• Asian equity markets failed to sustain the positive handover from Wall St where all major indices notched gains as tech resumed its outperformance
• US State Department lifted advisory against all international travel and is returning to its previous system of country-specific levels of travel advice
• US President Trump signed executive orders to ban transactions with TikTok’s parent ByteDance, as well as Tencent-owned WeChat in 45 days
• US President Trump Working Group on Financial Markets recommended Chinese companies currently listed on US exchanges be compliant with US accounting standards or be delisted
• In FX, the DXY has reclaimed 93.00 ahead of NFP and as US stimulus talks continue to disappoint
• US Treasury Secretary Mnuchin said the sides are closer on a lot of issues but far apart on some big issues
• US President Trump confirmed he has signed proclamation re-imposing aluminium tariffs on Canada
• Looking ahead, highlights include German Trade Balance, US and Canadian Labour Market Reports, Fed's Rosengren

CORONAVIRUS UPDATE

US COVID-19 cases +53,685 (prev. +49,988) and deaths +1,320 (prev. +1,107), while a major newswire tally showed US coronavirus cases increased by at least 57,014 to a total of 4.9mln and deaths rose by at least 1,206 to a total of 159.8k. California COVID-19 cases +5,258 (prev. +5,295) and deaths +166 (prev. +202), Florida cases +7,650 (prev. +5,409) and deaths 120 (prev. +225), while Texas cases +7,598 (prev. +8,706). (Newswires)

US State Department lifted advisory against all international travel and is returning to previous system of country specific levels of travel advice. (Newswires)

Germany reported 1,147 new COVID-19 cases (Prev. +1,045) and 8 new deaths (Prev. +7), according to the Robert Koch Institute. (Newswires)

ASIA

Asian equity markets failed to sustain the positive handover from Wall St where all major indices notched gains as tech resumed its outperformance and Apple continued to print fresh record highs to edge closer towards the USD 2tln market cap status, while sentiment stateside was also underpinned by lower jobless claims data and with COVID-sensitive sectors such as airlines, hotels and casinos supported in late trade after the US State Department lifted advisory against all international travel and returned to its previous system of country specific levels of travel advice. Nonetheless, the momentum faded in Asia with the region cautious heading into the latest Chinese trade data which later proved to be mostly better than expected and with US-China tensions stoked after US President Trump signed executive orders to ban transactions with TikTok’s parent ByteDance, as well as Tencent-owned WeChat in 45 days. ASX 200 (-0.7%) and Nikkei 225 (-0.6%) were both negative in which Australia’s mining names gave back some of their recent gains and as Japan digested earnings, with sentiment also dampened by concerns of a weaker consumer as although Household Spending in June rose by its fastest pace since data was made available in 2000, the actual decline in household spending for the April-June quarter of 9.8% Y/Y was the steepest contraction on record. Hang Seng (-2.2%) and Shanghai Comp. (-1.5%) conformed to the downbeat tone due to the US recent actions against TikTok and WeChat which saw Tencent shares slump over 7%, while US President’s Working Group on Financial Markets earlier recommended Chinese companies currently listed on US exchanges to be compliant with US accounting standards or be delisted. Finally, 10yr JGBs were relatively flat with minimal gains seen amid the risk averse tone and the BoJ present in the market for JPY 940bln of JGBs focused on 1yr-3yr and 5yr-10yr maturities.

PBoC injected CNY 10bln via 7-day reverse repos for a net weekly drain of CNY 270bln vs. CNY 120bln net injection last week and will sell CNY 20bln of 3-month bills & CNY 10bln of 1-year bills in Hong Kong on August 13th. (Newswires) PBoC set USD/CNY mid-point at 6.9408 vs. Exp. 6.9380 (Prev. 6.9438)

Chinese Trade Balance (CNY)(Jul) 442.2B vs. Exp. 286.8B (Prev. 328.9B) Chinese Exports (CNY)(Jul) Y/Y 10.4% vs. Exp. 0.9% (Prev. 4.3%) Chinese Imports (CNY)(Jul) Y/Y 1.6% vs. Exp. 2.5% (Prev. 6.2%)

Chinese Trade Balance (USD)(Jul) 62.33B vs. Exp. 42.0B (Prev. 46.42B) Chinese Exports (USD)(Jul) Y/Y 7.2% vs. Exp. -0.2% (Prev. 0.5%) Chinese Imports (USD)(Jul) Y/Y -1.4% vs. Exp. 1.0% (Prev. 2.7%)

US President Trump signed an executive order related to divestment of TikTok as expected and stated that TikTok could be used for disinformation campaigns to benefit the CCP. Furthermore, he stated that any transaction subject to US jurisdiction with ByteDance is prohibited beginning in 45 days, while he said he also signed an executive order banning any transaction with WeChat and owner its Tencent (700 HK) in 45 days although an official later clarified that the order involves WeChat and not other Tencent transactions. (Newswires)

US President Trump Working Group on Financial Markets recommended Chinese companies currently listed on US exchanges be compliant with US accounting standards or be delisted. Reports added that Chinese companies would have until January 1st, 2022 to comply otherwise they wouldn’t be able to trade on US listed exchanges, while there is no transition period and it would go into effect immediately if the rule is implemented by the SEC. (Newswires)

FX

The DXY rebounded overnight to reclaim 93.00 with the hard currency supported by the risk averse tone heading into the key US jobs data and after large differences remained in relief bill discussions with Democrats said to be very disappointed regarding the result of talks approaching Friday’s suggested make-or-break deadline. EUR/USD gave back some of its gains to trade below the 1.1850 level where there is a notable option expiry of EUR 1.1bln rolling off at the New York cut, while GBP/USD retreated to pre-BoE levels. USD/JPY was steady as the mild rebound in the greenback was offset by risk averse flows into the Japanese currency and antipodeans mildly pull back due to the lack of risk appetite, while the RBA Statement on Monetary Policy saw a relatively muted reaction as the central bank reiterated that the board will not increase the cash rate target until progress is being made towards full employment and inflation target.

