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[Bloomberg]( Calmer bond markets do not mean Italy's crisis is over, Trump's making no friends in trade, and shale has a problem. Calmer European markets are not seeing a repeat of yesterday’s huge selloff in Italian debt, with the country’s bonds staging something of a [relief rally]( in early trading, and demand at today’s auction of 10-year notes hitting the highest since December. The moves are certainly not driven by an [outbreak of political stability]( in the Mediterranean nation, which appears headed for a fresh election. Californian bond giant Western Asset Management Co. said that now is the [time to take profits]( on Italian shorts, suggesting the selloff went too far, too quickly. Trump trade Days before the next round of trade negotiations are due to begin, President Donald Trump has [increased the pressure on China]( by saying he is moving ahead with plans to impose tariffs on $50 billion of Chinese imports, with the White House set to publish the final list of imported goods on June 15. Elsewhere, Prime Minister Shinzo Abe [hit back at plans]( to introduce levies on Japanese car exports to the U.S. saying, "from a security perspective, it’s very difficult to understand why this would be imposed on Japan, a military ally." Canadian Prime Minister Justin Trudeau said that a win-win deal was still possible on Nafta, but added he would rather [see the trade deal die altogether]( than accept certain hardline demands. One country that seems to be welcoming Trump’s advances is North Korea, with all signs pointing to the summit between the two nations being [back on for June 12](. Oil warning A barrel of West Texas Intermediate for July delivery was trading at $66.96 at 5:40 a.m. Eastern Time as crude investors try to [balance the risks]( posed by renewed global trade tensions with concerns that OPEC and its allies might announce an easing of their production cuts. One feature of the oil market this year has been the widening spread between WTI and Brent crude as American shale production has increased pressure on the U.S. benchmark. Still, shale output is facing problems amid [infrastructure bottlenecks](, with pipeline shortages and storage issues hampering the sector’s ability to capitalize on global demand. Markets mixed Overnight, the MSCI Asia Pacific Index lost 1.4 percent while Japan’s Topix index closed 1.5 percent lower, extending its losing streak to eight days. In Europe, equities were not seeing a repeat of yesterday’s major selloff, with the Stoxx 600 Index up 0.1 percent by 6:33 a.m., while Italy’s benchmark gauge rose 1.6 percent. S&P 500 futures pointed to a [higher open](, the 10-year Treasury yield was at 2.875 percent, and gold at $1,297.49. Coming up… At 8:30 a.m., the second reading for Q1 GDP is published, with wholesale inventories for April due at the same time. German inflation numbers for May are published at 8:00 a.m., with economists expecting a jump in the year-on-year headline number to 1.9 percent. At 10:00 a.m., Canada’s central bank announces its latest rate decision where it is expected to [keep policy unchanged](. The Fed’s beige book is due at 2:00 p.m., with the central bank holding an open board meeting on the Volcker rule at 3:00 p.m. What we've been reading This is what's caught our eye over the last 24 hours. - The bad days have been [really bad]( in 2018’s stock market. - Bond traders’ confidence in [Fed rate path]( crumbles. - Soros sees [new financial crisis]( brewing. - Gold’s reputation [takes a beating](. - Hermitage CEO Bill Browder says Spain arrested him on [Russian warrant](. - Electric vehicles are [set to triple]( in two years. - Would a [central-bank digital currency]( disrupt monetary policy? And finally, here’s what Joe’s interested in this morning The political situation in Italy and the unbelievable moves in the country's massive debt market have revived talk about what the ECB can do to calm the situation. After all, it was Mario Draghi's forceful action in the summer of 2012 that tamped down the crisis. But 2018 is no 2012. The ECB is both more and less powerful to address the situation than it was back then. [This article from Bloomberg's Paul Gordon]( lays it out nicely. The ECB has a tool -- Outright Monetary Transactions (OMT) - that provides a de facto backstop for a country's bond market if interest rates surge. The catch: a government must request the aid and abide by a supervised fiscal program. That last part is key. In a situation like Italy, the tension stems from the fact that markets are worried that the populist coalition doesn't want to abide by Europe's fiscal rules anymore. (And more dramatically, there are fears that a new government could take the country out of the euro altogether.) So the ECB's most powerful tool is entirely irrelevant in the current context. If people thought Italy might be willing to request the OMT backstop, then they wouldn't be nervous in the first place. The other thing that the ECB can do, of course, is more bond buying through QE. But that does nothing if the fear is debt default or redenomination. The key thing is that it's all about domestic politics. If a new government wants to take the country in an anti-Europe direction, there's not much the ECB or anyone else can do about it. Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. 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