• European bourses modestly strengthened from a soft open after a weak APAC handover amidst quiet newsflow
• NHC says Laura is set to rapidly strengthen to a Category 4 hurricane
• Salesforce (CRM) beat on top and bottom lines and are some 12% higher in the pre-market
• DXY holds 93.00 with major peers mixed but overall little changed
• UST yields are continuing yesterday’s bear-steepening with USD 51bln 5yr supply in focus before tomorrow’s Jackson Hole
• Looking ahead, highlights include US Durable Goods, Fed’s Barkin & BoE's Haldane. Supply from the US.

CORONAVIRUS UPDATE

Major newswire tally stated that US cases increased by at least 38,204 to a total of 5.72mln and deaths rose by at least 1,210 to a total of 178.5k. Texas cases +6,091 (prev. +2,847) and deaths +181 (prev. +25). (Newswires)

US Department of Health and Human Services said the Trump administration will distribute 1.5mln N95 respirators to nursing homes from the strategic national reserve. (Newswires)

Global Times stated that all confirmed COVID-19 patients in Beijing hospitals have been cured and discharged. (Twitter)

German Foreign Ministry is extending the COVID-19 travel warnings for nations outside of Europe until September 14th, according to a governmental source; will be intensifying checks of returning traveller quarantines. (Newswires)

ASIA

Asian equity markets traded cautiously amid a lack of fresh macro drivers and following on from the somewhat choppy performance of US counterparts, where the DJIA underperformed whilst the S&P 500 and Nasdaq eventually extended on record highs. ASX 200 (-0.7%) underperformed in which utilities and financials led the broad descent across its sectors and as earnings continued to dominate headlines. Nikkei 225 (-0.1%) swung between gains and losses in tandem with an indecisive currency and as early momentum was stalled by resistance at the 23,350 level, with slight political uncertainty also clouding sentiment following PM Abe’s recent hospital visits that have spurred some speculation of a possible step-down, although officials were quick to refute this. Elsewhere, Hang Seng (U/C) and Shanghai Comp. (-1.3%) were subdued despite the recent constructive trade discussions, as there were also reports the Trump administration is mulling accusing China of 'genocide' over the maltreatment of Uighur Muslims. Furthermore, the PBoC continued its liquidity efforts but to a lesser extent and refrained from 14-day reverse repos in today’s open market operations, while Alibaba shares were a notable gainer overnight after its affiliate Ant Group filed for an IPO in Hong Kong and Shanghai as it targets a USD 225bln valuation and could raise as much as USD 30bln which would be the biggest on record. Finally, 10yr JGBs were lower in a continuation of the retreat from the 152.00 level and amid spillover selling from USTs, while prices also failed to benefit despite the lacklustre risk appetite and BoJ’s presence in the market for nearly JPY 1.2tln of JGBs with 1yr-10yr maturities.

PBoC injected CNY 200bln via 7-day reverse repos for a net daily injection of CNY 50bln at a rate of 2.20% PBoC set USD/CNY mid-point at 6.9079 vs. Exp. 6.9086 (Prev. 6.9183)

China’s Agriculture Ministry stated that China's imports of soybeans are expected to steadily increase in H2 and after the implementation of the China-US trade deal, more soybeans from the US will be imported to China. (Global Times) Subsequently, China is said to expect record US soybean purchases in 2020 via sources. (Newswires)

China's PLA will hold another military exercise in the East China Sea from Thursday to Sunday, the Zhejiang Maritime Safety Administration announced in a navigation restriction notice via Global Times. (Global Times)

China could weaponise its exports of medicines and drug precursors if the US cuts the country’s access to computer chips, a prominent Chinese academic and government adviser says, cited by SCMP. (SCMP)

Japanese Gov't spokesperson Suga says PM Abe's health has not changed; sees him twice a day; has never thought about pursuing his job; wants to avoid another State of Emergency. Separately, sees no need to reduce sales tax from current 10%. (Newswires)

US

American Chamber of Commerce in Shanghai has warned of an enormous negative impact on US Co's with international businesses if President Trump ban's Tencent's WeChat app, WSJ. (WSJ)

US President Trump tweeted that Wisconsin Governor should call in the National Guard which is ready, willing and more than able, while he suggested to end the problem fast in regards to the ongoing protests in Kenosha where fires have been set following a police shooting. (Twitter)

UK/EU

US is, according to the State Department, dismayed by HSBC's (HSBA LN) reported actions towards certain Hong Kong related accounts. (Newswires)

Germany is to extend its wage support program through to the end of next year, which doubles the length of the program to 24 months. Subsequently, German Finance Minister Scholz suggests that the additional COVID-19 relief measure will likely cost EUR 10bln, adding that the German economy is in better shape than feared a few weeks ago. (Newswires)

