• European bourses are softer after a mixed-APAC handover while US futures are little changed overall as newsflow remains relatively quiet
• USTR maintained import tariffs at 15% and 25% respectively for EU aircraft and other goods, with minor tweaks to the 25% tariff basket
• US Treasury Secretary Mnuchin said Trump’s administration is willing to move ahead with legislation but Democrats have no interest in negotiating; no COVID bills scheduled in the Senate today
• Apple (AAPL), Ford (F), Walmart (WMT) and Walt Disney (DIS) are some of the companies appealing to the White House over the WeChat app ban as it could put US companies at a severe disadvantage, WSJ
• IEA Monthly Oil Market Report, 2020 crude oil demand forecast reduced to 91.9mln BPD, -140k. First downgrade for several months
• DXY remains downbeat but holding 93.00 while the fixed space has seen a pull-back more recently as such US yields are erring towards the U/C mark
• Looking ahead, highlights include US weekly jobs, Fed's Bostic, Brainard, US 30yr Auction

CORONAVIRUS UPDATE

Major newswire tally stated that US cases increased by at least 51,848 to a total of 5.22mln and deaths rose at least 1,459 to a total of 166.1k. Major newswire tally stated California cases increased by at least 7,914 on Wednesday and deaths rose by at least 148, while Texas cases +6,200 (prev. +8,913), deaths +324 (prev. +220) and hospitalizations fell by 188 to 7,028 which officials noted was a 6-week low. (Newswires)

Argentina and Mexico agreed to produce AstraZeneca’s (AZN LN) coronavirus vaccine for Latin America. (Newswires)

New Zealand PM Ardern said she expects the cluster of coronavirus cases to increase further before slowing. The health chief stated they do not currently need to widen restrictions outside of Auckland yet. Furthermore, health officials noted the cluster in Auckland had grown, which is said to raise the likelihood of a lockdown extension. (Newswires/AFP)

ASIA

Asian equity markets began mostly higher as the region took impetus from the tech-led gains on Wall St where the S&P 500 and Nasdaq moved to within close proximity of record highs, fuelled by strength across the big tech names and with Tesla front-running the advances following the recent announcement of a 5-for-1 stock split. However, some of the elation gradually waned overnight as focus turned to the deluge of earnings. ASX 200 (-0.7%) and Nikkei 225 (+1.8%) were mixed with price action for the biggest movers in Australia dictated by results, in particular the worst performers AGL Energy and Telstra after both posting weaker bottom lines for the full year, while the Japanese benchmark outperformed on a breakout above 23,000 to print its highest level since February. Hang Seng (Unch.) and Shanghai Comp. (Unch.) were indecisive with only minimal support seen from another substantial PBoC liquidity injection as geopolitical tensions remain in the background and tentativeness ahead of US-China talks on Saturday to assess the Phase-1 deal in which China will reportedly bring up WeChat and TikTok issues. Furthermore, Hong Kong was also kept indecisive amid choppy trade in index heavyweight Tencent which was eventually pressured despite topping earnings estimates as it refrained from an interim dividend and as it faces the impending WeChat ban in US. Finally, 10yr JGBs traded marginally higher after rebounding from yesterday’s floor and despite the strength in Japanese stocks, while the BoJ were also present in the market today for nearly JPY 1.2tln of JGBs in 1yr-10yr maturities.

