• European stocks drift lower despite a lack of fresh catalysts ahead of Fed Chair Powell
• US Republicans are reportedly refining the new 'skinny' stimulus proposal which would not include stimulus checks and would be valued at USD 500bln
• US Defense Secretary Esper said Beijing has repeatedly failed to keep promises to adhere to international laws
• In FX, DXY remains propped up around 93.00, antipodeans outperform; UST curve is fractionally flatter
• Looking ahead, highlights include US GDP (2nd Estimate), Initial/Continued Jobless Claims, Fed Chair Powell, BoC's Macklem & ECB's Lane at the JH Symposium, Banxico Minutes and supply from the US

JACKSON HOLE

Today’s Events:

-        0900ET / 1400BST – Fed’s George hosts program kick-off.

-        0910ET / 1410BST – Fed Chair Powell provides Opening Remarks.

-        1115ET / 1615BST – ECB’s Lane, BoC Governor Macklem and MAS Chairman Shanmugaratnam are panellists on “Crisis Management in the COVID-19 Economic Shutdown”

Link to newsquawk primer for Fed Chair Powell

CORONAVIRUS UPDATE

Major newswire tally stated US cases increased by at least 43,459 to a total of 5.84mln on and deaths rose by at least 1,199 to a total of 179.7k. Texas cases +5,045 (prev. +6,091) and deaths +229 (prev. +181), California cases +6,004 (prev. +4,480) and deaths +150 (prev. +105).

NIH's Fauci expressed concerns about interpretations of recommendations made in coronavirus task force discussions and stated that it may give the incorrect assumption that asymptomatic spread is not a great concern when in fact it is. (CNN)

UK Air Bridge between London and New York to enable travellers to side-step the quarantine is under discussion in top level US and UK government talks. (The Telegraph)

Western governments are reportedly concerned regarding Beijing's commitment to identify the source of the pandemic after WHO investigation team failed to visit Wuhan. (FT)

South Korea confirmed 441 additional coronavirus cases (prev. +320) and urged businesses to have employees work from home after it reported the largest increase of daily coronavirus cases since March. Furthermore, South Korea Health Ministry said discussions continue about potentially increasing social distancing to level 3, while it was also reported that India’s daily coronavirus cases increased by a record 75,760 to a total 3.31mln. (Newswires)

Abbott Laboratories (ABT) received US FDA emergency use authorization for its USD 5, 15-minute, easy-to-use coronavirus test, while the Co. said it will ship tens of millions of tests next month and will ramp up to 50mln tests per month in October. (Newswires)

ASIA

Asian equity markets traded mixed after failing to take full impetus from the fresh record highs stateside which was led once again by a surge in big tech, with the region kept tentative by ongoing US-China tensions and ahead of the looming Jackson Hole Symposium. ASX 200 (+0.2%) was led higher by metal miners following the prior day’s advances in precious metals and with sentiment also supported amid better than expected Private Capex data which included upward revisions to yearly capex estimates. Conversely, Nikkei 225 (-0.4%) was pressured as exporters suffered from the ill effects of recent currency strength, while the KOSPI (-1.0%) also weakened after virus cases rose by the most since March and following the BoK rate decision where the central bank maintained rates at 0.50% as expected but downgraded its 2020 growth forecast in which it now anticipates a wider contraction of 1.3% for the economy. Elsewhere, Hang Seng (-0.8%) and Shanghai Comp. (+0.6%) were cautious as US-China tensions were stoked after the US blacklisted more Chinese firms including several subsidiaries of China Communications Construction Company which saw shares in the parent drop nearly 5%. Other notable stock movers today included HSBC (-1.6%) which was pressured by recent accusations from US Secretary of State Pompeo that it is aiding Beijing’s crackdown on Hong Kong and continues to provide services to people sanctioned by the US, although Xiaomi (+13.0%) shares have surged after it more than doubled its Q2 profit. Finally, 10yr JGBs were positive following the bull steepening stateside in the wake of a strong 5yr US auction, with the slightly soured Asia-Pac tone also providing a tailwind for bond prices, although some of the gains were later pared after mixed results at today’s 2yr JGB auction. 

