• Asian equity markets head into the weekend mixed as the region took its cue from the lackadaisical performance in global peers
• Chinese Industrial Production and Retail Sales missed expectations
• In FX, the DXY has consolidated after a brief dip below 93.00, EUR/USD and GBP/USD maintain 1.1800 and 1.3050 respectively
• RBA Governor Lowe who noted the likely conditions for a rate increase will not be met for at least 3 years
• White House said Treasury Secretary Mnuchin told House Speaker Pelosi he was willing to move forward with COVID-19 aid on some issues, but not election funding
• Looking ahead, highlights include EZ Employment and GDP (2nd), US Retail Sales, Industrial Production and University of Michigan Survey, Fed's Kaplan

CORONAVIRUS UPDATE

US COVID-19 cases +56,307 (prev. +55,540) and deaths +1,497 (prev. +1,244), while a major newswire tally stated that US coronavirus cases increase by at least 53,276 to a total of 5.27mln on Thursday and deaths rose by at least 1,185 to a total of 167.2k. California COVID-19 cases +7,085 (prev. 11,645), while a major newswire tally stated that California coronavirus cases increased by at least 8,295 on Thursday and deaths rose by at least 193. Elsewhere, Texas cases +6,755 (prev. +6,200) and deaths +255 (prev. +324). (Newswires)

WHO's Ryan said COVID-19 has a long way to burn if we allow it to. The WHO said the Russian vaccine is not in the Covax portfolio and that it does not have sufficient information to make a judgement on expanded use of it, while it is in talks with Russia to get more information. (Newswires)

EU official said talks concluded with Johnson & Johnson (JNJ) for 200mln doses of COVID vaccine. (Newswires)

UK PM Johnson's office said UK infections appears to have levelled off and that the plan to reopen more parts of the economy in England can resume following a 2 week pause, while it also plans to raise fines on those that repeatedly flout rules on facemasks. (Newswires)

Germany reports 1,449 new COVID-19 cases (Prev. +1,445) and 14 additional deaths (Prev. +4), according to RKI. (Newswires) 

ASIA

Asian equity markets head into the weekend mixed as the region took its cue from the lackadaisical performance in global peers after both the S&P 500 and Nasdaq failed to carve out fresh record levels in the US but where downside was stemmed by encouraging initial jobless claims data, while participants also digested disappointing Industrial Production and Retail Sales data from China. ASX 200 (+0.6%) was underpinned by outperformance in tech and healthcare, while the largest weighted financials sector was dragged following a 7% decline in NAB’s cash profit for Q3 although shares in the Big 4 bank itself were kept afloat after its revenue rose 10% for the quarter and as it explores a sale of its MLC wealth business. Nikkei 225 (+0.1%) traded indecisively amid an uneventful currency and the KOSPI (-1.2%) was the worst performer following a flare up of virus cases in which the country posted its largest daily increase in cases since March. Hang Seng (-0.1%) and Shanghai Comp. (-0.2%) were choppy after both Industrial Production and Retail Sales missed expectations, although PBoC efforts resulted to a net weekly injection of CNY 490bln and it announced to conduct a medium-term lending facility operation on Monday, while focus also shifts to the US-China talks set for tomorrow. Finally, 10yr JGBs were lower amid spillover selling from USTs in the aftermath of an abysmal 30yr auction, with prices also dampened by weaker demand at the enhanced liquidity auction for longer-dated JGBs.

PBoC injected CNY 150bln via 7-day reverse repos for a weekly net injection of CNY 490bln vs. Prev. CNY 270bln drain last week, while it kept the rate at 2.20% and will conduct an MLF operation on Monday (Newswires) PBoC set USD/CNY mid-point at 6.9405 vs. Exp. 6.9470 (Prev. 6.9429)

Chinese Industrial Production (Jul) Y/Y 4.8% vs. Exp. 5.1% (Prev. 4.8%) Chinese Retail Sales (Jul) Y/Y -1.1% vs. Exp. 0.1% (Prev. -1.8%) Chinese China House Prices (Jul) Y/Y 4.8% (Prev. 4.9%)

US President Trump said TikTok has to be proved to be totally secure and that any deal will have to be substantially beneficial for US, while he also suggested his attitude to China is not friendly. Furthermore, it was reported that two GOP Senators have sent a letter to the FTC asking for an investigation of TikTok's data collection services. (Newswires)

US Secretary of State Pompeo said the US will designate China's Confucious Institute US as a foreign mission. (Newswires)

Aberdeen Standard Investments warned of dramatic undervaluations related to forced delistings of Chinese companies in US and that Trump administration measures could impact USD 1tln of equity investments. (FT)

UK/EU

UK Transport Minister Shapps announced to impose 14-day quarantine on arrivals from France and Netherlands effective 0400BST on Saturday and noted that if the quarantine was not announced now, we would be failing to act on an infection rate which is too high. Furthermore, Shapps added that Malta, Monaco, Aruba, Turks and Caicos have also been included to the quarantine list, while French Junior European Affairs Minister Beune said the UK quarantine on arrivals from France will result to a reciprocal measure and hopes things will return to normal soon. (Newswires/Twitter)