French PM Castex says the economic recovery plan will be presented on September 3rd; EUR 2bln will be given to the cultural sector. (Newswires)

ECB's Kazimir says that he believes the Eurozone economy is in line with the base case scenario; room to wait for hard data & there is no obligation for the entirety of the PEPP envelope to be used. (Newswires)

GEOPOLITICAL

US Secretary of State Pompeo tweeted there is no surprise Venezuela's illegitimate Maduro regime is looking to Iran for weapons and this is why we are restoring all UN sanctions on Iran including the arms embargo, while he added the US will fully enforce the sanctions. (Twitter)

Israeli Army said it bombed Hamas targets in southern Gaza in response to incendiary balloon, while it also struck Hezbollah outposts in Lebanon after shots were fired at Israeli troops, but noted no injuries were reported. (Newswires)

Sweden has ramped up its military readiness amid the "heightened security situation" due to Russian military manoeuvres. (FT)

France, Italy, Greece & Cyprus are to hold joint military exercises in the Eastern-Mediterranean from August 26th - 28th. Subsequently, Turkish President Erdogan says the nation will take what it deserves in the Agean, Black Sea and Mediterranean and will do whatever needed to get its rights. (Newswires)

EQUITIES

European stocks are mixed (Euro Stoxx 50 +0.2%), having opened with mild losses of around 0.3-0.5%, albeit cash bourses and equity futures remain contained amid a lack of fresh catalysts. There was no particular news flow that prompted the initial turnaround in the first half-hour since the cash open – it is worth keeping in mind the holiday-thinned conditions and caution heading into the Fed Jackson Hole Symposium, with the schedule set for release at 20:00ET/0100BST. Sectors are mixed with no clear risk profile to be derived; the IT sector outperforms as SAP (+1.3%) moves higher on the back of stellar numbers from Salesforce (+13% pre-mkt), who raised guidance. Note: SAP carries an almost 6% weighting in the Euro Stoxx 50. In terms of individual movers, Elekta (+13.7%) tops the European charts post-earnings, Telecom Italia (+3.8%) trades firmer after the Italian government gave the green light for KKR’s purchase of a stake in Co’s secondary grid. Meanwhile, Carnival (+2.8%) shares trade higher amid a firmer performance in the Travel & Leisure sector, although Co’s Princess Cruises has announced early-2021 world cruise cancellations for two out of 19 ships.

China's Foreign Minister is to visit the Netherland's today, likely to lobby the Dutch Gov't to renew an export license for the sale of critical chip technology to China. (SCMP) Of note for ASML (ASML NA)

Salesforce.Com Inc (CRM) - Q2 20 (USD): Adj. EPS 1.44 (exp. 0.67), Revenue 5.15bln (exp. 4.9bln). FY Revenue view 20.7-20.8bln (exp. 20.07bln). (PR Newswire) Co. shares rose 12% in pre-market trade

FX

USD - The Dollar is holding up relatively well ahead of durable goods, spot month end and the start of this year’s global Central Bank ‘gathering’ in Wyoming, albeit with assistance from certain currency rivals and a fade in broad risk sentiment after the recent bull run. The index has tightened its grip around 93.000 following several false breaks below, but is also meeting stiff resistance on rebounds amidst the usual sell signals for portfolio rebalancing from various bank models. Hence, the DXY is meandering within a 93.215-92.990 band and Usd/major pairs remain mixed/rangebound.

CHF - A marginal G10 underperformer, though still straddling 0.9100 vs the Greenback and 1.0750 against the Euro after an improvement in Swiss investor sentiment and eyeing Q2 GDP on Thursday that is expected to confirm a technical recession via a more pronounced q/q contraction compared to the previous quarter.

EUR - The Euro has waned ahead of 1.1850 for a 3rd consecutive session and failed to convincingly breach a technical barrier in the form of the 200 HMA that is currently at 1.1848, but the latest pull-back is shallower and not far from daily chart support just above 1.1800. Fundamentally, not much from an independent perspective as the single currency continues to track Buck moves alongside the general market mood.

NZD/JPY/AUD - No real reaction to NZ trade data overnight, but the Kiwi may be benefiting from a combination of short covering/corrective price action given the magnitude of post-RBNZ policy meeting depreciation. On that note, Assistant Governor Hawkesby may have contributed to the Nzd/Usd bounce from sub-0.6550 towards 0.6575 and latest Aud/Nzd retreat from near 1.1000, as he seemed to infer a preference for upping the balance sheet over conventional easing. However, the Aussie has also staged a firmer rebound vs its US counterpart to retest 0.7200 in wake of considerably less weaker than anticipated construction work completed during Q2. Similarly, the Yen has regained some poise between 106.55-17 parameters following firmer than forecast Japanese services PPI.

