seng mostly down about 8 10 of 1 . We are also looking forward to the afternoon business in tokyo and we will get the latest after the break. This is bloomberg. Asian stocks are down, bringing a fourday rally to an end. Energy stocks are among the top losers , with brent crude dropping below 50 per barrel. Precious metals were in demand as investors continued to see caven following the uks decision to leave the eu. Silver and gold have now retreated from twoyear highs as the dollar steadied following five days of losses. Shares in chinas largest Property Developer slums by 10 for a second straight day. Its hong kong traded stock remains in positive territory. The company resumed trading for the first time this year on monday following a sixmonth halt at its to big its shareholders fighting for control. We are an hour away from the rbas latest Rate Decision; most see governor Glenn Stevens maintaining the record low of 1. 75 , but are betting policymakers will ease next month. This comes as counting resumes in the weekend election and in the nature a deficit widens more than expected to the equivalent of 1. 7 billion usd. Global news, 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world. This is bloomberg. Lets get the latest on the markets; heres david ingles. David thanks. Were about an hour away from the Rate Decision from the rba. We dont expect any fireworks, but the element of surprise is certainly there. Pocket of the market we had been watching is the mining stock, especially those exposed to the precious metal space. We are seeing the big chinese and silver prices coming off a little bit. We are still seeing gains, so when you look at some of these miners, new crest giving back Western Areas at an