• Asian equity markets traded mostly positive and E-mini S&P topped 3,400
• US FDA authorized the emergency use of convalescent plasma as treatment for hospitalized COVID-19 patients
• China launched the emergency use of COVID-19 vaccines which are going through clinical trials
• Australia's Victoria State Premier is to allow the extension of the state of emergency for a year & New Zealand extended the Auckland Level 3 lockdown restrictions; South Korea is considering moving the country to Level 3 restrictions
• In FX, DXY was uneventful, USD/JPY was range-bound, and NZD underperformed
• Looking ahead, the calendar sees a lack of pertinent data and the start of the US Republican National Convention

CORONAVIRUS UPDATE

US FDA authorized the emergency use of convalescent plasma as treatment for hospitalized COVID-19 patients. US President Trump confirmed the announcement which he stated will expand access to plasma treatment and suggested plasma treatment is proven to reduce mortality by 35%, while there were also separate reports that President Trump is considering fast tracking the UK vaccine which is currently being developed by AstraZeneca before the election, although AstraZeneca later denied this. (Newswires/FT)

China launched the emergency use of COVID-19 vaccines which were going through clinical trials. (Global Times)

US COVID-19 cases +45,265 to a total 5.64mln and deaths +1,006 to a total 175.7k, while a major newswire tally stated that US coronavirus cases increased by at least 31,344 to a total of 5.72mln on Sunday and deaths rose by at least 450 to a total of 176.8k. Florida COVID-19 cases +2,974 to a total 600,571 and deaths +51 to a total 10,462, Texas cases +4,398 to a total 577,537 and deaths +104 to a total 11,370, while a major newswire tally stated that California coronavirus cases increased by at least 3,139 on Sunday and deaths rose by at least 16. (Newswires)

UK COVID-19 cases +1,041 (prev. +1,288) and deaths +6 (prev. +18). (Newswires)

Italy’s Health Minister Speranza suggested that coronavirus situation doesn’t warrant imposing additional restrictions such as a new lockdown or travel ban between provinces, while he added it is different than the first phase and noted that both France and Germany have refrained from imposing additional measures despite higher infection rates. (Newswires)

Australia's Victoria State Premier announced the state of emergency that was set to expire on Sept. 13th has been extended for a year which is the legal instrument that allows rules on facemasks, COVID-safe work plans and limits on pubs, cafes and restaurants. (Newswires)

New Zealand PM Arden extended the Auckland level 3 lockdown restrictions to August 30th. (Newswires)

South Korea is considering moving the country to Level 3 lockdown restrictions, the highest level and up from the current Level 2, in a nationwide move given the increases in cases with ~3k reported in the last 10 days. (Newswires)

ASIA

Asian equity markets traded mostly positive and E-mini S&P topped the 3,400 mark following Friday’s tech-fuelled gains on Wall St and the recent emergency use authorization of convalescent plasma for treatment of COVID-19 which was suggested to reduce mortality by 35%, but with gains capped by US-China decoupling concerns following comments by US President Trump. ASX 200 (+0.2%) and Nikkei 225 (+0.2%) were initially indecisive before outperformance in tech then proved to be the deciding factor to keep stocks afloat in Australia and with earnings results the main catalyst for the biggest stock movers, while the Japanese benchmark was also higher as it made another attempt at the 23,000 focal point. Hang Seng (+1.6%) and Shanghai Comp. (+0.2%) were underpinned by another firm liquidity effort by the PBoC, although gains in the mainland were tempered by the ongoing US-China tensions after President Trump raised the prospect of decoupling from China and suggested the US does not have to do business with China. In addition, the People’s Liberation Army are to conduct military drills across 3 major Chinese sea regions in the approaching days which is aimed at deterring Taiwan secessionists and the US, while increased IPO activity also attracts funds from the broader market with 18 firms listing in the ChiNext today as part of reforms in the tech board aimed at fast-tracking IPOs and which saw some of the newly-listed names surge as much as 500%. Finally, 10yr JGBs were positive despite the mild gains in stocks as prices tracked recent upside in T-notes and with the BoJ also present in the market for a total of JPY 450bln of JGBs predominantly concentrated in 3yr-5yr maturities.

