• European bourses are impaired this morning given pressure on COVID-19 sensitive names and the banking sector; US futures down ~1.8%
• The ECB has launched a sweeping review of its EUR 1.35tln PEPP program, which will assess the impact of its bond-buying
• The death of Supreme Court Associate Justice Ginsberg has opened another front in the election battle with President Trump intending to make a nomination in the week ahead
• US Democrats and White House officials neared a deal on Friday on a stopgap spending bill to avert a shutdown; remains unfinished
• DXY drivers higher at highs of ~93.38 at present to the detriment of major peers aside from JPY with USD/JPY having tested 104.00 to the downside
• Looking ahead, highlights include ECB's Lagarde, Fed's Brainard, Williams & Kaplan

CORONAVIRUS UPDATE

US CDC reported total coronavirus cases rose to 6.75mln from 6.71mln and total deaths rose to 198.8k from 198.1k. Furthermore, US CDC reversed COVID-19 guidance that had stated people without symptoms that were exposed to the virus may not need a test. (Newswires/CNBC) US President Trump said the US is on track to have 100mln doses of a COVID-19 vaccine by year-end and expects every American to have a vaccine by April. (Newswires)

AstraZeneca (AZN LN) stated that its vaccine trial in the US remains on hold. (Newswires)

UK coronavirus cases rose by 3,899 (prev. +4,422). Reports note that senior members of the Conservative party are planning to prevent PM Johnson from imposing limits on people's freedom without scrutiny by forcing Parliament to have the final say on measures. (Telegraph) UK Health Minister Hancock stated that officials were to hold a meeting on Sunday to discuss what further measure may be required for London and suggested that a further national lockdown is possible if rules are not followed. (Newswires/BBC) England Chief Medical Officer Whitty said UK coronavirus trend is moving in wrong direction and the country is at a critical point in the pandemic with a very challenging winter approaching. Additionally, Whitty and Chief Scientific Advisor Vallance are not to immediately announce new COVID-19 related restrictions; after having meetings with UK PM Johnson and aides yesterday, Politico (Newswires) London Mayor Khan is to recommend lockdown measures for London after a meeting with council leaders on Monday. (LBC/Newswires)

A second wave of COVID-19 outbreak in China is "inevitable," said China's leading infectious disease specialist, who added "We should make plans for at least another year", reported via Global Times. (Twitter)

France coronavirus cases rose by 10,569 (prev. +13,498 record increase). (Newswires)

ASIA

Asian equity markets were subdued and US equity futures traded choppy after last Friday’s losses on Wall St amid quadruple witching and continued tech woes, with risk appetite also dampened by holiday conditions as Japanese participants observe a 4-day weekend. ASX 200 (-0.7%) was negative with losses in metal miners and financials underperforming in the broad weakness across its sectors aside from Health Care and Energy, while KOSPI (-1.0%) swung from gains and losses on varied COVID-19 headlines with South Korea to extend level 2 social distancing curbs by an additional week but will also be distributing emergency funds from the 4th extra budget within days. Hang Seng (-2.0%) and Shanghai Composite (-0.6%) were downbeat with HSBC shares slumping to a 25-year low in Hong Kong after a leaked document noted that the bank had permitted GBP 62mln to be moved to Hong Kong in suspicious transactions during 2013-2014 despite being warned by a regulator, while Standard Chartered also declined after being implicated by the ‘FinCEN’ leak, and other reports noted concerns HSBC and Standard Chartered could be frozen out of the US banking system in the event of a further escalation US-China tensions. Elsewhere, Tencent shares were pressured amid uncertainty regarding its US future despite a California judge halting President Trump's ban on WeChat downloads, while weekend news that President Trump gave his blessing to the TikTok-Oracle-Walmart deal, also did little to spur risk appetite.

PBoC injected CNY 100bln via 7-day reverse repos CNY 40bln via 14-day reverse repos for a net daily injection of CNY 60bln, with rates on the 7-day and 14-day operations maintained at 2.20% and 2.35% respectively. (Newswires) PBoC set USD/CNY mid-point at 6.7595 vs. Exp. 6.7663 (Prev. 6.7591)

PBoC 1-Year Loan Prime Rate 3.85% vs. Exp. 3.85% (Prev. 3.85%) PBoC 5-Year Loan Prime Rate 4.65% vs. Exp. 4.65% (Prev. 3.65%)

ByteDance said TikTok Global will launch an IPO and conduct a small pre-IPO round that will make it an 80% owned subsidiary of ByteDance, while it noted that Oracle (ORCL) has security access to TikTok's US source code and that the current plan does not include the transfer of algorithms or technologies. (Newswires)