PBoC injected CNY 100bln via 7-day reverse repos for a net daily drain of CNY 60bln at a rate of 2.20%. (Newswires) PBoC set USD/CNY mid-point at 6.8903 vs. Exp. 6.8838 (Prev. 6.9079)

Chinese Industrial Profits (Jul) Y/Y 19.6% (Prev. 11.5%). (Newswires) Chinese Industrial Profits YTD (Jul) Y/Y -8.1% (Prev. -12.8%)

US Defense Secretary Esper said Beijing has repeatedly failed to keep promises to adhere to international laws, while he added that China has hampered global efforts to combat the virus and its military continues to pursue aggressive modernization plan. Furthermore, Esper also suggested the US needs to be able to deal with China and Russia in all areas of the globe. (Newswires)

China's Foreign Ministry says it is unjust for the US to impose sanctions on Chinese construction within their own territory, such sanctions are unjustified and a gross interference in internal affairs. (Newswires)

TikTok CEO Mayer resigned following US threat to ban the app. (Newswires/FT)

Bank of Korea kept its 7-Day Repo Rate unchanged at 0.50% as expected vias unanimous decision. BoK Governor Lee said exports will perform better in H2 than H1 but added the recovery in exports will only be gradual and that monetary policy needs to be actively used if economic downturn widens although any further rate cuts need to consider potential adverse effects, while he stated they have other tools ready aside from rate cuts including OMOs. Furthermore, BoK forecasts 2020 GDP growth at -1.3% vs. Prev. -0.2% and sees 2021 GDP growth at 2.8%, while it sees 2020 inflation at 0.4% vs. Prev. 0.3% and 2021 inflation at 1.0%. (Newswires)

US

US Republicans are reportedly refining the new 'skinny' stimulus proposal which would not include stimulus checks and would be valued at USD 500bln, while there were separate comments from US Senator Johnson said he's optimistic about getting 51 GOP senators on board with a "targeted" COVID relief bill that they could be called back to vote on before Labor Day. (CNBC/Washington Post)

White House said following unrest in Kenosha, Wisconsin, it has assisted the state in the deployment of nearly 1,000 National Guard troops, while the US Justice Department deployed over 200 agents and marshals from FBI, ATF and US Marshals Service due to the riots. In relevant news, the Wisconsin Justice Department stated that investigators recovered a knife from parked car that Jacob Blake was reaching into before being shot by police. (Newswires)

UK/EU

UK Government officials have warned that negotiations with Japan over a post-Brexit trade agreement could take weeks to conclude rather than days amid disagreements over agriculture. (Times)

Spanish Economy Minister says furlough scheme may have to be extended for certain industries. (Newswires)

GEOPOLITICAL

China and India have agreed to further ease border tensions. Following active efforts from both sides, frontline troops have made progress in disengagement: Defense Ministry spokesperson Wu Qian cited by Global Times. (Twitter)

Russian President Putin says Belarus' Lukashenko has asked him to form a reserve police force, Ifx; no need to use Russian forces in Belarus at present. (Ifx)

EQUITIES

Subdued trade across the European equity space (Euro Stoxx 50 -0.5%), as bourses drifted lower since the cash open despite a lack of fresh catalysts and a mixed APAC lead, but with possible positioning/profit-taking ahead of Fed Chair Powell’s address (full Jackson Hole schedule available on the newsquawk headline feed). Participants will be eyeing any nuances regarding the Fed’s framework review and average inflation targets ahead of the September meeting (full preview available in the newsquawk Research Suite). Sectors are mostly lower with a defensive bias, although IT bodes somewhat better than other cyclical names following the tech outperformance on Wall Street yesterday. Meanwhile, Banks reside at the bottom of the pile amid the low-yield environment. In terms of individual movers, WPP (+4.3%) leads the gains in the Stoxx 600 after overall solid earnings. Conversely, Rolls-Royce (-6.8%) resides on the other side of the spectrum after reporting dismal numbers whilst noting the COVID-19 has significantly impacted the group in H1. The newest DAX-component Delivery Hero (-2.9%) is pressured by its earnings which eroded YY. Finally, positive broker moves see Ambu (+1.5%) and Swedbank (+1.0%) in the green. 

FX

AUD/NZD – The Aussie and Kiwi are outpacing G10 peers, with the former probing resistance around 0.7250 vs its US counterpart in wake of Q2 Capex data showing a less steep decline than anticipated, while Aud/Usd is also deriving more upward momentum from the ongoing incremental strength in the YUAN that is now testing 6.8700 against the Greenback. Meanwhile, Nzd/Usd is eyeing 0.6650 next having established a firmer base above 0.6600 and gleaning some support from latest reports on the COVID-19 situation in Auckland as NZ’s Health Minister states that the outbreak is now relatively contained.

DXY – The broad Dollar and index have unwound more of Wednesday’s pre and post US durable goods gains after another solid Treasury auction prompted a retreat in yields alongside some curve realignment from pronounced steepening, which in turn helped Gold and other precious metals to rebound sharply (Xau currently back up around Usd 1950/oz compared to just above Usd 1900 at one stage). In fact, the DXY is now hovering shy of 93.000 within a 92.991-783 range awaiting top tier data, Fed speakers at the symposium and the final issuance of the week, while also conscious of the fact that today is spot month end and portfolio rebalancing models are negative on balance for the Buck.