PBoC injected CNY 100bln via 7-day reverse repos and CNY 60bln in 14-day reverse repos for a net daily injection of CNY 110bln and maintained 7-day reverse repo rate at 2.20% and 14-day reverse repo rate at 2.35%. (Newswires)

-        PBoC set USD/CNY mid-point at 6.9194 vs. Exp. 6.9201 (Prev. 6.9107)

US President Trump raised the prospect of decoupling from China in which he suggested the US doesn’t have to do business with China, while he later commented regarding decoupling which he noted is something he would certainly do if China don’t treat us right. (Fox News)

WeChat users group filed a suit to block the Trump administration's ban on the messaging app which they said was unlawful and TikTok is to also file a suit to challenge US President Trump's executive order. It was separately reported that China's Huawei and ZTE (763 HK) slowed the pace of the 5G rollout in China amid impact of US restrictions and Huawei asked a mobile phone component supplier last week to temporarily suspend development of new products amid problems related to MediaTek chip supplies due to US restrictions. Conversely, reports noted that Russia is prepared to co-operate with China and Huawei on 5G technology which Moscow is currently trying to develop, according to reports citing Foreign Minister Lavrov. (Newswires/FT/LTN/Interfax)

China’s Global Times Editor tweeted there is increasing concern regarding risk of war as the US & Taiwan challenge the "One-China principle" by demonstrating stronger political relations coupled with US' blatant show of muscle in Taiwan Strait and South China Sea, while he suggested the situation is heading towards spiralling out of control. In related the news, it was also reported that the People’s Liberation Army will be conducting military drills across 3 major Chinese sea regions in the approaching days which is aimed at deterring Taiwan secessionists and US. (Twitter/Global Times) China reportedly met with diplomats of 10 ASEAN members earlier in the month to propose resumption of talks and convey concerns about increasing risks of conflicts from activities by "non-regional countries". (SCMP)

UK/EU

A rift in the Conservative party reportedly broke out regarding whether tax increases are required to plug the gaps in public finances with the Treasury concerned about the rising debt level which increased to more than GBP 2tln, although PM Johnson’s chief adviser Cummings prefers spending reductions rather than an increase in taxes. (Telegraph)

UK PM Johnson is against plans by Chancellor Sunak to temporarily suspend pension protections to avert big increases caused by the “triple lock”, in an effort to boost public finances, with the PM concerned that such action could result to a backlash from older voters. Furthermore, Chancellor Sunak was separately reported to have threatened to withhold funding for poorly thought out infrastructure projects. (Telegraph/Times)

Reports alleged the EU is attempting to impose Brexit in name only which raises the prospects of a no-deal exit. Furthermore, a senior Whitehall source accused the EU as treating PM Johnson’s government the same as former PM May’s by seeking a deal that would tie Britain to EU rules, while officials also stated that Cabinet Minister Gove spends the majority of his time in preparation for a no-deal. (Sunday Times/Twitter) In relevant news, UK Cabinet has drawn up emergency plans to protect the UK from a second COVID-19 wave coinciding with a no-deal Brexit; note, the plans are reportedly dated July 2020. (The Sun)

UK is reportedly set for a record-breaking economic rebound in Q3 amid increased spending post-lockdown, although some economists are concerned the strong initial recovery may quickly peter out. (FT)

European Trade Commissioner Hogan is facing calls to quit after allegedly breaching COVID-19 regulations. An official close to the trade chief said the Hogan is not resigning. (Guardian)

Nicolai Tangen, who is due to become head of the Norwegian Sovereign Wealth Fund on September 1st, reportedly faces the choice of either resigning or selling his stake in AKO Capital due to conflicts of interests. Note, he was previously told he would be able to keep a ~43% stake; is to meet with the Norges Bank today to discuss next steps. (FT)

S&P affirmed Switzerland at AAA; Outlook stable. (Newswires)

FX

In FX markets, the DXY began the week uneventful although held above the 93.00 level following Friday’s advances which were spurred by better than expected PMI data stateside, as well as weakness in its major counterparts in which EUR/USD trickled below 1.1800 following the disappointing EZ PMIs. GBP/USD also remained subdued after it recently retreated from resistance at 1.3250 and slid to beneath the 1.3100 handle owing to fruitless Brexit discussions, while a senior Whitehall source accused the EU of treating PM Johnson’s government the same as former PM May’s by seeking a deal that would tie Britain to EU rules which raises the prospects of a no-deal exit. Elsewhere, USD/JPY mostly kept to within a tight range sandwiched between its 50-Hour and 100-hour MA levels at 105.81 and 105.70 respectively, and antipodeans traded lacklustre after Australia's Victoria State Premier announced to extend the state of emergency for a year and with NZD subdued by the contraction in Retail Sales and brief extension of the level 3 alert in Auckland.