US President Trump said he gave his blessing to the deal between TikTok, Oracle and Walmart, while he also stated that companies agreed to make a USD 5bln contribution to an education foundation. However, other reports in FT noted that the sides agreed to create an initiative following a request by President Trump but had no discussions about a USD 5bln commitment and will not create an education programme which seeks to teach American history tailored to any specific bias, according to sources. Furthermore, the US Commerce Department announced to delay the order issued that would have banned TikTok updates and downloads by a week to September 27th so the sides can finalize a deal. (Newswires/FT)

A California judge halted President Trump's ban on WeChat downloads and stated that users who filed a lawsuit showed “serious questions” in their claim that the ban threatens their First Amendment rights. (CNN)

Tencent commented that further evaluation is being conducted to assess the impact of identification of prohibited transactions on the group. (Newswires) China had stated on Saturday that it resolutely opposed the US ban on the Chinese-owned mobile apps Tiktok and WeChat and vowed to take countermeasures. (SCMP)

China issued rules regarding its proposed unreliable entities list, while it reportedly did not have a timetable or pre-set names of companies but warned that if foreign firms violate the nation’s laws or commit “illegal acts” they could be included in the list and face measures. (Newswires) Experts have noted that given the provisions, the foreign entities that play a role in the block and cutting-off of supplies to Chinese firms could be targeted, media reports have hinted at many US firms as potential targets of the list, including Qualcomm (QCOM), Cisco (CSCO), Apple (AAPL) and FedEx (FDX). (SCMP)

Chinese President Xi said the nation’s economy remains resilient despite increasing external risks, while he noted that Beijing has ample policy tools at its disposal. (Newswires)

Japan's PM Suga expressed hopes for forward looking ties with South Korean President Moon. (Yonhap)

US

Fed's Kashkari (voter, dovish dissenter) said he wanted a stronger commitment to zero interest rates for the Fed to vow to wait on rate hikes until core inflation is at 2% for roughly a year, while he also noted that under the new forward guidance the Fed may still raise rates before achieving goals. (Newswires)

US Democrats and White House officials neared a deal on Friday on a stopgap spending bill to avert a shutdown and fund the government through to December 11th according to two people familiar with the plans, but the agreement remained unfinished amid a last-minute dispute over funding for farmers. (NYT).

The death of Supreme Court Associate Justice Ginsberg has opened another front in the election battle with President Trump intending to make a nomination in the week ahead which he said will be a woman, while Democrats and Republican Senators Murkowski and Collins prefer for the winner of the election to make the nomination. There were also comments by Democratic Presidential Candidate Biden who said we should honour Ginsburg’s wish to wait till after the election for a replacement and Biden urged Republicans to do what is right when seeking to replace Ginsburg. (FT/Newswires) US House Speaker Pelosi refused to rule out impeachment proceedings to prevent President Trump's US Supreme Court pick from being confirmed to the bench, adding that Democrats will “use every arrow in our quiver” to block the eventual nominee. (Fox News)

POLL: Biden 51% vs. Trump 43%, according to a WSJ/NBC national registered voters poll. The 8-point advantage for Biden is little changed from the Prev. 9-point advantage last month. (WSJ) Conducted September 13th – 16th

UK/EU

UK Chancellor Sunak is expected to announce plans to extend four loans schemes this week to support businesses amid worsening spread of the virus. (FT) Sunak is reportedly looking into scrapping increases in welfare payments and public sector pay which are linked to inflation alongside convincing the PM to allow him to break the pension ‘triple lock’. (CityAm)

BoE’s Haldane stated the UK’s economy is recovering faster than anticipated although noted that better incentives and access to finance are required for businesses to invest in technology. (Sunday Times)

ECB has launched a sweeping review of its EUR 1.35tln PEPP program, which will assess the impact of its bond-buying scheme, which some policymakers anticipate could result to changes to its other programs. ECB are said to consider how long the measure should continue and whether some of its extra flexibility should be transferred to the ECB’s longer running asset-purchase schemes. (FT)

ECB’s De Guindos stated that the PEPP is a temporary emergency programme which is serving its purpose and suggested the ECB has to act for as long as price stability objective is not met, while he added the exchange rate is not an objective but will monitor it which will be an input for models used to calculate inflation projections. (Newswires)

EU wants new powers to address the big tech firms including the ability to force them to break up or sell some of their European operations if their market dominance threaten the interests of customers and smaller competitors, according to EU Commissioner for Internal Market Breton. (FT)

S&P affirmed Spain at A; Outlook revised to Negative from Stable. (Newswires)

UK manufacturers reportedly see no evidence of a V-shaped recovery, according to Make UK/BDO quarterly survey in which the gauge for investment intentions declined to -32% from -26%. (Newswires)

