• Asian equity markets began the week somewhat mixed following the indefinite postponement of the US-China trade agreement review talks
• The US-China six-month review of the trade agreement was delayed due to scheduling issues and a new date was not yet set, according to sources
• US President Trump increased pressure on ByteDance and is said to be looking at pressuring other Chinese companies including Alibaba
• In FX, DXY was subdued around 93.00, EUR/USD breached 1.1850 and GBP/USD briefly reclaimed 1.3100
• China was said to ramp up US oil purchases ahead of the planned review of the trade deal
• Looking ahead, highlights include NY Fed Manufacturing, US Democratic National Convention, Fed's Bostic

CORONAVIRUS UPDATE

US CDC reported COVID-19 cases rose by 54,686 to 5.34mln and deaths rose by 1,150 to a total 168,696, while a major newswire tally later stated that US coronavirus cases rose by at least 40,057 to 5.42mln and deaths rose by at least 515 to 170,040. Texas coronavirus cases rose by 6,744 to a total of 535,582 and deaths rose by 143 to a total of 9,983, while Florida cases rose by 3,899 to a total of 573,416 and deaths rose by 107 to a total of 9,587. Elsewhere, a major newswire tally stated that California coronavirus cases increased by at least 4,841 and deaths rose by at least 12. (Newswires)

New Zealand PM Ardern announced the decision to extend the lockdown for 12 days following an increase in the cluster of cases, while she also more recently announced that the election will be pushed back by 4 weeks to October 17th. Furthermore, New Zealand extended its mortgage deferral to 31st March 2021 from September 27th 2020 and extended its wage subsidy which is expected to cost about NZD 510mln and cover 470,000 jobs in response to the Auckland lockdown. (Newswires)

Italy is reportedly to make face coverings mandatory as of tonight between 18:00 and 06:00 where social distancing is not possible; alongside the closure of nightclubs and other venues. (Sky News)

Russia has struck an agreement in principle to carry out clinical trials of its COVID-19 vaccine in the UAE and Saudi Arabia, according to the head of the Russian sovereign wealth fund. (Newswires)

ASIA

Asian equity markets began the week somewhat mixed amid uncertainty following the indefinite postponement of the US-China trade agreement review talks and with President Trump increasing the pressure on ByteDance and is said to be looking at pressuring other Chinese companies including Alibaba. ASX 200 (-0.6%) and Nikkei 225 (-0.7%) were negative with Australia led lower by underperformance in financials and with a deluge of earnings updates also in focus, while the Japanese benchmark suffered on recent currency effects and after a larger than expected contraction for Q2 GDP. Hang Seng (+1.4%)  and Shanghai Comp. (+2.3%) traded positively despite the ongoing tension between the world’s two largest economies, as risk appetite was helped by efforts from the PBoC which announced a CNY 50bln reverse repo injection and a CNY 700bln in 1-year Medium-term Lending Facility. Furthermore, notable gains were seen in Xiaomi and WuXi Biologics as they are set to join the Hang Seng Index from September 7th and with Xiaomi also buoyed after the CEO debuted a live showcase of products on TikTok. Finally, 10yr JGBs were slightly higher to track the mild gains in T-notes and with the weakness seen in Japanese stocks, although upside was only marginal amid the lack of BoJ presence in the market today.

PBoC injected CNY 50bln via 7-day reverse repos at a rate of 2.20% vs. Prev. 2.20%, while it conducted CNY 700bln Medium-term Lending Facility at 2.95% vs. Prev. 2.95% PBoC set USD/CNY mid-point at 6.9362 vs. Exp. 6.9371 (Prev. 6.9405)

The US-China six-month review of the trade agreement was delayed due to scheduling issues and a new date was not yet set according to sources. (Newswires) One source noted that the delay was related to a conference of senior Communist Party leaders, whilst another source suggested that the US wanted more time to allow China to increase US imports. (SCMP)

US President Trump issued a new order to increase the pressure on TikTok parent ByteDance which orders the Co. to divest itself of any assets used to support the TikTok app in the US within 90 days. Furthermore, President Trump was asked on Saturday if he was contemplating punitive action against more Chinese companies, such as Alibaba to which he replied: "We're looking at other things, yes we are”. (Newswires)

Japanese GDP (Q2 P) Q/Q -7.8% vs. Exp. -7.6% (Prev. -0.6%) Japanese GDP (Q2 P) Y/Y -27.8% vs. Exp. -27.2% (Prev. -2.2%)

UK/EU

UK Trade Minister Truss pledged to protect Scotch whisky from unacceptable and unfair US tariffs and accused Brussels of not doing enough to protect UK’s interests, while she also said the UK aims to reach an in principle trade agreement with Japan by the month-end. (Telegraph)

The UK is set to imminently launch post-Brexit trade discussions with Canada with the aim of striking an agreement this year. (Telegraph)

EU’s Dombrovskis warned the City of London faces a longer wait regarding market access to the bloc post-Brexit as changes in Brussels regulations will delay the process of granting equivalence. (FT)