GBP/CAD - The Pound is pivoting 1.3150 against the US Dollar and outpacing the Euro as the cross dips a bit further beneath 0.9000, but Cable stopped just a handful of pips short of Tuesday’s best awaiting commentary from BoE chief economist Haldane for some specific inspiration. Elsewhere, firm oil prices could be keeping the Loonie afloat above 1.3200 rather than remarks from BoC’s Schembri on alternative policy measures including an average inflation target, as the spotlight switches to Senior Deputy Governor Wilkins this afternoon.

SCANDI/EM - The Nok has not been deflected off course by a jump in the Norwegian Labour Force Survey rate, and for once inflammatory statements from Turkish President Erdogan regarding rights in the Agean, Black Sea and Med have not undermined the Try (further), while the Zar has gleaned more momentum from SA CPI marginally surpassing consensus and the Cnh via the PBoC maintaining its gradual inclining Cny fix trend. Conversely, the Rub is reeling on geopolitical jitters and bearish technical factors after sliding through 75.0000.

Notable FX Expiries, NY Cut:

-        USD/JPY: 105.00 (3.2BLN), 105.40-55 (1.2BLN), 105.75 (1BLN), 106.00 (1BLN), 106.15 (420M), 106.30-35 (380M), 106.40-50 (600M), 106.90-107.10 (1.5BLN)

Australian Construction Work Done (Q2) -0.7% vs. Exp. -5.8% (Prev. -1.0%)

New Zealand Trade Balance (NZD)(Jul) 282M (Prev. 426.0M, Rev. 475M) New Zealand Exports (NZD)(Jul) 4.91B (Prev. 5.07B, Rev. 5.08B) New Zealand Imports (NZD)(Jul) 4.63B (Prev. 4.64B, Rev. 4.61B)

FIXED INCOME

Gilts failed to maintain recovery momentum despite the DMO receiving ample bids for its 2030 issuance and the suspicion was that debt participants were waiting to see results of the impending German 15 year sale before covering more shorts, taking profit and/or unwinding cash hedges. In the event, caution proved to be a prudent approach as the latter was far from well subscribed  and there is still US supply to absorb after durable goods data, 2 appearances from Fed’s Barkin and the focus turns to JH Day 1 tomorrow (full agenda due to be published later today). Back to bonds, Bunds, Gilts and 10 year T-notes are all trying to regroup after hitting deeper 175.52, 136.12 and 139-00+ intraday lows.

COMMODITIES

WTI and Brent front month futures remain relatively uneventful but remain near 5-month highs as traders keep an eye on the Hurricane situation in the Gulf of Mexico. In terms of the latest update, NHC said Hurricane Laura is expected to rapidly strengthen to a Category 4 hurricane (out of 5 categories), and is forecast to produce a life-threatening storm surge, alongside extreme winds, and flash flooding over Eastern Texas and Louisiana later today. The hurricane is forecast to make landfall in late US hours. Meanwhile, the BSEE’s latest estimates note that ~84.3% of current oil production in the region has been shuttered in anticipation of the hurricane, whilst Shell resists shutting its Deer Park Texas refinery (275k BPD), Marathon Galveston Bay Texas refinery (571k BPD) reported a potential shutdown, Valero Port Arthur Texas refinery (395k BPD) was also ceasing operations and Citgo Lake Charles Texas refinery (428k BPD) announced also it was shutting ahead of Hurricane. Elsewhere, prices also remain propped up by the latest inventory figures – which printed a larger than expected drawdown of 4.5mln barrels vs. exp. 3.7mln barrels. WTI and Brent October futures are contained, with the former towards the bottom of its USD 43.20-47/bbl current range, and the latter sub-46/bbl having had printed a range of USD 45.76-46.10/bbl. Elsewhere, spot gold moves at the whim of the Buck but holds onto a USD 1900+/oz status within a USD 20/oz range. Spot silver similarly sees losses and reside below USD 26.50/oz, having touched a base at USD 26.150/oz. In terms of base metals, LME copper prices eke mild gains, with a similar performance seen in Shanghai, whilst stainless steel futures in Shanghai rose in excess of 1% amid supply shortages of nickel ore and ferronickel.

US Private Energy Inventories (w/e Aug. 21st): Crude -4.5mln (exp. -3.7mln, prev. -4.3mln). (Newswires)

NHC says Laura is set to rapidly strengthen to a Category 4 hurricane and is forecast to produce a life-threatening storm surge, extreme winds and flash flooding over Eastern Texas and Louisiana later today. (Newswires)

Rosneft reportedly intend to increase Tuapse refinery output by 11% in September, from August's 700k tonnes, according to sources. (Newswires)