–Once again US yields edged lower Wednesday, with tens -1.4 bps to 178.2.  The curve had a flattening bias, with red/gold euro$ spread at just 74 bps, -2 on the day.  Weakness in stocks was a partial driver, though the US market appears to be the beneficiary of safe haven flows during Asian hours, with concerns about China’s massive debt load continuing to draw scrutiny.  For example, BBG reports that a Chinese fertilizer company defaulted.  A Reuters article notes that there’s a “Long list of China high-yield issuers due to make May debt payments” (link below).  
–While ADP data was weaker than expected, labor markets have been a bright spot in the US economy.  [Employment report tomorrow].  However, there’s a bit of a grey lining there as well.  While yesterday’s productivity data was better than expected, a decline of ‘just’ 1% with unit labor costs +4.1%, the trend of negative productivity supports Goldman’s thesis that US company margins are declining as increases in labor costs are outpacing inflation.  It’s a longer term headwind for stocks, also alluded to by Druckenmiller.
–There continues to be accumulation of TYU 133c, now up to about 30k, settled 40/64 ref  130-105.  Seems to be the insurance strike, as there has also been sizable buying a few weeks back in TYM 133c, which indeed have the highest call open interest at 125k contracts and settled at 3/64 ref 130-14.  
–On the political front, several commentators, notably including Gundlach, predict that Trump will beat Hillary.  The recently accepted scenario was that the republican party was splintering and that there could be a contested convention.  Now it looks as if everyone is falling behind Trump, and the contest may be on the dem side.  It’s hard to miss news this morning that “Guccifer” easily hacked into the Clinton server.  Perhaps the left recognizes that Bernie might be the better opponent to face Trump, and a stream of negative news regarding Hillary is just beginning….