UK Rightmove House Price Index M/M -0.2% (Prev. 1.9%). (Newswires)

S&P affirmed Sweden at AAA; Outlook Stable. (Newswires)

FX

The DXY remained subdued around the 93.00 level as it extended on Friday’s losses. As such, the greenback’s major counterparts marginally benefitted in which EUR/USD broke above 1.1850 and GBP/USD briefly reclaimed the 1.3100 handle with newsflow relatively light ahead of the next round of Brexit talks this week. Elsewhere, USD/JPY was relatively unchanged at 106.50 amid USD-weakness and mixed risk tone, while antipodeans were varied with AUD/USD briefly eyed the 0.7200 handle after the PBoC set the strongest reference since early March, although NZD/USD was less decisive following the Auckland lockdown extension for 12 days and PM Arden’s announcement to delay the election for 4 weeks to October 17th.

South Africa’s Eskom announced that the power system will be extremely constrained for the week due to delayed return of energy units. In other news, South African President Ramaphosa said the Cabinet moved COVID-19 alert to level 2 which removes almost all restrictions on the economy. (Newswires)

COMMODITIES 

WTI crude futures eked mild gains amid the USD softness and recent reports of China ramping up US oil purchases ahead of the review of the phase 1 trade deal review, which was ultimately postponed indefinitely, while the latest Baker Hughes rig count also showed a decline in oil rigs for the past week. Elsewhere, gold prices were contained below short-term resistance of USD 1950/oz despite the weaker greenback and copper mirrored the humdrum tone across the commodities complex, with price action constrained by mixed risk appetite.

China was said to ramp up US oil purchases ahead of the planned review of the trade deal in which Chinese state oil firms were tentatively booking tankers to ship at least 20mln bbls of US crude for August and September. (Newswires)

Baker Hughes US Rig Count (w/e Aug. 14th); Oil -4 at 172, Nat Gas +1 at 70, Total -3 at 244. (Newswires)

GEOPOLITICAL

UAE summoned the Iranian diplomat following a speech by Iranian President Rouhani which called UAE’s deal to normalize ties with Israel as a huge mistake, while the UAE stated the speech was unacceptable and inciting. There were also comments from Iran’s armed forces chief of staff Bagheri that Tehran’s approach to UAE will change amid deal with Israel. (Newswires)

Belarus President Lukashenko said NATO build up is taking place on the country’s western border and rejected calls from Lithuania, Latvia, Poland and Ukraine to hold new elections. (Newswires) Russia's Kremlin said it is prepared to invoke a joint treaty with Belarus following two phone calls between Russian President Putin and Belarusian President Lukashenko. (Times) Separately, an EU official said the bloc will pay close attention to China's handling of Belarus after China voiced support for President Lukashenko. (SCMP)

US has reportedly formalised the sale of F-16 jets to Taiwan (Global Times) This comes as China's PLA announced drills in the Taiwanese Straits.

US

Treasury yields were slightly lower on Friday as risk assets paused and the week’s pronounced bear-steepener came to a standstill. By settlement, yields were between around 1bps lower at the front and long-end, while 2bps lower in the belly; volumes were average. Treasuries lacked much conviction today after the sell-off seen amid this week’s chunky supply, both from the Treasury and corporates; Thursday’s 30-year auction served as the cherry on the cake as bidders failed to emerge. Right-side tail risk was cut off after today’s US retail sales failed to meet analyst expectations, although the UoM survey was somewhat of a silver lining. Either way, Treasuries were little reactive to data points or headlines today. Instead, yields tracked the gentle meandering of the broader risk tone with an overarching trend lower. The later announcement of the China/US trade deal review meeting being delayed did not affect risk assets either, nor did Trump’s stimulus announcements. Treasury market participants now look to next Wednesday’s 20-year bond auction from the Treasury, likely keeping some cautious about letting yields richen given the mixed results from this week’s slate; more broadly, the flash PMIs will be in focus, as will the FOMC minutes. T-notes (U0) settled 5 ticks higher at 139-04.

US President Trump said he directed Treasury Secretary Mnuchin to prepare to send direct payments to all Americans and that he is ready to have the US Treasury and Small Business Administration to send additional PPP payments to small businesses. However,  President Trump later said he is waiting for the Democrats to approve the COVID-19 relief checks before the Treasury moves ahead with them and that he will not cut a deal with Democrats on COVID-19 relief because of the money they are seeking for states and cities, while he also tweeted that he is ready to send USD 105bln to the states to help open schools safely with additional PPE and the Democrats are holding this up. (Newswires/Twitter)

US House Speaker Pelosi told lawmakers she is calling for the House to return to session later this week to vote on legislation to protect the postal service, while a senior US Democratic aide said the likely plan is that the House will return on Saturday to work on postal legislation

POLL: CNN National Poll shows former VP Biden support at 50% (-5) vs. President Trump at 46% (+5), conducted August 12th-15th. (CNN/Twitter)