• Asian equity markets were somewhat mixed as the region only partially sustained the momentum from the firm US handover
• ByteDance plans to restructure TikTok with its new investors which would see Oracle (ORCL) and Sequoia Capital taking stakes
• UK government won the vote on the Internal Market Bill by 340-263 which now moves the bill to the Committee Stage of the legislation process
• The DXY lost further ground after slipping below 93.00; EUR/USD trades just beneath 1.1900, GBP/USD trades firmly above 1.2850
• BSEE estimated 21.39% (396k BPD) of offshore oil production in the Gulf of Mexico has been shut-in amid hurricane Sally
• Looking ahead, highlights include UK Labour Market report, German ZEW survey, US NY Fed and Industrial Production, weekly Private Inventory Crude Stocks, IEA Monthly Oil Market Report, ECB's Panetta, supply from UK, Germany and US

CORONAVIRUS UPDATE

US COVID cases +35,549 (prev. +40,423) and deaths +510 (prev. +807), while a major newswire tally stated that US cases increased by at least 36,970 to a total of 6.57mln and deaths rose by at least 423 to a total of 194.6k. New York COVID cases +583 (prev. +725) and deaths +4 (prev. +6), California cases +2,855 (prev. +4,625) and deaths +56 (prev. +78), while Texas cases +2,595 (prev. +1,845) and deaths +21 (prev. +47). (Newswires)

AstraZeneca (AZN LN, AZN) COVID-19 vaccine trial in the US is on hold (other locations still running) until at least midweek amid an investigation in the side effects seen in Britain, according to sources. Furthermore, it was unclear how long the FDA would take to complete their review. (Newswires)

UAE officially made China's Sinopharma COVID-19 vaccine available for front-line workers following successful Phase III trials. (Gulf News)

US issued a Level 3 “Reconsider Travel" advisory against China and Hong Kong due to COVID-19 vs. Prev. Level 4 'Do Not Travel' warning. (Newswires)

Australia's Victoria state Premier Andrews announced to ease restrictions for regional Victoria and stated there could be a further relaxation due to encouraging statistics. (Newswires)

ASIA

Asian equity markets were somewhat mixed as the region only partially sustained the momentum from the firm handover from the US where the tech sector resumed its outperformance and sentiment was underpinned by vaccine and M&A developments. ASX 200 (-0.1%) was indecisive and only briefly benefitted from the announcement to ease regional Victoria coronavirus restrictions, with strength in tech and mining stocks offset by losses in energy and financials, while Nikkei 225 (-0.5%) underperformed as exporters suffered from the ill-effects of a firmer currency and with Sony shares pressured by reports it is to reduce its PS5 sales forecast by 4mln units due to chip supply issues. Hang Seng (+0.5%) and Shanghai Comp. (+0.3%) eventually gained following a CNY 600bln MLF announcement by the PBoC and better than expected Chinese data where Industrial Production and Retail Sales both topped forecasts. In addition, China announced to extend tariff exemptions for 1 year on imports of some US products which were due to expire tomorrow, although the support for stocks was limited as uncertainty regarding TikTok remained given the no-algorithm inclusion aspect of the deal and with the US to block imports of cotton, linen, hair products and computer parts made by specific entities in Xinjiang. Finally, 10yr JGBs were flat following similar rangebound trade in T-notes, while firmer demand at today’s enhanced liquidity auction for long-end JGBs only mildly supported as price action was once again hampered by resistance at the 152.00 level.

PBoC refrained from reverse repo operations but announced a CNY 600bln Medium-term Lending Facility. (Newswires) PBoC sets USD/CNY mid-point at 6.8222 (Prev. 6.8361); strongest since May 13th 2019. (Newswires)

Chinese Industrial Production (Aug) Y/Y 5.6% vs. Exp. 5.1% (Prev. 4.8%). Chinese Retail Sales (Aug) Y/Y 0.5% vs. Exp. 0.0% (Prev. -1.1%)

China announced a 1-year extension to tariff exemptions for imports of 16 US products such as lubricants, whey and fish meal for 1 year that were due to expire on September 16th. (Newswires)

ByteDance plans to restructure TikTok with its new investors which would see Oracle (ORCL) and Sequoia Capital taking stakes. This follows reports that TikTok submitted a proposal to the US Treasury that it believes would resolve the administration's security concerns, while sources noted it expects to create 25,000 new jobs in the US as part of its proposal if approved by the Trump administration. Furthermore, it was also reported the Microsoft (MSFT) bid for TikTok was rejected after it demanded a total end to cloud control of its product and algorithm to ensure no Chinese interference, while some White House officials are skeptical if the deal with Oracle will meet national security concerns. (Newswires/Fox Business News)

