• Asian equity markets were mostly higher but with gains contained as the region struggled for direction due to a lack of fresh catalysts and as earnings dominated news flow
• FX markets were relatively uneventful amid a lack of data releases or macro drivers, EUR/USD and GBP/USD stall around the 1.1450 and 1.2750 levels respectively
• Looking ahead, highlights include a speech by Fed’s Bostic on the economic outlook

ASIA

Asian equity markets were mostly higher but with gains contained as the region struggled for direction due to a lack of fresh catalysts and as earnings dominated news flow. ASX 200 (+0.1%) traded positive but with price action kept in a tight range as strength in miners was counterbalanced by weakness in the largest weighted financials sector and consumer staples following disappointing results from Woolworths, while Nikkei 225 (-0.2%) underperformed amid a firmer currency and as some analysts even suggested stealth tapering after the BoJ refrained from buying stocks for 2 days last week. Elsewhere, Hang Seng (+1.0%) and Shanghai Comp. (+0.1%) traded higher but with sentiment in the mainland bourse flimsy as it swung from gains and losses, however the bulls eventually took the upper hand following another firm liquidity effort by the PBoC and continued hopes regarding trade talks. Finally, 10yr JGBs were initially uneventful amid a similar tone across asset classes and a lack of BoJ presence in the bond market, although prices gradually edged higher throughout the session amid the underperformance of stocks in Tokyo which helped 10yr JGBs break above resistance around the 150.50 level.

PBoC injected CNY 120bln via 7-day reverse repos. (Newswires)
PBoC set CNY mid-point at 6.8718 (Prev. 6.8894)

UK

UK government is to publish no-deal advice on Thursday, notices will include advice for businesses, citizens and public bodies. Thursday will also see UK Brexit Secretary Raab making a speech in Westminster to outline plans in the case of a no-deal Brexit. (BBC)

UK Cabinet papers showed plans for EU migrants to be given the right to stay in UK in the event of a no-deal amid worries of potential labour shortages. (Telegraph)

Ministers are facing calls to focus on UK’s trade with the EU as they look for new markets ahead of Brexit. This comes as UK Trade Secretary Fox’s international trade department prepares to set out support for companies in its export strategy. (Times)

UK Tory Brexiteer Jacob Rees-Mogg warned PM May that Eurosceptics will block her plans unless they are changed, while the group are also reported to be devising an alternative proposal to PM May’s Brexit plans. (Independent)

The monthly Institute of Directors (IoD) tracker found business leaders' confidence in the UK economy has fallen to its lowest point this year amid a potential chaotic Brexit. (Telegraph)

UK Rightmove House Prices (Aug) M/M -2.30% (Prev. -0.10%). (Newswires)
UK Rightmove House Prices (Aug) Y/Y 1.10% (Prev. 1.40%)

EU

ECB’s Weidmann (Hawk) stated that monetary policy normalization is foreseeable following the latest decisions and that interest rates will increase as a result, although the process will be gradual. (Newswires)

Italy’s populist government are drawing up a plan of up to EUR 80bln to rebuild the country’s rundown infrastructure after the Genoa bridge collapse. (Telegraph)

The Italian cabinet undersecretary Giorgetti has indicated he wanted the ECB to continue buying fresh bonds, including Italian government debt, under its QE programme. (FT)

German Finance Ministry noted that TRY crisis, US tariffs and Brexit are risks to the German economy. (Newswires)

ESM stated that Greece successfully completed its bailout programme. (Newswires)

S&P downgraded Turkey from BB- to B+; Outlook Stable and Moody’s also cut Turkey from Ba2 to Ba3; Outlook Negative, while Fitch affirmed Russia at 'BBB-'; Outlook Positive. (Newswires)
 

FX

FX markets were relatively uneventful amid a lack of data releases or macro drivers. Nonetheless, the greenback attempted to recover some of Friday’s losses against its major counterparts which saw EUR/USD and GBP/USD stall around the 1.1450 and 1.2750 levels respectively, while a mild pullback was also seen in AUD/USD and NZD/USD in which the former just about held onto the 0.7300 handle. Elsewhere, JPY marginally benefitted from cross-related flows and CNY gained against USD to strengthen past 6.8500 after the PBoC set a firmer reference rate.

COMMODITIES

Commodities mirrored the uneventful picture across asset classes in which WTI crude futures marginally weakened and declined below USD 65.00/bbl for the October contract. Pertinent news flow for crude was light over the weekend although Iran had expressed opposition to Saudi Arabia’s willingness to make up for any shortfall that could arise from US sanctions, in which it told OPEC that no country is allowed to take over the share of other members for production and exports of oil under any circumstances. Elsewhere, gold was relatively flat with prices subdued as the greenback attempted to nurse losses, while copper was marginally higher amid the mostly positive risk tone.

Baker Hughes Rig Count Total Rigs unchanged at 1057. (Newswires)

Iran told OPEC that members should not be permitted to take over another member's share of oil exports, after Saudi Arabia had offered to increase output to cover any Iranian shortfall. (Newswires)

GEOPOLITICAL

US reportedly reject Turkey’s offer of releasing Pastor Brunson in exchange for bank relief. (Newswires)

US

Slight flattening of the curve was seen on Friday by settlement, and yields are ultimately little changed. There was little move after a miss on the University of Michigan sentiment data, and Treasuries edged higher. The complex was positive up until a news report suggesting that the US and Chinese were working on a roadmap to reach a resolution in their trade dispute by November. The headline saw a move into risk, to the detriment of Treasuries. US 10-year T-notes settled half-a-tick tick lower at 120-08.

US Trade Representative Lighthizer will hold a hearing on China tariffs in August, while it was also reported on Friday that US and China trade talks have a plotted road map to resolve trade dispute by November. (Newswires/WSJ)

US and Mexico narrowed differences on farm trade in NAFTA talks, while there were also reports the US dropped the agriculture demand from NAFTA talks, according to Mexico’s top farm lobby. In related news, White House advisor Hassett commented that they are very close to reaching a trade deal with Mexico, while Mexico’s Economy Minister Guajardo stated that they are hoping to conclude the remaining bilateral issues with the US by the middle of this week including auto rules of origin. (Newswires)