• Asian equity markets attempted to shrug-off Wall Street’s pre-quadruple witching indecision with a slightly upbeat tone seen in the region
• US Assistant Secretary of State for the Bureau of East Asian and Pacific Affairs Stilwell said China’s attitude in Hawaii talks cannot be described as forthcoming
• FX markets were relatively contained overnight with the DXY consolidating just below weekly highs around 97.50
• Energy Intel tweeted the mood at the JMMC wasn’t very positive according to delegates; Nigeria and Angola are yet to present plans on how to improve compliance
• Looking ahead, highlights include UK retail sales, EU Council meeting, CBR rate decision, Canadian retail sales, Fed's Rosengren, Powell, Mester, EU's Von der Leyen, ECB's Lagarde, quadruple witching 

CORONAVIRUS UPDATE

US CDC reported coronavirus cases increased by 22,834 to 2,155,572 and deaths increased by 754 to 117,632. It was also reported that NY cases rose by 618 or 0.2% vs. Prev. 7-day average of 0.2%, Texas coronavirus cases rose by 3516 to a total of nearly 100,000 which was the largest daily increase on record for the state. (Newswires) US NIH's Fauci said further US lockdowns are not required to get the outbreak under control, despite the increase in the national daily rate. (AFP)

A Wuhan study (yet to be peer-reviewed) suggested there may be no herd immunity against the COVID-19 and that people are unlikely to produce long-lasting protective antibodies against this virus. (Morocco World News)

ASIA

Asian equity markets attempted to shrug-off Wall Street’s pre-quadruple witching indecision with a slightly upbeat tone seen in the region. ASX 200 (+0.1%) was higher with initial outperformance in Australia spearheaded by a surge in the consumer discretionary sector following a record jump in preliminary sales data, while advances in the Nikkei 225 (+0.5%) were limited by uninspiring currency moves and after early momentum was stalled by resistance around the 22550 level. Hang Seng (Unch.) and Shanghai Comp. (+0.4%) were mixed amid the overall non-committal tone seen across global markets and as US-China frictions lingered with US President suggesting the US maintains the option of a complete decoupling from China and US Assistant Secretary of State Stilwell noted China’s attitude in Hawaii talks cannot be described as forthcoming and that the relationship between the sides is said to be tense overall, although the mainland indices remained afloat following the PBoC’s liquidity efforts in which it utilized both 7-day and 14-day reverse repos for a 2nd consecutive day. Finally, 10yr JGBs are flat with demand hampered as Japanese stocks remained afloat and amid the lack of BoJ presence in the market, although downside was also stemmed by a floor just above the 152.00 level.

PBoC injected CNY 70bln via 7-day and CNY 110bln via 14-day reverse repos with rates kept unchanged PBoC set USD/CNY mid-point at 7.0913 vs. Exp. 7.0938 (Prev. 7.0903)

US President Trump said US certainly does maintain a policy option under various conditions of a complete decoupling from China but also stated that China is buying a lot. (Newswires)

US Assistant Secretary of State for the Bureau of East Asian and Pacific Affairs Stilwell said China’s attitude in Hawaii talks cannot be described as forthcoming and will have to wait to see in a couple of weeks if the discussions were productive, while he added Chinese actions have not been really constructive lately citing India, Hong Kong, South China Sea and trade in which Chinese actions on trade have not lived up to the billing. Furthermore, US and China relationship is said to be tense overall and China made a clear commitment to follow through regarding the Phase One trade deal. (Newswires)

Bankers are reportedly pitching secondary offerings to a number of US-listed Chinese companies amid the heightened tensions between US and China. Bankers and lawyers say that more US-listed Chinese stocks could follow in the steps of JD.com which could see Hong Kong markets profit handsomely. (FT) 

BoJ Minutes from April and May meetings stated that members agreed there is strong uncertainty regarding timing of when pandemic will be contained, as well as the impact on economies domestic and abroad, while a few members said prolonged economic weakness could lead to rising credit costs for banks. Furthermore, Japan's economy had been in an increasingly severe situation and was likely to remain severe for the time being due to the impact of the spread of COVID-19 at home and abroad, while financial conditions had been accommodative on the whole but less so in terms of corporate financing, as seen in deterioration in firms' financial positions. (Newswires)

Japanese National CPI (May) Y/Y 0.1% vs. Exp. 0.2% (Prev. 0.1%). (Newswires) Japanese National CPI Ex. Fresh Food (May) Y/Y -0.2% vs. Exp. -0.1% (Prev. -0.2%) Japanese National CPI Ex. Fresh Food & Energy (May) Y/Y 0.4% vs. Exp. 0.4% (Prev. 0.2%)

UK/EU

UK PM Johnson is expected to announce on June 29th that air bridges deals are put in place for a small number of countries with low coronavirus levels with the UK aiming to have the first deals with countries which are likely to include France, Spain, Greece and Portugal. (Telegraph)

French President Macron told UK PM Johnson that France still supports getting a deal on Brexit, according to a source, while there were also comments from a UK spokesperson that PM Johnson welcomed the agreement to intensify Brexit talks during the meeting with Macron. (Newswires)

UK GfK Consumer Confidence* (Jun) -30 (Prev. -34.0). (Newswires)

FX

The DXY consolidated around weekly highs just below 97.50 after the prior day’s gains in which price action rebounded off a floor at the 97.00 level. EUR/USD was contained around 1.1200 where there is a EUR 1.1bln option expiry rolling off at today’s New York cut and with participants looking ahead to the European Council discussions on the recovery fund in which several officials have already downplayed the prospects of a consensus being reached today, while GBP/USD remains on a 1.2400 handle post-BoE and as Brexit uncertainty persists. Elsewhere, price moves in USD/JPY and JPY-crosses reflected the somewhat hesitant risk tone and with outdated minutes from the BoJ’s April and May meetings doing little to spur the currency, while antipodeans conformed to the overall humdrum trade despite the strong Australian Retail Sales data and which followed a marginally weaker PBoC reference rate setting.