PBoC injected CNY 150bln via 7-day reverse repos for a net injection of CNY 150bln at a rate of 2.20%. (Newswires) PBoC set USD/CNY mid-point at 6.9429 vs. Exp. 6.9388 (Prev. 6.9597)

US

Apple (AAPL), Ford (F), Walmart (WMT) and Walt Disney (DIS) are some companies appealing to the White House over the WeChat app ban as it could put US companies at a severe disadvantage, WSJ reports. (WSJ)

Fed's Daly (non-voter) said a lapse of extended unemployment benefits creates a gap in consumer demand and spending, while she added Congress will need to build a bridge now that dealing with the virus is longer than hoped. Furthermore, Daly stated forward guidance can make some of the Fed's instruments more effective by providing a clearer message and noted that some sectors will not fully return to pre-pandemic levels. (Newswires)

US President Trump said the US economy is doing significantly better than Europe and a 50% rebound in the stock market signals a V-shaped recovery, while he added he will terminate payroll taxes after the election. Furthermore, President Trump said he is very angry at China because they let the virus come into the US and the world. (Newswires)

US Treasury Secretary Mnuchin said House Speaker Pelosi's statement is not an accurate reflection of our conversation and Pelosi made it clear she is unwilling to continue negotiations unless WH agreed to USD 2tln proposal, while he added that the Trump administration is willing to move ahead with legislation but Democrats have no interest in negotiating. (Newswires) Pelosi said the WH is not budging from its position around size/scope and they will return to negotiations when administration takes this seriously

The US Senate will be in session at 1600BST/1100ET with a small number of Senators expected to speak, House Speaker Pelosi is due to speak at 1545BST/1045ET; no coronavirus bill talks are scheduled, according to Fox's Pergram. (Twitter)

Ipsos poll showed former VP Biden leading President Trump in a 2-way race at 58% vs. 42% conducted Aug 10th-11th. (Twitter)

UK/EU

Business leaders and trade unions urged the UK government for a furlough extension and warned Chancellor Sunak to safeguard the recovery or else it will fail. (The Times)

US Trade Representative in WTO Airbus (AIR FP) case said it is removing certain products from UK and Greece from the tariff list and adding an equal amount of trade from France and Germany effective September 1st, while the amount of products subject to countermeasures will remain at USD 7.5bln and tariff rates are kept at 15% for aircraft and 25% for all other products. Furthermore, USTR Lighthizer stated that EU and member states have not taken the actions required to comply with WTO decisions on Airbus case and that the US will begin a new process with the EU in an effort to reach an agreement that ensures a level playing field for US companies. European Commission acknowledges the US decision not to exacerbate the Airbus (AIR FP) dispute and says EU wants to negotiate solution with Washington. (Newswires) Link to newsquawk analysis on this.

EU official said EU and US should increase efforts to negotiate a solution to ongoing trade irritants and that EU Trade Commissioner Hogan will continue active engagement with USTR Lighthizer, while the official added that the US decision to refrain from raising tariffs on EU goods avoids exacerbating the dispute. (Newswires)

UK RICS Housing Survey (Jul) 12 vs. Exp. -5.0 (Prev. -15.0, Rev. -13). (Newswires)

GEOPOLITICAL

US sent 3 stealth bombers to the Indian Ocean island of Diego Garcia reportedly to address Chinese threat ahead of China's live firing naval drills north of Taiwan. (The Times) Subsequently, Chinese Military suggests the recent drills near Taiwan were "necessary" to safeguard sovereignty. (Newswires)

Global Times Editor Hu Xijin tweets that the PLA's military drills in the Taiwan Strait shows it "is capable of launching a full-scale attack and capturing the island within hours, leaving US military no time to react. It’s a clear warning to Taiwan". (Twitter)

US Central Command released a video showing Iranian forces boarding a Liberian ship in international waters. (Twitter)

France are to deploy two rafale planes and reinforce their presence in the Mediterranean with 'Lafayette' ship, part of plans to bolster military presence in the region given Turkish prospecting. (Newswires)

