• Asian equity markets eventually traded mostly higher on what was an indecisive start to the week amid holiday-thinned conditions
• A lack of progress in Congressional stimulus talks prompted President Trump to go ahead with taking executive action
• Trump took action on enhanced unemployment benefits, evictions, payroll tax deferral and student loan relief
• Reports noted that the orders are likely to face some legal challenges, while the enhanced unemployment benefits would require states to pay for the 25% of additional benefits
• In FX, DXY stalled at resistance around 93.50, EUR/USD eyes 1.18 to the upside and GBP/USD sits above 1.3050
• Looking ahead, highlights include EZ Sentix Index, Fed’s Evans (Non-voter)

CORONAVIRUS UPDATE

US CDC reported coronavirus cases rose by 54,940 to a total 4,974,959 and death toll rose by 1,064 to 161,284, while a major newswire survey later stated that US coronavirus cases increased by at least 46,248 to a total of 5.06mln on Sunday and deaths rose by at least 496 to a total of 162.6k. Florida coronavirus cases rose by 6,229 on Sunday to a total of 532,806 and deaths rose by 77 to a total of 8,315, Texas coronavirus cases rose by 4,879 on Sunday to 486,362 and deaths rose by 116 to a total 8,459, while Texas 7-day average test positivity rate increased to a record 20.3%. California coronavirus cases rose by at least 5,540 to 162,604 and deaths rose by at least 67 to a total of 10,378 according to a major newswires tally. (Newswires)

NIH's Fauci said COVID-19 vaccines are likely to be 50-60% effective, so we cannot abandon public health measures. (Newswires)

UK coronavirus cases rose by 1,062 which surpassed the 1,000 level for the first time since June. In related news, the UK official daily death count could be abandoned following an investigation into the method of counting the death toll. (Newswires/Telegraph)

Scientists working on Britain's best hope for a COVID-19 vaccine are reportedly divided on whether to deliberately infect healthy patients in order to test the vaccine and potentially speed up the process. Some scientists argue that such an approach carries too much risk. (Telegraph)

ASIA

Asian equity markets eventually traded mostly higher on what was an indecisive start to the week amid the thinned conditions due to holiday closures in Japan and Singapore, with participants mulling over the recent US NFP beat, firmer than expected Chinese inflation data and last week’s Congressional impasse which prompted US President Trump to sign executive orders over the weekend. ASX 200 (+1.7%) was underpinned with financials and consumer staples frontrunning the broad-based sector gains and as earnings also provided a tailwind. Elsewhere, a rally in Hyundai Motor shares helped fuel the KOSPI (+1.4%) after reports it is to create a family of Ioniq-brand electric vehicles in its pursuit to become the third-largest EV maker by 2025, while Hang Seng (-0.3%) and Shanghai Comp. (+0.4%) were indecisive as participants digested the latest inflation figures from China which were firmer than expected but showed that PPI remained negative and with risk appetite in Hong Kong mired by the arrest of Next Digital’s founder Jimmy Lai who is a main contributor to the pro-democracy camp and the highest-profile arrest under the National Security Law so far which subsequently saw as much as a 16% intraday drop in Next Digital shares.

PBoC injected CNY 10bln via 7-day reverse repos for a CNY10bln net injection with rate kept at 2.20% PBoC set USD/CNY mid-point at 6.9649 vs. Exp. 6.9617 (Prev. 6.9408)

Chinese CPI (Jul) M/M 0.6% vs. Exp. 0.4% (Prev. -0.1%) Chinese CPI (Jul) Y/Y 2.7% vs. Exp. 2.6% (Prev. 2.5%) Chinese PPI (Jul) Y/Y -2.4% vs. Exp. -2.5% (Prev. -3.0%)

Twitter (TWTR) has reportedly approached China's ByteDance to express interest in purchasing its US operations, sources state. (BBC) Blackstone has reportedly discussed joining Microsoft (MSFT) in a potential bid for ByteDance's TikTok, according to sources. (Fox Business) Seperately, TikTok is not willing to move its HQ to London from the US without a public statement of support from the UK government, although UK PM Johnson is facing a split among ministers over the GBP 3bln investment promised by ByteDance, according to sources. (SCMP)

US National Security Adviser O’Brien commented that Chinese hackers were aiming at US election infrastructure ahead of the election in November. (WSJ)

Hong Kong police arrested Next Digital (282 HK) founder Jimmy Lai on suspicion of colluding with foreign forces which is the most high-profile arrest under the national security law in Hong Kong, while police confirmed they made 7 arrests today under the national security law and added the operation is still in process with more arrest possible. (Newswires)

UK Foreign Office issued a joint statement with US, Canada, Australia and New Zealand regarding erosion of rights in Hong Kong in which it stated it is gravely concerned by unjust disqualification of candidates and postponement of Legislative Council elections, while it urged Hong Kong to reinstate eligibility of candidates so elections can proceed. (Newswires) 

UK/EU

A third of British employers are planning job reductions in Q3, according to reports citing a survey by the Chartered Institute of Personnel and Development. (FT)

The EY Item Club says that banking lending to companies in the UK has risen to a 13 year high as businesses take on a "staggering" level of debt to survive COVID-19. (Times) 

European Economy Commissioner Dombrovskis confirmed that EU restrictions on national budgets, suspended over the pandemic, will not apply again until 2022 at the earliest. (FT)

FX

The DXY gave back some of the post-NFP gains seen on Friday, although the momentum ultimately stalled at resistance around the USD 93.50 level and as focus turned to the lack of a breakthrough in coronavirus relief negotiations. This prompted President Trump to go ahead with taking executive action on enhanced unemployment benefits of USD 400/week (Prev. USD 600/week), as well as evictions, payroll tax deferral and student loan relief. However, there are doubts regarding the enhanced unemployment benefits and ability of states to afford the payments as they will be required to contribute 25% of the additional benefits. Elsewhere, the greenback’s major counterparts were relatively steady with EUR/USD currency eyeing a retest of the 1.1800 level to the upside where there is a substantial option expiry of EUR 3bln rolling off at today’s New York cut, while GBP/USD made mild headway after finding a floor around 1.3050. Elsewhere, USD/JPY was kept subdued amid the absence of Japanese participants and antipodeans also contributed to the humdrum mood due to the early indecisive risk appetite and after a further deterioration in New Zealand business surveys.