Australian Preliminary Retail Sales (May) M/M16.3% (Prev. -17.7%). Australian Bureau of Statistics said May retail sales showed the largest increase on record and a rise across every industry with a big increase seen in clothing, footwear, personal accessories, cafes, restaurants and food takeaways. (Newswires)

Australian PM Morrison said a state-based actor was conducting a cyber-attack targeting all levels of Australia's government, industry, political organizations, education, health and essential service providers. Morrison added that the frequency of attacks had been increasing over many months but refrained from making any public attribution regarding identity of state actor. (Newswires)

COMMODITIES

WTI crude futures extended on the prior day’s gains above the USD 39/bbl level following the OPEC JMMC meeting where Iraq and Kazakhstan submitted their proposals to compensate for overproduction, although the committee have delayed the press conference to next week as Nigeria and Angola have not yet submitted their compliance proposals. In addition, there were some recent optimistic comments from Saudi Aramco’s CEO that he is seeing signs of oil recovery in H2 and that the worst is definitely behind us, while Russian Energy Minister Novak suggested the oil market could balance as early year-end. Elsewhere, gold prices were kept range bound amid a stable greenback and copper prices were underpinned amid the mild gains in stocks overnight.   

Russia Energy Minister Novak said the oil market may balance by the end of this year/beginning of next, while he added that OPEC+ have not discussed plans for August and does not rule out an emergency OPEC+ meeting before December if necessary. (Newswires)

OPEC JMMC is to hold a news conference next week after all countries have submitted plans on how to compensate for overproduction. It was also reported that Iraq pledged to cut oil output above quota by 57k BPD in July and 258k BPD in both August and September according to an OPEC source, while Kazakhstan pledged to cut oil output above quota by 50k BPD in both August and September. (Newswires)

Energy Intel tweeted the mood at the JMMC wasn’t very positive according to delegates, while Nigeria and Angola still didn’t present their plans on how they plan to improve compliance. (Twitter)

CME lowered Comex 100 Gold futures (GC) and Gold enhanced delivery futures initial margins for speculators by 10.4% to USD 9,020 from USD 10,065, while it lowered Palladium futures NYMEX initial margins by 11.4% to USD 42,900 per contract from USD 48,400 and lowered Platinum futures NYMEX initial margins by 11.1% to USD 4,400 per contract from USD 4,950. Furthermore, it lowered Comex 5000 Silver futures maintenance margins by 11.1% to USD 8,000 per contract from USD 9,000 and lowered Comex Copper (HG) maintenance margins to USD 2900 per contract from USD 3250. (Newswires)

Goldman Sachs raised 3-month gold forecast to USD 1800/oz from USD 1600/oz, 6-month forecast to USD 1900/oz from USD 1650/oz and 12-month forecasts to USD 2000/oz from USD 1800/oz, while it added that inflation would need to move above 2% target and be met with a muted policy response for gold prices to surpass USD 2000/oz. Furthermore, it raised 3-month silver forecast to USD 19/oz from USD 13.50/oz, 6-month forecast to USD 21/oz from USD 14/oz and 12-month forecast to USD 22/oz from USD 15/oz. (Newswires)

GEOPOLITICS 

Iran Foreign Minister Zarif said an agreeable solution is possible amid UN nuclear agency demands to access 2 of its nuclear sites. (Newswires)

US

The Treasury curve bull-flattened on Thursday as equities drifted sideways, and the bond supply deluge seen earlier in the week calms. At settlement, 2s were unchanged at 20bps, 10s -4bps at 69bps and 30s -6bps at 146bps. Initial jobless claims provided a tailwind for Treasuries, where expectations for a fall were disappointed. Furthermore, COVID-19 cases/hospitalisations in key US hot spots, Florida and Texas, continue to rally. Demand for inflation protection, as measured by today’s USD 17bln 5-year TIPS auction, was solid: stopping through the WI by 2.8bps for a high yield of -0.766%, marking the security’s fourth consecutive stop through, covered 2.78x (prev. 2.69x) and indirects took a chunky 70.27%. Elsewhere, the CME Group announced is to reintroduce the 3-year Treasury Note futures on July 10th – coming at a time where expectations of YCC from the Fed at the front-end of the curve. US T-note futures (U0) settled 7+ ticks higher at 138-26+.

Fed's Kashkari (voter. dove) said the recovery is likely to be bumpy and muted, while he also stated the real US unemployment rate is probably around 20% and that a way to help small businesses get through the crisis is make sure they take advantage of the paycheck protection program and Fed's Main Street lending program. (Newswires)

US President Trump said he is in talks with Democrats about more PPP support and thinks the US economy will bounce back in Q3 and Q4, while he is also impressed with recent stock performance and last month's jobs report. (Newswires)

US President Trump's administration is considering significant expansion of visa restrictions for foreign workers, in which cabinet members and advisers met to discuss possible executive order to suspend visa issuance for several classes of individuals. (Newswires)

Fox News poll showed former VP Biden leading US President Trump by 50% vs. 38% (Prev. 48% vs. 40%), with the survey conducted June 13th-16th. (Fox News)