• European stocks are choppy amidst minimal news-flow, Spain’s IBEX underperforms; US futures modestly firmer
• US President Trump issued a new order on ByteDance to divest itself of any assets used to support the TikTok app in the US within 90 days.
• One source suggested the US-China meeting was delayed as US wanted more time to allow China to increase US import; another referenced a conference of senior Communist Party leaders
• US House Democrats are to hold a caucus-wide conference call this morning regarding the house returning this week to deal with the USPS legislation, Fox’s Pergram
• In FX, DXY fluctuates on either side of 93.000, NZD underperforms and TRY hits fresh lows
• 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)

Novavax (NVAX) is commencing the second-phase of its COVID-19 vaccine development, could commence large final stage of testing by September, WSJ. (WSJ)

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 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 (-0.8%) and Nikkei 225 (-0.8%) 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 (+0.6%)  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)

On the US-China review being delayed, 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%)

US 

Link to Democratic National Convention Schedule Highlights

US House Democrats are to hold a caucus-wide conference call this morning in regards to bringing back the House this week to deal with the USPS legislation, " Bill could be expanded to tackle other coronavirus-related measures", according Fox's Pergram. Echoes commentary from 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. (Twitter/Newswires)

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

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)

German Government spokesman says further EU sanctions on Belarus is contingent on how the authorities act; subsequently, European Council President Michel says he will be calling an EC meeting on Wednesday at 12:00CEST/11:00BST to discuss the situation in Belarus. (Newswires)

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

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

EQUITIES

A choppy start to the week for European stocks [Euro Stoxx 50 Unch] as the region swung between gains and losses in the first hour of cash trading before calming in mixed trade. This comes as the region failed to sustain the mostly positive APAC lead amid a lack of fresh catalysts in what has thus far been a quiet start to the week. Spain’s IBEX (-0.8%) is the marked laggard as the country’s recent COVID-19 case spikes prompted the closure of nightlife, whilst Germany reaffirmed its travel warning to Spain and Tui (-4.8%) extended the suspension of flights to Spain, Portugal, Cyprus and Morocco. Sectors also see a mixed performance with no clear risk profile to be derived, with Basic Resources and Tech holding their top spots, with some aid potentially derived from the PBoC’s liquidity injection overnight, whilst Travel & Leisure, Banks and Real Estate remain the laggards. In terms of individual movers, Monday M&A action from Sanofi (+0.2%) sees the company eking mild gains as it is to acquire Principia Biopharma (PRNB) in an all-cash deal valued at approximately USD 3.4bln. The deal will further strengthen core R&D areas of autoimmune and allergic diseases, Sanofi expects to complete the purchase in Q4 2020. Under the deal, outstanding Principa shares will be purchased for USD 100/shr (vs. Friday’s USD 90.74/shr close), and thus the Co. trades over 10% higher in the pre-market. Elsewhere, Deutsche Lufthansa (-2.0%) conforms to the overall underperformance in the travel sector, albeit the group reached a deal with UFO union on cost cutting measures, but talks have been broken off with the Verdi union on ground personnel.

FX

USD – A real Monday summer lull and lacklustre trade in the currency markets, with the DXY going nowhere fast or far from the 93.000 pivot that has been keeping the index and Greenback in general tethered for a while. The US fiscal impasse continues and even the eagerly awaited showdown with China to assess progress towards the Phase 1 trade pact was postponed for another day, so the weekend has passed by without any real meaningful event. Moreover, today’s agenda is hardly promising in terms of potential catalysts to prompt some price action, as the European calendar is bare beyond weekly ECB QE tallies and the US docket only comprises NY Fed manufacturing and NAHB surveys. Back to the DXY, 93.124-92.887 covers the range and the base is just shy of last week’s low as a reference point.

CAD/NOK – Marginal G10 outperformers, and perhaps deriving some traction from firmer crude prices, while the former awaits the BoC’s Q2 Senior Loan Officer Survey and latter acknowledges a significantly narrower trade deficit in the run up to this week’s Norges Bank policy meeting. Usd/Cad is straddling 1.3250 and Eur/Nok is still eyeing the psychological 10.5000 level after recent probes below, but no sustained break.

JPY/AUD/GBP/CHF/EUR – All narrowly mixed against the Buck, as the Yen rotates around 106.50 in wake of weak GDP and ip data, the Aussie spans 0.7175, Pound flits either side of 1.3100, Franc hovers just above 0.9100 and 1.0750 vs the Euro as Eur/Usd trades around 1.1850. Note, another hefty Swiss bank sight deposits has not hindered the Chf, but did result in some selling pressure last week.

NZD – The Kiwi is still lagging and underperforming on NZ’s COVID-19 resurgence that has forced the Government to extend mortgage deferrals by another 6 months to the end of Q1 next year and a new Nzd 510 mn salary subsidy for 470k jobs. Nzd/Usd is towards the bottom end of 0.6523-53 parameters and Aud/Nzd has extended post-RNBZ gains sharply to over 1.1000 before paring back a bit.

EM – No adverse reaction to the aforementioned US-Sino trade deal meeting delay, as the PBoC set a firm Cny midpoint fix overnight and added more 7-day liquidity alongside medium term funds, but the Try has depreciated yet again amidst more Turkish trouble in Syria and the Med, not to mention a wider budget shortfall. Usd/Try has been above 7.3950 irrespective of the CBRT’s longer term repo auction.

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)

FIXED INCOME

Bunds seem to have hit the buffers after testing 176.00 to the upside, but not extending more than a tick beyond, while Gilts hit resistance ahead of their nearest big figure at 136.94 amidst relatively listless trade and low-key volumes. Similarly, US Treasuries have drifted down from overnight session highs ahead of a light first agenda of the new week that includes NY Fed manufacturing, NAHB and Fed’s Bostic, though still ‘comfortably’ above worst levels seen last week in wake of the meek 30 year sale.

COMMODITIES

WTI and Brent front month futures have waned off overnight highs since European players entered the fray, again with little to report in terms of fresh fundamentals. That being said, source reports late Friday noted that China will significantly increase imports of US oil – an area China has been lagging in under the Phase 1 deal. On the OPEC front, the JMMC will reportedly be meeting on Wednesday. Although no major surprises are expected, focus will likely fall on any commentary surrounding the oil market outlook, whilst credence will also be given to the compliance of the OPEC+ stragglers and whether they are over-complying as promised. Turning to the US, Friday’s Baker Hughes rig count saw active oil rigs continuing to decrease (-4), but analysts are skeptical that US producers will be able to sustain current production levels given the slump in drilling activity. “Although US producers should be able to bring back some production, even with the limited drilling activity. The Industry is still sitting on a large amount of drilled but uncompleted wells (DUCs), and so can complete these wells in an attempt to sustain production levels” ING writes. Elsewhere, spot gold and silver continue grinding higher, initially due to a weaker USD, but thereafter the preciously metals found mild support at USD 1950/oz and USD 26.60/oz respectively. Precious metal traders this week will be eyeing the FOMC Minutes, US-Sino events, COVID-19 developments, and US stimulus bill updates. Meanwhile, Dalian iron ore prices continued to edge higher, marking a third straight session of gains amid an upbeat demand prospects for steel-making, but traders are also keep an eye on the supply side of the equation. Nickel prices meanwhile were supported by tighter supply from a key supplier – the Philippines.

Iranian Oil Minister Zanganeh says OPEC has been successful as crude prices have increased and stabilised. (Newswires)