• Asian equity markets traded mixed amid a lack of fresh catalysts and with the region failing to take advantage of the mild tailwinds from Wall St
• In FX, the DXY remains sub-93.00, EUR/USD trades in the high 1.18’s and GBP/USD maintains 1.31 status ahead of the BoE
• US stimulus talks remain deadlocked with recent reports suggesting that President Trump is prepared to use executive orders if a deal is not reached
• Looking ahead, highlights include BoE and RBI Monetary Policy Decisions, US Initial Jobless Claims and Continued Claims, Fed's Kaplan, supply from Spain and France
• Earnings from Adidas, Credit Agricole, UniCredit, Deutsche Lufthansa, Merck, ING, Rheinmetall, Siemens, T-Mobile, Bristol-Myers, Mylan, Norwegian Cruise Lines

CORONAVIRUS UPDATE

US COVID-19 cases +49,988 (prev. +49,716) and deaths +1,107 (prev. +733), while a major newswire tally later showed that US coronavirus cases rose by at least 55,323 to 4.84mln and deaths rose by at least 1,241 to 158,561. California COVID-19 cases +5,295 (prev. +4,526) and deaths +202 (prev. +113), Texas cases +8,706 (prev. +9,167) and death toll +236 (prev. +245). (Newswires)

NIH’s Dr. Fauci does not believe the US will have to go back into "shutdown mode" and said COVID-19 taskforce is going to really take a careful look at whether the virus is spread via airborne transmission, while he later commented that we will likely have tens of millions of vaccine dosages by year-end and that manufacturers say they will have a billion doses by end of next year. (Newswires)

ASIA

Asian equity markets traded mixed amid a lack of fresh catalysts and with the region failing to take advantage of the mild tailwinds from Wall St where cyclicals led the upside and the DJIA outperformed its major peers after the blue-chip index received a boost from a surge in Disney shares post-earnings and with Boeing also flying high after optimism on its ability to navigate through the aviation crisis. Furthermore, participants continue to hang on COVID-19 relief discussions where the latest headlines suggested that progress must be made by this Friday or else President Trump is ready to take executive action. ASX 200 (+0.2%) was positive with the index kept afloat of the 6000 level, supported by the commodity-related sectors and with the RBA continuing its QE operations for a 2nd consecutive day. Nikkei 225 (-0.5%) was subdued by a firmer currency and as earnings remained in focus with Honda Motor and Mitsui Engineering & Shipbuilding among the worst hit after posting losses during the prior quarter, while KOSPI (+1.1%) benefitted alongside strength in index heavyweight Samsung Electronics after it unveiled a new phablet, foldable smartphone and wearable products. Hang Seng (-1.5%) and Shanghai Comp. (-0.4%) failed to hold on to early gains with sentiment dampened by a continued PBoC liquidity drain and ongoing US-China tensions with the US said to want untrusted Chinese apps removed from US app stores and President Trump criticized that Hong Kong will not be a successful financial exchange anymore in which the city will dry up and fail. Finally, 10yr JGBs were weaker amid spill-over selling from USTs and with prices also dampened by weaker demand at the 10yr inflation-indexed auction.

PBoC skipped reverse repo operations for a net daily drain of CNY 50bln PBoC set USD/CNY mid-point at 6.9438 vs. Exp. 6.9464 (Prev. 6.9752)

US Secretary of State Pompeo said US wants to see "untrusted" Chinese apps removed from US app stores, while he added that TikTok and WeChat pose significant threats to personal data on US citizens. Furthermore, Pompeo said the US is working to ensure the CPC cannot compromise information carried by undersea cables and will be working with Commerce, as well as other departments to limit the ability of Chinese cloud service providers to collect, store and process data and sensitive information in the US. (Newswires)

UK/EU

UK recruiters reported the fastest pace of increase since 2008 for people in UK seeking jobs, according to a KPMG/REC survey. (FT)

FX

The DXY was off its worst levels but remained dejected beneath 93.00 following its recent drop to 2-year lows amid continued stalemate in relief discussions in which reports suggested there will likely not be a deal if an agreement in principle cannot be reached by Friday and that President Trump was said to be ready to move on executive orders. Furthermore, mixed ISM Non-Manufacturing PMI and ADP Employment data, as well as a more aggressive Treasury refunding announcement did little favours for the buck. The greenback’s major counterparts were rangebound overnight with EUR/USD oscillating around its 20-Hour MA level of 1.1865 and with price action in GBP/USD contained ahead of the BoE’s Super Thursday Rate Decision, Minutes and MPR announcements. Elsewhere, USD/JPY remained firmly below 106.00 and antipodeans mirrored the soured tone in the region with AUD/USD giving back the 0.7200 handle and NZD/USD failing to benefit from firmer 2yr inflation expectations.

Brazil Central Bank lowered its Selic rate by 25bps to 2.00% as expected through unanimous decision and stated that the remaining room for monetary stimulus, if any, is small. Furthermore. It noted that possible future adjustments to degree of stimulus would occur with additional gradualism, while it added that the policy committee doesn't foresee reductions in monetary stimulus unless inflation expectations and baseline projections are sufficiently close to the target. (Newswires)

Australian PM Morrison said tougher restrictions in Victoria state is expected to reduce GDP by AUD 7bln-9bln during Q3 and that the total impact on national GDP forecast is at AUD 10bln-12bln for Q3, while he added that unemployment could peak closer to 10% now. (Newswires)

New Zealand 2yr Inflation Expectations 1.4% (Prev. 1.2%). (Newswires)

COMMODITIES

WTI crude futures took a breather from the prior day’s fluctuation in which prices initially rallied to pandemic highs before hitting resistance at the USD 43.50/bbl level and pulling back to an overnight floor at around USD 42.00/bbl. Elsewhere, gold prices plateaued during Asia hours after having extended on its recent historic feat by another gain of around USD 20/oz yesterday with the precious metal helped by ongoing economic uncertainty and with the greenback at around 2-year lows, while copper underperformed as the risk tone gradually soured during the session.