Goldman Sachs sees the case for USD depreciation remaining intact citing factors including USD being overvalued and US real interest rates to remain negative for several years, while it further cited a steady recovery of the economy from the pandemic. However, it also noted factors for consolidation to persist which includes pandemic uncertainty, Fed outlook and US politics. (Twitter)

New Zealand Retail Sales (Q2) Q/Q -14.6% (Prev. -0.7%). (Newswires)

New Zealand Retail Sales (Q2) Y/Y -14.2% (Prev. 2.3%)

Fitch affirmed Turkey rating at BB-; Outlook revised to Negative from Stable. (Newswires)

Brazilian President Bolsonaro’s reaction when questioned on a BRL 89k payment to his wife from a former police officer has sparked significant pushback within Brazil. (Guardian)

COMMODITIES

WTI crude futures oscillated around the USD 42.50/bbl level amid mixed headlines as although the latest Baker Hughes Rig Count showed an increase in oil rigs, there were also reports of producers evacuating personnel and reducing production with 13% of crude output shut on Saturday ahead of Hurricane Marco and Tropical Strom Laura. Nonetheless, oil prices were initially supported near the open although this gradually faded, while recent reports of Nigeria to boost Bonny Light and Forcados oil exports in October was another contributor to the cautious price action. Elsewhere, gold traded sideways with the precious metal hampered by a steady greenback and with participants looking ahead to the events later this week for a better catalyst, notably the Fed’s Jackson Hole Symposium beginning on Thursday, while copper marginally benefitted on the mostly constructive risk tone to nurse some of Friday’s slump from resistance at USD 3.00/lb.

Baker Hughes Rig Count: Oil +11 to 183, nat gas -1 to 69, total +10 to 254. (Newswires)

US President Trump said he approved the disaster declaration for California amid wildfires, while he also approved the disaster declaration for Puerto Rico and Louisiana amid Hurricane Marco and Tropical Storm Laura. Furthermore, the NHC earlier announced that Marco turned into a hurricane with a life-threatening storm surge and hurricane force winds expected along parts of the US Gulf Coast, while Tropical Storm Laura was heading towards eastern Cuba with heavy rainfall and life-threatening flash flooding continuing over parts of the Dominican Republic and Haiti. (Newswires)

BHP is ramping down operations at Shenzi and Neptune platforms in the Gulf of Mexico and noted that evacuations were to be completed by Sunday afternoon. Furthermore, Shell (RDSA LN) said on Friday that there were no impacts from Gulf of Mexico storms to its production it began reducing non-essential personnel from some sites, while BP (BP LN) also evacuated employees from the Gulf of Mexico and began to shut production at four of its plants in the region. (Newswires)

Nigeria will reportedly boost its Bonny Light and Forcados oil exports in October. (Newswires)

Syria said an Arab gas pipeline explosion has resulted to a total blackout out in the country, while the government later declared the explosion targeting the main line feed could be a terrorist act. (Newswires)

US

Treasuries were ultimately unchanged today after positive US data prints offset earlier richening of yields. By settlement, 2s +0.5bps at 15bps, 10s -0.5bps at 64bps, 30s -2.5bps at 135bps; TYU volumes remained light. Yields had been declining through the European session on the back of a mixed slate of Flash PMIs, although as US participants entered the fray, a pick-up in equities into the open was accompanied by the paring of strength in sovereigns. After a shaky cash open for stocks, buyers emerged in USTs, although rates found their floor after the all-forecast-beating US PMIs buoyed the risk tone and the dollar. Looking ahead, duration should find some respite from the recent supply pressure as we enter next week, where the Treasury auctions will be concentrated in the belly maturities, and corporate issuance should cool too as we move further past Q2 earnings season. However, participants might feel cautious to put directional bets on ahead of Thursday’s Jackson Hole confab. T-note (U0) futures settled flat at 139-18.

US House voted 257-150 on Saturday to approve the bill which provides USD 25bln to the Postal Service and halt the operational services which has caused delays for the mailing system, although the White House had threatened to veto the House postal service bill. (Newswires)

US President Trump’s senior adviser Conway is to leave the White House at end of the month. (Washington Post)

Democratic Presidential Nominee Biden has stated he would be prepared to shut the country down due to COVID-19 if that was the recommendation of scientists, ABC interview. (FT)