UK Rightmove House Prices (Sep) M/M 0.2% (Prev. -0.2%). (Newswires) UK Rightmove House Prices (Sep) Y/Y 5.0% (Prev. 4.6%)

EQUITIES

Stocks in Europe see deep losses across the board (Euro Stoxx 50 -3%) as the region coat-tailed on the downbeat APAC handover before extending on losses amid an intensifying risk averse tone and a number of sector-specific factors. Firstly, Travel & Leisure resides as the marked underperformer as the resurging cases across Europe trigger warning bells for the sector, with some of the region’s worst performers including the likes IAG (-12%), Tui (-8.6%), easyJet (-8.4%), Carnival (-8.0%), Lufthansa (-7.7%) and Ryanair (-7.1%). Secondly, the European banking sector plumbs the depths in light of a leaked US government document accused HSBC (-5%), Standard Chartered (-4.4%), Barclays (-6.2%), Deutsche Bank (-5.6%), JPM (-3.6% premkt) and BNY Mellon (-2.5% premkt) of moving large sums of illegal cash for shady characters and criminal networks. The documents center around the number of SAR's (Suspicious Activity Reports) sent to US authorities between 1999 and 2017. The Basic Resources and Oil & Gas sectors are also among the laggards. As such, the UK’s FTSE 100 (-3.4%) underperforms the region despite a softer Sterling, given its heavy exposure to the aforementioned sectors. In terms of other movers and shakers, United Internet (-24%) and 1&1 Drillisch (-27%) reside as the biggest losers in Europe after cutting their respective FY EBTIDA guidance, whilst their spat with Telefonica (-3.6%) intensified over its subsidiary Telefonica Deutschland (-3.4) being accused of raising user costs significantly from July. Elsewhere, Rolls-Royce (-8.5%) holds onto its losses amid reports that the group is planning to raise as much as GBP 2.5bln to brace itself for another demand decline for aircraft engines. As such, Leonardo (-6.0%) continues falling despite an early halt, whilst Safran (-4.4%) is also pressured in sympathy. Finally, the Norwegian government has proposed that its Sovereign Wealth Fund should invest more within the US stock market and less within Europe.

Banking Names – Leaked documents have accused Standard Chartered (STAN LN), HSBC (HSBA LN) and Deutsche Bank (DBK GY) alongside JP Morgan (JPM) and Bank of NY Mellon (BK), of moving large sums of illegal cash for shady characters and criminal networks. The documents centre around the number of SAR's (Suspicious Activity Reports) sent to US authorities between 1999 and 2017,

Apple (AAPL) – Blix, a US app maker, has sent a letter to EU Antitrust Chief Vestager stating that Apple is "not playing fair". (Newswires)

Exxon (XOM) - Bids for the Co's UK oil & gas fields are due on October 28th, current sale process excludes Southern North Sea assets and could fetch USD 1bln, according to sources. (Newswires)

Norwegian Gov't has proposed that its Sovereign Wealth Fund should invest more within the US stock market and less within Europe; work must be strengthened on climate risk. (Newswires)

FX

JPY/DXY - Although the Dollar has regained some poise amidst more pronounced risk aversion at the start of a new week, Usd/Jpy continues to decline alongside Yen crosses in the absence of Japanese market participants for ‘Old Age Day’. The headline pair has now breached another key chart if not major technical level in the form of July 31’s 104.20 low and there is little in the way of 104.00 to stop a 250+ pip cumulative fall from this month’s early peaks, especially given another holiday on Tuesday (Autumnal Equinox). However, it remains to be seen whether a 103.00 print provokes some verbal intervention from the MoF, and for now greater safe-haven demand for the Jpy is keeping the Usd index relatively capped beyond 93.000 within a 93.322-92.746 band.

AUD/CAD/CHF - All succumbing to the increasingly sour tone and deterioration in broad sentiment as the Aussie loses 0.7300+ status vs its US counterpart, the Loonie retreats through 1.3200 with added fuel from a reversal in crude prices and the Franc falls back below 0.9100, albeit holding above 1.0800 against the Euro following latest weekly Swiss bank sight deposit balances showing perhaps surprise declines ahead of the SNB. Question is, are these coincidental or significant in advance of a more official shift in policy to be revealed at Thursday’s quarterly review?

NZD/EUR/GBP - The Kiwi is back-pedalling further from Friday’s near 0.6800 peak vs its US peer and 1.0800+ apex on the Aud/Nzd cross even though NZ PM Adern scaled down the country’s COVID-19 alert level outside of Auckland again, while the Euro is retesting bids/support around 1.1800 and Sterling has recoiled over a big figure to sub-1.2850 on the ongoing rise of the pandemic across Europe.