Iraq's Oil Minister said OPEC tolerance will not last long and Iraq will be forced this month and next to 100% compliance, adds non-compliance by Iraq would mean other will not comply and result to a collapse in prices with its effect on Iraq's economy, according to Energy Intel. (Twitter)

US

The Treasury curve bear steepened on Wednesday amid cyclical outperformance and the chunky quarterly refunding announcement, reversing Tuesday’s bull-flattener. By settlement, 2s +1bps at 12bps, 5s +2.5bps at 22bps, 10s +3bps at 54bps, 30s +3bps at 122bps. Yields had been on the rise overnight as cyclical sectors led a rally in equities in Europe which carried through into the US. The sell-off in USTs didn’t seem to take much notice from the disappointing headline miss in the ADP report, which was swiftly overshadowed by the Treasury’s quarterly refunding announcement, which showed larger sized additions (48bln of 3-year, exp. 48bln, prev. 42bln; 38bln of 10-year, exp. 35bln, prev. 32bln; 26bln of 30-year, exp. 25bln, prev. 22bln) than many had anticipated while making clear that it will continue to term out the debt; the Treasury noted that it expects borrowing needs to moderate somewhat, but remain elevated on a historical basis, in part due to an assumption regarding additional legislation. The announcement catalysed further duration selling, with reports of block sales in the 30-year futures; volumes today have been slightly higher than some of the recent, drought-like sessions. The surprise rise in the Services ISM only emboldened the selling. However, as Europe departed Treasuries came off their floor, moving sideways alongside equities into settlement. T-note (U0) futures settled 8 ticks lower at 140-02+.

US President Trump said he may do payroll tax cuts himself and that he has the right to suspend payroll taxes, while he later commented that if Democrats put partisan demands aside, we will reach an agreement on relief quickly. President Trump also stated he is exploring executive action on evictions and unemployment relief. Furthermore, there were separate reports President Trump is considering an executive order on imposing the stimulus bill outside of Congress and is said to order the IRS to cancel all payroll taxes if congress fails to agree on a stimulus deal. (Newswires)

US White House Chief of Staff Meadows said at this point we’re either going to get serious about negotiating and get an agreement in principle, otherwise he has become extremely doubtful that they will be able to make a deal if it goes well beyond Friday. Meadows said he will meet with House Speaker Pelosi and Senate Minority Leader Schumer on Thursday evening and that if significant progress hasn't been achieved by Friday, US President Trump is ready to use executive action and noted the sides remain trillions of dollars apart in discussions on COVID relief. (Newswires)

US Senate Majority Leader McConnell said both sides want to achieve a solution in relief talks but noted the sides are far apart, while Senate Minority Leader Schumer commented that this is a huge crisis and Democrats will only back a broad bill that meets the crisis, while he added that Democrats will stay in Washington for as long as it takes to reach an agreement and will not walk away. (Newswires)

US House Speaker Pelosi says she and Senate Minority Leader Schumer are determined to reach an agreement on relief that satisfies US public needs, while she feels optimistic following discussions with the White House. Furthermore, Pelosi declined to say whether lawmakers must reach an agreement on COVID relief this week and claimed President Trump cannot use executive orders instead of legislation for COVID relief package but may be able to extend the moratorium on evictions. (MSNBC)

US Senator Braun said really there was very little difference between yesterday's lunch and today’s, while Senator Roy Blunt said Treasury Secretary Mnuchin and WH Chief of Staff Meadows message to GOP senators at lunch was that "if there's not a deal by Friday there won't be a deal". (Newswires)

16 Republican Senators back a new round of USD 25bln in payroll assistance to US airlines (UAL, DAL, LUV, AAL), according to a letter seen by Newswires. (Newswires)

Fed's Kaplan (voter) said the US economy needs a continuation of unemployment benefits and aid to state and local governments, while he thinks the economy will rebound in Q3 but that depends on the course of the virus. (Newswires)

Fed's Mester (voter) said high frequency data and discussions with regional contacts point to a slowdown in US economic activity in recent week and suggested the reopening proved to be more difficult and could be more protracted that thought. Mester added that there doesn't seem to be much support regarding negative rates for the US and noted much more fiscal support will be needed, while she also commented that forward guidance is a tool she will keep in her kit for the right time and is hopeful a stimulus bill is passed because the need is out there. (Newswires)

The Hill/HarrisX poll showed former VP Biden leads President Trump nationally at 43% vs. 40% (Prev. 45% vs. 38%) which was conducted online between August 2nd-5th. (The Hill)

It was initially reported that Twitter (TWTR) suspended US President Trump from tweeting until he removes a Fox News clip which alleged that children were almost immune to COVID-19, although this was later corrected to stated that US President Trump is not banned from tweeting and instead the Trump campaign account will not be able to tweet until the post was removed. In related news, Facebook (FB) also said it took down a post from President Trump's Facebook page as it broke COVID-19 misinformation rules. (Washington Post/Newswires)

New York Prosecutors seeking President Trump's tax records had reportedly issued a subpoena last year to his long-term lender Deutsche Bank, which suggests a more wide-ranging investigation. (New York Times)

New York declared a state of emergency in 12 areas due to Tropical Storm Isaias. (Newswires)