The US and China are talking but it is not clear there is much progress. What I am hearing:

• As expected, the US-China Diplomatic and Security Dialogue on Friday was difficult and did not lead to any significant breakthroughs;

• Yang Jiechi did not get a hoped-for drop-in meeting and handshake with President Trump, but he did get a meeting with Jared Kushner;

• I have heard from several people that Steve Mnuchin and Liu had a phone call on Friday, though nothing has been confirmed and no details leaked. The talk that Liu He may be heading to DC soon for talks in advance of the Trump-Xi G20 meeting continues, and if he does come expect markets to get excited, at least momentarily;

• The split over trade issues inside the Trump administration appears to be unresolved, with USTR head Lighthizer pushing a much tougher approach than Mnuchin. As always what matters will be Trump's decision at the moment, and I believe Beijing still thinks it can sway him towards backing off from the next round of the …