EQUITIES

European equities have largely seen modest broad-based losses [Euro Stoxx 50 -0.2%] after a mixed APAC lead as earnings take focus amid a lack of fresh catalysts. UK’s FTSE 100 (-1.1%) sees more pronounced losses vs. the region amid currency dynamics, but more notably due to a slew of large-cap ex-dividends including the likes of AstraZeneca (-1.5%), BP (-2.4%), Diageo (-1.1%), GSK (-2.4%) and Shell (-2.5%) – together equating to just under a quarter (~24%) of the FTSE 100 by weighting. Sectors are mixed with no clear risk profile to be derived – Energy underperforms, IT remains somewhat afloat after its underperformance yesterday, whilst Telecom names see a firm performance on the back of Deutsche Telekom’s (+2.1%) earnings, which topped revenue and adj. EBITDA forecasts whilst the Co. also raised its FY20 adj. EBITDA AL guidance.  In terms of individual movers, Airbus (-1.4%) shares remain pressured after the US maintained tariffs on the European aviation sector. Thyssenkrupp (-14.3%) shares tumbled at the open amid dismal numbers, whilst Wirecard (-13.8%) follows a close second after Deutsche Boerse has announced that subsequent to approving new rules in light of the Wirecard scandal, the new composition of the DAX will be published on August 19th, the review will see Wirecard removed from the index. Separate reports also noted that the Philippines government is mulling criminal charges for Wirecard executives forging travel data. Other earnings-related movers include RWE (+1.4%), Deutsche Wohnen (Unch), Lanxess (-1.1%), Swisscom (-0.3%) and Carlsberg (-4.8%).

China's retail car sales for the first week of August +3% Y/Y, according to PCA. (Newswires)

IATA increases its estimate for the impact of COVID-19 on global aviation & tourism employment to 7mln jobs (Prev. 6mln); expects a 60% decrease in European air passenger numbers this year. (Newswires)

FX

USD - The Dollar remains depressed following another dead cat bounce and failure to reach 94.000 in index terms with the aid of firm US inflation data, and a retreat in Treasury yields amidst re-flattening across the curve is not helping the Greenback sustain gains as the DXY slips closer to the round number below. Meanwhile, bouts of risk-off trade due to the lack of progress on fiscal stimulus to replace maturing COVID-19 relief are fleeting and not providing the Buck any safe-haven sustenance, as 2nd wave concerns linger alongside global trade, diplomatic and geopolitical threats to the economic recovery. Ahead, initial claims will be monitored in context of the latter and recent signs that the re-opening return to employment is waning.

EUR/GBP/CHF/JPY - All benefiting at the expense of the Dollar, and technically in the case of the Euro as it builds a firmer base above the 200 HMA around 1.1800 eyeing 1.1850 next on the upside, while Sterling has recovered well from successive retreats towards 1.3000, albeit with Cable unable to reach 1.3100 again. Elsewhere, the Franc is probing 0.9100 and Yen has bounced a bit further from 107.00 to sit within a 106.92-57 range on the aforementioned less bearish UST yield/curve backdrop.

CAD/AUD/NZD - The Loonie has lost some impetus from crude, but meandering between 1.3256-26 parameters and the Aussie is holding above 0.7150 after better than expected jobs data, albeit mainly due to a jump in temporary workers keeping the overall unemployment rate relatively steady, but the Kiwi is lagging again following an attempt to revisit 0.6600 as the NZ pandemic resurgence continues and PM Ahern warns that the situation could get worse before slowing down again. Moreover, RBNZ Deputy Governor Bascand acknowledges a big risk to the outlook due to the growing cluster and a policy response in the event of an extended lockdown likely in the form of NIRP in tandem with a funding for lending facility.

SCANDI/EM - Some consolidation after recent volatile trade, and little reaction from the Nok or Sek to mixed Norwegian consumer sentiment, firmer Swedish 1-year CPIF expectations and NIER’s less recessionary 2020 GDP forecast. However, the Zar may respond to SA Gold and mining production as Eskom projects more load-shedding and the Brl has Brazilian services sector growth to digest.

