• European bourses & US equity futures are now mixed after experiencing a modest recovery from APAC/Wall St. induced downside pressure
• White House Economic Adviser Kudlow said we are examining all deals regarding China-based firms that may list in US
• US Congress is reportedly readying to leave Washington as early as this week until after the election and therefore will not be able to put through any coronavirus relief
• FX sees the USD firmer but off highs while GBP remains elevated ahead of the statement from Chancellor Sunak
• SNB & Norges left rates unchanged while the ECB’s latest TLTRO allotment came in at the upper-end of forecasts
• Looking ahead, highlights include CBRT & Banxico Rate Decisions, US Initial/Continued Jobless Claims, Fed's Powell, Williams, Kaplan, Bostic, Barkin, Evans, Bullard, BoE's Bailey & US supply. UK Chancellor Sunak statement.

CORONAVIRUS UPDATE

US President Trump said 4 COVID-19 vaccine candidates are in final stage of trial in US and the administration is giving USD 200mln for states to distribute vaccines to high-risk people, while the White House may or may not approve the FDA proposal to add a hurdle to the vaccine approval which he stated appeared to be a political move. (Newswires)

US FDA issued an emergency use authorization for the first serology/antibody point-of-care COVID test. (Newswires)

AstraZeneca (AZN LN) CEO said the pharma had not begun pediatric study in COVID vaccine trial; hopes to show an efficacy in trials of more than 60% or 70%; adds AZN is waiting for FDA decision on resuming US COVID vaccine trial. (Newswires)

Russia is to supply 17 more countries with its Avifavir COVID-19, according to RDIF. (Newswires)

England and Wales reportedly rolled out smartphone app to trace contacts and check local risk levels, while it was separately reported that a 3-tier traffic light system is planned for local coronavirus lockdowns in England which will based on infection rates and determine the restrictions imposed. (Newswires/Telegraph)

ASIA

Asian equity markets were lower on spill-over selling from peers on Wall St where the major indices were dragged by broad weakness across all sectors and hefty losses in the big tech names, while President Trump's comments also spurred concerns of a contested election. This was after he stated that he thinks the 2020 election will end up at the Supreme Court which is why it is important to have nine justices and later refused to commit when questioned about a peaceful transition of power if he loses the election. ASX 200 (-0.8%) was dragged lower by underperformance in tech and miners, as well as losses in financials after Westpac agreed to pay a record AUD 1.3bln fine over anti-money laundering breaches, while Nikkei 225 (-1.1%) was also subdued as exporters suffered from the recent inflows into the currency and ill-effects of the JPY-risk dynamic. Hang Seng (-1.8%) and Shanghai Comp. (-1.7%) conformed to the broad downbeat tone after a tepid liquidity effort which resulted to a net daily injection of CNY 10bln and it refrained from 7-day reverse repos owing to the National Day Golden Week holiday which begins next Thursday. Furthermore, there was still no significant improvement in US-China related headlines as US Secretary of State Pompeo reiterated calls for US  Governors to increase scrutiny on state pension funds' investments into Chinese companies, while TikTok filed for a preliminary injunction against President Trump’s ban. Finally, 10yr JGBs were rangebound and failed to benefit from the risk averse tone after similar lacklustre trade in T-notes and with demand also hampered by weaker results at the 40yr JGB auction.

PBoC injected CNY 120bln via 14-day reverse repos at rate of 2.35% for a net daily injection of CNY 10bln. (Newswires) PBoC set USD/CNY mid-point at 6.8028 vs. Exp. 6.8064 (Prev. 6.7986)

China's Global Times tweeted using the UN platform for a political campaign lacks decency and that major countries should act like major countries not continuously shunning responsibilities for the world, messing up domestic problems and blaming others, citing analysts. (Twitter)

Japanese gov't has downgraded views on consumer spending and Capex in its September economic report. (Newswires)

White House Economic Adviser Kudlow said we are examining all these deals in China-based firms that may list in the US, while he added that he doesn't think there will be another broad stimulus package and will take a look at potential executive action regarding airlines. (Newswires)

US

President Trump stated that he does not have a meeting planned with Judge Barbara Lagoa but she is on his list for potential Supreme Court nominees, while he declined to commit when questioned about a peaceful transition of power if he loses the election. (Newswires)

Congress is reportedly readying to leave Washington as early as this week until after the election and therefore will not be able to put through any coronavirus relief. (CNN)

POLL: Iowa; Trump 42% vs. Biden 45%. Georgia; Trump 45% vs. Biden 45%. Texas; Trump 46% vs. Biden 43%, NY Times poll of likely voters. (NYT)