UK/EU

UK government won the vote on the Internal Market Bill by 340-263 which moves the bill to the Committee Stage of the legislation process. Note, lawmakers also voted 349-213 against the Labour amendment which aimed to reject the bill entirely. (BBC)

UK PM Johnson warned that as things stand, there are other avenues in addition to a blockade on agricultural goods that the EU could explore and we need these protective powers against EU absurdity. (Newswires)

UK is considering extending the ban on convictions from commercial properties from the end of September until the end of 2020. (FT)

FX

The USD remained pressured after the prior day’s losses owing to the heightened risk appetite which saw the DXY slip back below the 93.00 level to the benefit of its major counterparts in which EUR/USD broke through yesterday’s best levels where a nearby option expiry of nearly EUR 1bln at 1.1885 resides. GBP/USD only marginally benefitted from the subdued greenback amid ongoing Brexit concerns and with the reaction in the currency muted after UK Parliament voted to move the Internal Markets Bill to the next stage of the legislation process which was not much of a surprise given PM Johnson’s 80-seat majority and as only 30 Tories had planned to revolt against the government. Elsewhere, USD/JPY was dispirited after its recent retreat from the 106.00 status and antipodeans outperformed as AUD/USD fully reversed early losses to reclaim the 0.7300 handle after the RBA minutes noted that the downturn had not been as severe as earlier expected and a recovery is underway in most of Australia, while the strongest CNY fix since May 2019 and better than expected Chinese data also contributed to the trans-Tasman tailwinds.

RBA Minutes from the September meeting noted that the downturn had not been as severe as earlier expected and a recovery is underway in most of Australia, while the board reaffirmed it would not raise the cash rate target until progress is made to full employment and inflation. The board also agreed to maintain highly accommodative settings for as long as required and will continue to consider how further measures could help the recovery. (Newswires)

COMMODITIES

WTI crude futures were little changed throughout the session on recent opposing forces including downward global oil demand growth revisions for 2020 and 2021 in the OPEC Monthly Oil Market Report and with sources stating that this week’s JMMC meeting will likely allow Iraq and others to extend oil cuts compensation period into October and November. Conversely, there were also renewed disruptions in the Gulf of Mexico operations due to Sally which strengthened to a hurricane and has resulted to an estimated 21.39% of production shut in, while participants also look ahead to the latest stockpile numbers beginning with the private sector inventory report today. Elsewhere, gold prices benefitted from the weaker greenback with prices around USD 1965/oz heading into European trade and copper eked marginal gains amid the better than expected Chinese activity data.

NHC said a life-threatening storm surge, hurricane force winds and flash flooding are likely along parts of northern Gulf coast on Monday and Tuesday, while it added that Sally is slightly stronger and was expected to strengthen further Monday tonight. In related news, BSEE estimated 21.39% (396k BPD) of offshore oil production in the Gulf of Mexico has been shut-in amid hurricane Sally and forecasts 25.28% of natural gas production was shut-in. (Newswires)

GEOPOLITICAL

US President Trump commented on recent reports Iran may be planning an assassination against US in retaliation for killing of General Soleimani, in which he warned that any attack by Iran in any form will be met with an attack of Iran that will be 1,000 times greater. (Twitter)

Russia's Kremlin said it has ordered the withdrawal of reserve troops from near the Belarusian border. (TASS)

US

Treasuries were little changed to start with neither the positive risk tone nor supply bulk managing to lift very low volumes. By settlement, 2s +1bps at 14bps, 10s unch. at 66.5bps, 30s -1bps at 140.5bps; volumes were noticeably depressed, likely some caution ahead of Wednesday’s FOMC. There was little data for the market to dig into today and rates didn’t find much enthusiasm from the positive risk tone across the rainbow in stocks. Or, judging on the minimal volumes, didn’t see the risk recovery as a good enough reason to come out and sell USTs, particularly in the face of Wednesday’s FOMC meeting. A heavy slate of corporate deals today (both IG and HY) didn’t manifest in much (noticeable) Treasury hedging flows either. However, neither did participants feel justified bringing the 10-year cash yield below its support at c. 66bps. After the recent decent long-end Treasury auctions, there have likely been some sighs of relief over concerns related to a supply imbalance, with little concession seen in the long-end ahead of Tuesday’s USD 22bln 20-year bond auction. T-note (Z0) futures settled 0.5 ticks lower at 139-18+.

US House plans to vote on the stopgap funding bill next week, according to an aide. (Newswires)