The US ambassador to the UN has appealed to the UK, Germany and France to put forth a compromise measure to extend the Iranian arms embargo. (FT)

FX

The DXY consolidated following the fluctuations seen in yesterday’s session where prices briefly dipped below the 93.00 level after finding some support with the recovery aided by a rise in yields in the aftermath of a weak 30yr auction. The price moves in USD, or lack thereof in Asia hours, has set the tone for its major counterparts with EUR/USD steady after finding a floor at the 1.1800 level and with the single currency also contained by over EUR 3bln of nearby option expiries between 1.1800-1.1850 for today’s New York cut, while GBP/USD hovered around support near 1.3050 with the currency unreactive to the announcement that more countries will be included in the UK’s quarantine list including France and Netherlands in which France warned of reciprocal action. Elsewhere, USD/JPY was little changed amid the non-committal tone, while antipodeans were lacklustre after the disappointing Chinese data and comments from RBA Governor Lowe who noted a high degree of uncertainty about the outlook and recovery, as well as the likelihood conditions for a rate increase will not be met for at least 3 years. Furthermore, Governor Lowe continued to distance himself from negative rates and stated he would like a weaker currency but also dismissed the prospects of intervening in the FX markets.

RBA Governor Lowe said the view is that best course of action is to continue with current package and they considered the possibility of a regular program of bond purchases, while he stated the conditions for a rate increase will not likely be met for at least 3 years and hopes cash rate will not be this low for 5 years but it is possible. Furthermore, Lowe stated that have not ruled out a separate bond-buying program or other adjustments to the package and stated that negative rates are extraordinary unlikely for Australia, while he would like AUD to be lower but added cannot say that the currency is overvalued and that they are not prepared to intervene in FX to weaken AUD. (Newswires)

Mexico Central Bank cut its interest rate by 50bps to 4.50% as expected, although one member voted for just a 25bps cut. The central bank stated that greater conditions of economic slack forecast with important downward risks and that balance of risks to inflation remains uncertain. (Newswires)

COMMODITIES

WTI crude futures were rangebound and contained by resistance at USD 42.50/bbl, while pertinent news flow for the energy complex was light. Elsewhere, gold prices were little changed around the USD 1950/oz level with price action hampered by an uneventful greenback and non-committal risk tone, while copper slightly fared better overnight and partially nursed some of yesterday’s declines.

GEOPOLITICAL

US seized 4 vessels of Iranian fuel cargo recently that was sent to Venezuela without the use of force after federal prosecutors filed a suit for their seizure last month. (WSJ)

US

Another chunky bear steepener for the Treasury curve as supply woes deepened after an ugly 30-year Treasury bond auction. By settlement, 2s +0.5bps at 16.5bps, 10s +3bps at 71.5bps, 30s +6bps at 142.5bps; volumes were again decent, but slightly beneath the last few sessions in ZN. Yields were moving lower overnight amid reports a slew of real money accounts were on a “buying spree”, particularly at the long-end of the curve. However, heading into the US session, dealers were said to seize the richened yields to allow for concession ahead of the 30-year bond supply. The selling found further legs upon Apple’s (AAPL) announcement a USD four-parter (it later sold USD 5.5bln, fewer than the USD 8.5bln back in May), and some modest follow-through after Initial Claims dipped beneath 1mln for the first time in months. Yields then moved sideways up to the Treasury auction, with 10s failing to break above 70bps, and also failing to come under any pressure after the Treasury announced it would be selling USD 25bln in its 20-year bond auction next week, above estimates that had earmarked USD 23bln. It’s possible that after the strong 10-year auction on Wednesday, participants were cautious about putting on a steepeners in the chance today’s 30-year auction was also solid. However, that was not the case (see below), and duration swiftly came under selling pressure amid the sloppy, record-size Treasury auction, seeing the 30-year yield shed an additional 4/5bps; the later pricing of Apple’s deal only exacerbated the moves. With this week’s key data points and auctions out the way, Friday is likely to be light on news, with tape action more susceptible to book squaring into the weekend after this week’s rate back-up; any updates on stimulus could also change the dial, while there will also be attention on retail sales data. T-note (U0) futures settled 7 ticks lower at 138-31.

White House said Treasury Secretary Mnuchin told House Speaker Pelosi he was willing to move forward with COVID-19 aid on some issues, but not election funding. (Newswires)

White House Economic Adviser Kudlow said President Trump’s executive orders to some extent fill the need for a second stimulus package, while he later stated that President Trump could extend payroll tax deferral for 6 months after the election but does not plan to eliminate payroll taxes permanently if re-elected. (Newswires)

White House Council of Economic Advisers acting chair Goodspeed said substantial headwinds still face the economy but advisers are encouraged by rehiring and hiring of workers in May-July, while US would recovery faster with more stimulus. (Newswires)

Fed plans to purchase approximately USD 80 billion over the monthly period from 8/14/20 to 9/14/20 (unch vs 7/14/20 to 8/13/20 period, as expected). (Newswires)