RBA Statement on Monetary Policy reiterated the board will not increase the cash rate target until progress is being made towards full employment and inflation target, while it added the board is committed to do what it can to support jobs, incomes and businesses. Further purchases of government bonds will be undertaken as necessary in secondary market and that there is no need to adjust mid-March package considering the nature of challenges from the pandemic. RBA sees GDP Y/Y at -6.0% in June and December this year, sees 5% growth December next year and 4% growth December 2022, while it sees CPI at 1.25% in December 2020, 1.0% December 2021 and 1.5% December 2022 in which the Forecast assumes cash rate and 3yr yield target remain at current levels. (Newswires)

RBA Assistant Governor Ellis said the RBA is to maintain accommodative policy for as long as needed and now thinks recovery will be more protracted with progress on unemployment to be slower. Ellis also stated that monetary policy measures are working as intended and that both monetary and fiscal policies need to pull together, while she added that GDP will probably take several years to revert to pre-|COVID trend path. (Newswires)

COMMODITIES

WTI crude futures were contained within a tight range and slipped below USD 42.00/bbl amid a lack of pertinent news flow for the energy complex. Elsewhere, gold prices held on to most the spoils of its recent historic surge although saw resistance around the USD 2070/oz level and silver is on track for its best week in 4 decades, although both precious metals are off their highs due to a rebound in the greenback and heading to the NFP data, while copper slumped due to the subdued risk tone and with Chile’s Codelco planning to resume activities next that were halted due to the pandemic.

Platts Oil tweeted that US rig count slides 3 to 285 as Permian operators shed rigs citing Enverus. (Twitter)

Chile state-owned copper miner Codelco said it will re-initiate projects and operations that had been suspended due to coronavirus from next week. (Newswires)

CME raised COMEX 5000 Silver Futures maintenance margins by 15% to USD 11,500/contract from USD 10,000 but lowered NY Harbor Heating Oil Futures maintenance margins by 9.7% to USD 5,100/contract from USD 5,650 and lowered RBOB Gasoline futures maintenance margins by 16.1% to USD 5,100/contract from USD 5,650. (Newswires)

GEOPOLITICAL

Iran Special Envoy Brian Hook is to quit the Trump administration which most likely rules out nuclear diplomacy with Tehran before November, according to reports. (NY Times)

US

Yields were little changed to fractionally lower by settlement, where an earlier bull-flattener reversed in latter trade; 2s unch. at 12bps, 5s unch. at 21bps, 10s -1bps at 53bps, and 30s -2bps at 120bps. Yields had been descending into the US session as stocks initially failed to extend their strength from Wednesday, although the moves didn’t appear to be a result of any particular updates to the macro narrative; note that yields have been choppy this week. Yields moved slightly higher after the promising weekly jobless claims data print, although bidders soon re-emerged to take the T-Note contract up to its high of 140-13, which it made earlier this week, although failed to print a new high today. Simultaneously, the 10-year cash yield printed a low of 50.4bps, failing to reach new recent lows beneath the big figure. As the session continued after Europe had departed, yields drifted higher - as did stocks - into settlement; again, little incrementally new updates were supporting the moves, although the State Department’s lifting of the international travel ban did provide some momentum to the move after it had already got going. Volumes were subdued today, although that could change on Friday with the highly uncertain NFP report casting a cloud over the market. T-note (U0) futures settled 2+ ticks higher at 140-05.

US Treasury Secretary Mnuchin said the sides are closer on a lot of issues but far apart on some big issues and that President Trump wants to do a deal but will not sign a bill with a large amount of money for state and local governments, while he added we've made a lot of progress and talks are not over. Mnuchin also commented that our first choice is a global deal but will do a smaller one and that the White House offered to compromise on enhanced unemployment. (Newswires)

White House Chief of Staff Meadows said going into talks that he wouldn't be there if he didn't have at least a glimmer of hope and the President wants a deal, but added if a topline number is not reached, we have very little incentive for further talks. However, following the discussions, White House Chief of Staff Meadows said they're still a considerable amount apart on a compromise which can be signed into law. (Newswires)

US House Speaker Pelosi said negotiators had a consequential meeting that showed differences between each sides’ values, while she added we are very far apart and that it was most unfortunate. (Newswires)

US Senate Minority Leader Schumer said Democrats are very disappointed with the result of talks, although urged the Republicans to keep talking, while he added that White House negotiators were unwilling to meet in the middle and wanted a deal mostly their way. (Newswires)

US President Trump confirmed he has signed proclamation re-imposing aluminium tariffs on Canada and said it is necessary to defend the industry, while the tariffs will be at 10% and will start on August 16th. Furthermore, a Canadian Government source had earlier warned that Canada would impose retaliatory tariffs on US goods if the US went ahead with aluminium tariffs on Canada and Deputy PM Freeland later stated the tariff is unwarranted and unacceptable, while she added Canada intends to swiftly impose dollar-for-dollar countermeasures in response. (Newswires)