CHF/EUR/GBP/JPY/CAD - All narrowly mixed vs the Greenback, as the Franc holds above 0.9100 and perhaps takes heed of Swiss Q2 GDP not contracting quite as much as expected, while the Euro continues to bang its head against 1.1850 and the 200 HMA in close proximity, but hold above 1.1800 and around the 21 DMA with a decent spread of option expiries outside of those parameters (from 1.1750-60 through 1.1900 to 1.19050-55). Elsewhere, the Pound is consolidating at newfound higher levels – Cable around 1.3200 and Eur/Gbp either side of 0.8950 – the Yen is straddling 106.00 and Loonie pivoting 1.3150 ahead of Canadian current account data and average earnings.

SCANDI/EM - Retail sales beats and improvements in Swedish sentiment (both industrial and consumer) haven’t given the Nok or Sek much lasting impetus, as the respective Eur crosses hover around 10.5300 and 10.3100, though the latter may receive something more sustainable from Riksbank's Floden shortly . However, EM currencies are largely firmer at the Dollar’s expense, even the Rub awaiting a major interview by Russian President Putin at 12.00BST and the Try despite Turkey announcing live fire drills for next Tuesday and Wednesday in the Eastern Med that is almost certain to irk Greece, the international community and investors.

Australian Capital Expenditure (Q2) -5.9% vs. Exp. -8.4% (Prev. -1.6%, Rev. -2.1%). (Newswires) Australian Private Capital Expenditure 2020-2021 (AUD)(Est. 3) 98.6B (Prev. 90.9B) Australian Private Capital Expenditure 2019-2020 (AUD)(Est. 7) 116.84B (Prev. 115.4B)

Notable FX Expiries, NY Cut:

-        EUR/USD: 1.1700-10 (500M), 1.1735-40 (700M), 1.1750-60 (1.6BLN), 1.1765-70 (450M), 1.1800 (580M), 1.1825-30 (620M), 1.1875-85 (800M), 1.1900 (1BLN), 1.1950-55 (1BLN)

-        USD/JPY: 104.90-105.00 (2BLN), 105.50-60 (1.2BLN), 105.70-75 (1BLN), 105.90-106.00 (600M), 106.50-60 (1BLN), 107.00-05 (550M), 107.15 (350M)

FIXED INCOME

It’s been steady and measured, but relatively consistent after some overnight/early EU wobbles and certainly more one directional of late, as Bunds and their Eurozone bond brethren continue to lead the broad revival from midweek lows. The 10 year German benchmark has now been up to 176.41 and almost a full point off Wednesday’s post-US data base, while Gilts just reached 136.49 vs 135.94 at worst yesterday and the T-note is just shy of the 139-14 overnight session high. Ahead, IJC, Q2 GDP 2nd take, pending home sales, KC Fed manufacturing survey and the 7 year sale, but Fed’s Powell will likely grab the headlines from the symposium after opening remarks and before BoC Governor Macklem and ECB chief economist Lane.

COMMODITIES

WTI and Brent front month futures remain uneventful within a tight range, albeit near session lows, awaiting the main even later today at the Jackson Hole Symposium. Prices have largely priced in the temporary impacts of Hurricane Laura – which has made landfall near Cameron Louisiana as a Cat 4 hurricane, but has since been technically downgraded to a major Cat 3 hurricane – with BSEE leaving their shuttered production estimates unchanged D/D at 84.3%, equating to around 1.56mln BPD (some 13% of total US output). WTI Oct resides sub-43.50/bbl, having touched the figure to the upside in APAC trade, but remains within a tight USD 0.40/bbl range thus far. Brent Oct similarly trades sideways under USD 46/bbl having had printed an overnight base at 45.57/bbl. Elsewhere, spot gold trades softer at the whim of the Buck just under the USD 1950/oz mark, moving within a USD 20/oz range, whilst spot silver sees similar price action and remains contained under USD 27.50/oz. In terms of base metals, nickel prices hit November highs after solid stainless-steel demand and supply concerns from top producer Indonesia, while copper traded flat overnight in tandem with the mixed risk appetite.

NHC said Hurricane Laura has become an "extremely dangerous" Category 4 hurricane and later updated that Hurricane Laura was located around 140 miles south of Lake Charles, Louisiana with maximum sustained winds reaching 145 miles/hour. (Newswires)

Natural Gas Pipeline Co declared a force majeure at in Cameron Parish, Louisiana Line due to storm path of Hurricane Laura. (Newswires)

Indian state refiners are reportedly to stop purchasing oil from China-linked Co's, according to sources. (Newswires)