SCANDI/EM - A sea of red as risk assets tumble, while the aforementioned downturn in oil takes a heavier toll on the Norwegian Crown compared to the Swedish Krona that seems to be deriving some traction from upbeat commentary by the nation’s Finance Minister. Similarly, the Yuan is drawing a degree of comfort from a steady PBoC Cny fixing, net liquidity injection and unchanged loan prime rates to offset other less favourable issues like the ongoing Sino-US spat and reports from China’s top infectious disease expert warning that a 2nd wave is inevitable. Conversely, diplomatic strains and the retracement in Brent are undermining the Lira and Rouble again, while the Rand has unwounded all and more of its post-SARB gains.

FIXED INCOME

Bunds have carved out another new m-t-d pinnacle, albeit minor at 174.48 and are retesting support at the psychological -50 bp yield as the 3 month Euribor fix extends its downward trajectory to fresh record lows, as safe-haven demand picks up amidst deeper equity losses and Eurozone periphery bonds trade more defensively awaiting the conclusion of the ECB’s extensive PEPP review. Moreover, Italian BTPs have political uncertainty to contend with given regional elections and results due after polls close on the 2nd day of voting. Back to the mainstream, Gilts have waned just above their post-BoE apex, at 136.90 and it seems that 15 bp in the 10 year benchmark is till proving obstinate, while US Treasuries are back in bull-flattening mode ahead of the first batch of many Fed speakers this week, including chair Powell, but also flash PMIs, decent data (on paper at least) and short end supply.

COMMODITIES

WTI and Brent front month futures continue to decline with losses driven by the broader risk averse sentiment coupled with a firmer Dollar and the prospect of dwindling demand given the resurgence of COVID-19 prompting talks of renewed lockdown measures. Furthermore, on the supply side of the equation, Libya’s NOC said it will lift the force majeure at ports and facilities that were deemed safe, with the gradual return of Libyan oil raising questions in terms of an OPEC quota for the country. WTI Nov resides around USD 40.50/bbl, having declined from a high ~41.50/bbl, whilst Brent Nov hovers just under USD 42.50/bbl vs. a high of USD 43.30/bbl. Another thing to keep on the radar – unconfirmed twitter reports noted that Saudi King Salman is reportedly in a critical condition, albeit nothing has been seen since on this front, with participants likely to dwell on the future of the Kingdom’s oil policy should he be replaced. Elsewhere, precious metal prices succumb to the Dollar, with spot gold now losing ground below the USD 1950/oz mark having traded on either side of the level in APAC hours. Spot silver meanwhile extends losses below USD 26.50/oz after printing a high just shy of USD 27/oz earlier in the session. In terms of base metals, LME copper is pressured by the broader equity sell-off and the firmer Buck, whilst Dalian iron ore futures slipped over 2% amid the soured risk tone and sluggish downstream demand.

NHC said tropical storm Beta had formed in the Gulf of Mexico and will threaten the Texas coast which is expected to strengthen with hurricane force winds within 36 hours and threatens heavy rains, as well as a storm surge in the Texas coast in the approaching days. (Newswires)

Port of Houston is reportedly fully operational with all facilities open for Monday. (Newswires)

Goldman Sachs said end of Libya's export restrictions shouldn't derail oil market rebalancing, while it reiterated its year-end 2020 Brent forecast of USD 49/bbl and expects prices to increase to USD 65/bbl by Q3 2021. (Newswires)

GEOPOLITICAL

US is to sanction more than 24 individuals and entities for involvement in Iran’s nuclear and arms programs on Monday, according to a US official. Furthermore, the official stated that US believes Iran could have sufficient fissile material for a nuclear bomb by year-end and stated that both Iran and North Korea have resumed collaboration on long-range missiles. (Newswires)

Pakistan reportedly violated a ceasefire with India; with the Indian army retaliating, according to ANI. (Twitter)

Iranian President Rouhani said the US is approaching inevitable defeat and a negative response from the international community regarding its sanctions move and that Iran will never yield to US pressure, while he added that Iran is ready to fully respect the nuclear agreement when all other sides do. (Newswires)

Russian Deputy Foreign Minister says the nation is not ready to extend the New START treaty under the conditions set out by the US, according to Tass. (Newswires)

Bahrain reportedly foiled a terror attack backed by Iran Revolutionary Guards, according to Saudi state TV. (Newswires)

Chinese military conducted a drill on Saturday in which 19 aircraft reportedly crossed the mid-line of the Taiwan Strait again, which followed a similar breach by 18 aircraft on Friday. (Newswires)

New Delhi police arrested a veteran Indian journalist on suspicion of spying for China, amid border stand-off. (FT)

Vague talk on Twitter noted reports that Saudi King Salman was in a critical condition – unconfirmed. (Twitter)