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North Korea missile test rattles U.S. and Chinese leaders, PMI day for China, and back to square one in Qatar’s isolation. Here are some of the things people in markets are talking about.

‘The World Isn’t Safe’

China is betting that President Donald Trump won’t take military action against North Korea after its leader Kim Jong Un claimed that every part of the U.S. is within its shooting range. Russia and China were called out as “economic enablers” of the regime by U.S. Secretary of State Rex Tillerson following North Korea’s intercontinental ballistic missile test launch on Friday night; he also discussed potential military options with his South Korean counterpart. Donning military garb on Sunday, Chinese President Xi Jinping told troops that “the world isn’t safe,” stressing the need to beef up and modernize the country’s military forces.

Coming Up…

China’s official manufacturing and non-manufacturing purchasing managers’ indexes for July, due out at 10 a.m. Tokyo time, will headline a jammed-packed economic calendar for the Asia-Pacific region Monday. Economists expect the manufacturing gauge moderated to 51.5 from 51.7, a level that still points to expansion. Other major releases include June preliminary industrial production data for Japan, forecast to advance 1.5 percent month-on-month, and Australian private-sector credit growth, projected to rise 0.4 percent on a monthly basis. Also due out: June housing starts for Japan, building permits for New Zealand, and new home sales for Australia.

Back to the Start

The only talking the Saudi-led alliance that cut off diplomatic and economic ties with Qatar and the Gulf nation are doing is talking past one another. The bloc reinstated its list of 13 demands Qatar must comply with before negotiations to end the crisis can begin, a step back after previously seeming to softening its position on what would be required of the emirate. Recent data show the isolation is having an adverse impact on Qatar's economy, with international reserves, imports and foreign bank deposits plummeting. Some international banks have reportedly elected to serve clients in the country from their European or American hubs rather than Dubai to avoid damaging their relationships with Saudi Arabia and the United Arab Emirates. The prolonged boycott is complicating preparations for the 2022 World Cup, as well.

Thrown Under the Priebus

On Friday, U.S. President Donald Trump announced via Twitter that Reince Priebus would be leaving the administration, with John Kelly (former head of Department of Homeland Security) taking over as White House chief of staff. Critics contend that the military background of Kelly, a retired general, leaves him ill-disposed to serve in this highly political role. Former Trump campaign manager Corey Lewandowski is advocating additional personnel changes, suggesting that the new chief of staff should fire Richard Cordray, director of the Consumer Financial Protection Bureau and potential Democratic candidate for the governorship of Ohio. While Trump's legislative agenda has stalled, with efforts to repeal and replace the Affordable Care Act failing in the Senate, House Republicans have pledged to pass a tax reform package before the year is out.

Attack Avoided

Australian authorities foiled a plot to “bring down” a plane, Prime Minister Malcom Turnbull said on Saturday evening. Four men were arrested over the alleged plan to blow up an aircraft with an improvised device, which is believed to have been inspired by the Islamic State. Security at the nation’s airports has been tightened, with passengers being warned to expect delays.

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