New Zealand ANZ Business Confidence (Jul P) -42.4 (Prev. -31.8). (Newswires) New Zealand ANZ Activity Outlook (Jul P) -17.0 (Prev. -8.9)

COMMODITIES

 Commodities were mixed with mild gains seen in WTI crude futures as they extended on Friday’s intraday rebound but with gains capped by an early non-committal tone seen in asset classes following the failure of coronavirus relief talks in US and as participants contemplated over President Trump’s executive orders. Nonetheless, oil prices were marginally higher which follows reports that key producers including Saudi were said to be encouraged by recent signs in the global economy and with the latest Baker Hughes numbers show a slight decline in oil rigs for the prior week, although there was also a discouraging earnings release from Saudi Aramco which reported a 73.4% drop in net profits for Q2 amid the pandemic fallout. Elsewhere, gold consolidated after Friday’s pullback, while copper prices attempted to nurse last week’s declines but with upside limited amid the lack of conviction across risk assets.

Baker Hughes US Rig Count oil rigs -4 at 176 and Nat Gas unch. at 69, Total rigs -4 at 247. (Newswires)

Saudi Arabia, Iraq and Gulf producers say they are encouraged by recent signs of improvement in the global economy and reaffirm commitments to the OPEC+ supply curb deal. (Newswires)

Saudi Aramco reported Q2 net profit fell 73.4% Y/Y to SAR 24.6bln and revenue fell 57% Y/Y, while it noted that Q2 saw impact of lower crude prices, as well as declining refining and chemicals margins. (Newswires)

GLOBAL NEWS

Protesters clashed with police in the Belarus capital of Minsk following the Presidential Election in which state exit polls projected incumbent Lukashenko is set to win around 80% of the votes. Furthermore, police were said to be using water cannons, tear gas and sound bombs, while there were also reports of a police van driving through the crowd. (Newswires/Twitter)

US

The Treasury curve has bear-steepened (slightly), with yields rising in wake of July’s jobs data, which topped expectations. And while the post-NFP trading landscape swiftly refocussed on stimulus talks and geopolitics, seeing risk assets trade choppily, Treasuries remained in the red; desks reasoned that the urge to sell was apparent as participants face the prospect of underwriting the record sized refunding, announced this week at historically low yields. Meanwhile, the jobs data itself showed a resilient economy in the face of fresh concerns about a loss of momentum, which analysts said impresses the need for lawmakers on Capitol Hill to strike a stimulus deal to ensure the recovery can be as V-shaped as possible. In later trade, the bear-steepening trend halted amid equities selling-off, though at settlement, 2s yields up c.1bps, 5s +1.2bps, 10s +2.3bps, 30s +2.5bps. US T-note futures (U0) settled 6+ ticks lower at 139-30+.

US President Trump signed executive orders for coronavirus relief following the failure of talks in Congress to reach an agreement with the executive action concerning enhanced unemployment benefits of USD 400/week (Prev. USD 600/week), providing assistance to renters and homeowners, payroll tax deferral and student loan relief. Furthermore, reports noted that the orders are likely to face some legal challenges, while the enhanced unemployment benefits would require states to pay for the 25% of additional benefits and must agree to enter this agreement with the federal government which has led to questions of how many states will be able to afford it. (Newswires)

US President Trump said he heard mostly positive things regarding executive action and that states can afford to kick in USD 100/week for benefits, while he added the Democrats might be inclined to make a deal now. President Trump also stated the payroll tax cut may be permanent which would have no impact on social security as reimbursements would be made through the general fund, while he added the White House would talk again with Democrats on stimulus if talks are not a waste of time and that Democrats have called and want to get together. (Newswires)

US House Speaker Pelosi stated that the sides have to reach an agreement and have to meet half way following the executive action taken by President Trump, while Senate Minority Leader Schumer stated that President Trump’s executive orders are unworkable, weak and far too narrow. Schumer also said he hopes that Republicans who hung their hat in the executive orders will now be forced to come to the table and accept a compromise to meet in the middle. (Newswires)

US House Speaker Pelosi said on Friday that the Democrats offered to reduce its aid package by USD 1trln which was rejected by the White House and noted that the difference with the White House is over food aid with sides were still far apart, while she told the White House to come back when they are ready to give a higher number. There were also comments from Senate Minority Leader Schumer that stimulus talks with Treasury Secretary Mnuchin and White House Chief of Staff Meadows were disappointing, while he added the White House said it cannot go beyond USD 1trln and Democrats are willing to go to around USD 2tln. (Newswires)

US Treasury Secretary Mnuchin said on Friday that the Democrat proposal was a non-starter and that no progress was made in stimulus talk, while he added the White House wants a compromise with time important since schools are reopening soon. Mnuchin also said he would return to talks any time to listen to new proposals and noted if a deal can be reached on unemployment, as well as state and local aid, then an overall agreement could be reached, and commented that he will recommend to President Trump to move ahead with executive orders which may take some time to process. Furthermore, US Treasury Secretary Mnuchin and White House Chief of Staff Meadows reputedly believe that the Democrats’ demands for nearly USD 1trln aid for state and local government was the biggest sticking point over a deal, according to sources. (Newswires/CNN)