Australian Employment Change (Jul) 114.7k vs. Exp. 40.0k (Prev. 210.8k) Australian Full Time Employment Change (Jul) 43.5k (Prev. -38.1k) Australian Unemployment Rate (Jul) 7.5% vs. Exp. 7.8% (Prev. 7.4%) Australian Participation Rate (Jul) 64.7% vs. Exp. 64.4% (Prev. 64.0%)

RBNZ Deputy Governor Bascand said resurgence of the virus in New Zealand is a big risk to the outlook and RBNZ would need to consider additional monetary stimulus if there are periods of resurgence and extended lockdowns. Bascand added that the RBNZ will probably combine negative rates and funding for lending programme if further stimulus is needed beyond yesterday's QE extension but also noted that banks are resilient and have strength to get us through the current period. (Newswires)

RBNZ Chief Economist Young Ha said he wants to see a weaker NZD and noted negative rate policy option is not inevitable, while he added that bond buying targets mean to signal intent. (Newswires)

FIXED INCOME

Gilts are still edging best gains in the mainstream and just inched another 2 ticks above yesterday’s Liffe session high to 137.15, while Bunds remain some distance from their 176.60 Eurex peak, albeit firm, and US Treasuries are maintaining a moderate bull re-flattening bias. However, trade and turnover have slowed in comparison to the price action and volumes seen of late amidst relative calm and a consolidative tone ahead of IJC and the last batch of Quarterly Refunding. On that note, US (and EU for that matter) auctions have been taken down adequately given concerns that the record amount of issuance may be hard to swallow, but less concession (currently) for the long bond may be less enticing for some buyers and before the sale 20 year bond and 30 year TIPS announcements are due.

COMMODITIES

WTI September and Brent October futures eke modest gains after a flat APAC session, with prices on either side of 42.75/bbl and 45.50/bbl respectively. The IEA monthly report trimmed its 2020 demand growth forecast by 140k BPD, citing poor jet fuel demand, whilst also cutting the 2021 metric by 240k BPD. The report chimes more with the OPEC's monthly report as opposed to the EIA's STEO, as OPEC also trimmed its 2020 global demand forecast view in light of second wave fears, although IEA specifically mentioned poor jet fuel demand. The IEA and OPEC do however differ in their 2021 view as latter left its forecast unchanged. Elsewhere, Russian Energy Minister Novak pushed back against some speculation that OPEC+ could taper their cuts sooner than agreed on. Novak stated that there has not been any proposals to alter the OPEC+ deal and added the JMMC will not discuss changes to the OPEC+ deal this month when they meet on August 18th. Elsewhere, spot gold remains firmer within recent ranges having had found some interim support at USD 1925/oz, whilst spot silver remains somewhat capped by mild resistance near 26/oz. In terms of base metals, LME copper trades softer despite Shanghai September copper futures closing higher, as the former tracks European stock performance. Shanghai Stainless steel futures also saw a session of gains amid robust demand and recent slump in inventories.

IEA Monthly Oil Market Report: 2020 crude oil demand forecast reduced to 91.9mln BPD, -140k. First downgrade for several months. 2021 crude oil demand forecast revised down to 97.1mln, -240k BPD. Remains unclear if new COVID-19 cases indicate a second wave or regular fluctuation. Compensation for earlier OPEC+ overproduction could keep world supply steady in August. Demand>supply in July, implied stock draw for rest of year. (Newswires)

Russian Energy Minister Novak says there has not been any proposals to alter the OPEC+ deal, IFX; committee will not discuss changes to the OPEC+ deal this month; sees the oil market balancing out

Nigeria plans to reduce an additional 114k BPD on top of its OPEC+ deal quota in August and September, according to Energy Intel citing Nigeria's petroleum minister. (Twitter)

Kuwait set September crude OSP to Asia at Oman/Dubai + USD 0.70/bbl, which is lower by USD 0.30/bbl from the prior month. (Newswires)

Port Headland, Australia iron ore shipments to China at 38.1mln tonnes in July vs. June's 46.2mln tonnes. (Newswires)