UK/EU

UK Chancellor Sunak is to unveil today an emergency COVID rescue plan to protect jobs that is expected to include wage subsidies, VAT cuts and more loans for struggling businesses. The Chancellor is expected to address the House of Commons around 12:30BST. Sunak also announced yesterday that the Autumn Budget would be scrapped this year due to the pandemic. (Times/Telegraph/BBC) UK PM Johnson reportedly put his foot down and overruled Chancellor Sunak to keep the triple lock increases to the state pension. (The Times) Newsquawk primer available on the headline feed (Link)

UK government reportedly faces a "week from hell" at the Commons next week with 3 Tory backbench rebellions in 3 days, according to Times Radio's Tom Newton Dunn. (Twitter)

British Chambers of Commerce survey found around 51% of companies had not taken any steps recommended by the government to prepare for changes to the trade of goods at the end of the transition period. (Newswires)

EU Economic Commissioner Gentiloni said Brussels is seeking to pressure capitals to remove structures that facilitate aggressive tax planning in the region as part of the recovery fund reform plans to ensure a level playing field. (FT)

German Ifo Expectations New (Sep) 97.7 vs. Exp. 98.0 (Prev. 97.5, rev. 97.2)

-        Business Climate New (Sep) 93.4 vs. Exp. 93.8 (Prev. 92.6, Rev. 92.5)

-        Current Conditions New (Sep) 89.2 vs. Exp. 89.5 (Prev. 87.9)

CENTRAL BANKS

SNB: leaves its Policy Rate unchanged at -0.75% as expected; maintains language around CHF as "highly valued"; prepared to step up FX invention as necessary. Modestly increases some forecasts given domestic developments and oil price increase. No mention of the tiering multiplier/exemption threshold. Separately, to provide additional data at a more frequent pace on the volume of FX market interventions. CHF little changed on release

Norges Bank: unchanged at 0.00% as expected; decision was unanimous; Rates to stay on hold until economic conditions see normalisation. Rate forecast is little changed from the June meeting, but does imply a modestly higher repo path. Governor Olsen said they do not anticipate negative rates and do not target a NOK level. The NOK depreciated on release perhaps given that the repo forecast was only marginally tweaked against some expectations for the timing for the first hike to be brought more explicitly forward; additionally, commentary around house price inflation seemingly downplays the prospect of any changes to the path in the near-term.

ECB TLTRO-III 5th Allotment: EUR 174.46bln (TLTRO-III 4th Allotment EUR 1.31tln) Expectations were EUR 10-200bln, with the majority focused around EUR 50-100bln.

ECB Economic Bulletin: rebound in euro area economic activity is expected to continue in the remainder of 2020, provided there is no major resurgence of the pandemic. (Newswires)

BoE's Haldane says there's a very good chance this crisis will give the hurry up to some of what were already deep-seated structural trends in the economy, even before Covid. (ITV)

BoJ Minutes from the July Meeting stated that members agreed the central bank must ease without hesitation if needed with eye on impact of pandemic on the economy and that Japan's economy had been in an extremely severe situation with the impact of COVID-19 remaining at home and abroad, although noted economic activity had resumed gradually. Furthermore, it stated exports and industrial production had declined substantially with overseas economies being depressed significantly, while members agreed there was risk financial intermediation could stagnate if financial institutions' profits remain under prolonged strain. (Newswires)

Hungarian Central Bank increase interest rates on one-week deposit facility to 0.75% (Prev. 0.6%). (Newswires)

EQUITIES

European equities are now mixed after opening lower across the board (Euro Stoxx 50 -0.2%) in a continuation of the losses seen on Wall Street yesterday and in APAC hours. That being said, European equity futures came off lows following the cash open and are now mixed on the day whilst futures across the pond have been contained within tight ranges ahead of a slew of Fed speakers scattered throughout the day; currently mixed as well. Back to Europe, broad-based losses are seen across major bourses, but Netherland’s AEX (-0.5%) modestly underperforms as the tech sector lags (in-fitting with Wall Street and APAC performance), with heavy-weight ASML (-2.2%) weighing on the index and broader sector. The energy sector also resides as one of the straddlers amid price action in the complex. Overall sectors are mostly lower and somewhat of a defensive bias. The sectoral breakdown paints a similar picture, but performance is similarly off lows, with Travel & Leisure towards the bottom of the pile, whilst real estate, particularly in the UK, are supported ahead of Chancellor Sunak’s unveiling of further supportive measures. In terms of individual movers, AA (+4.6%) is firmer after confirming that a consortium of Towerbrook Capital and Warburg Pincus has expressed strong interest in pursuing a possible cash offer for the Co. Elsewhere, Veolia (-1.3%) CEO said the group is to hold discussions with Engie (-1.0%) and did not rule out increasing its bid for Engie’s holding of Suez (-3.9%).

Walmart (WMT) to cut workers pay while increasing their hours as they press ahead with restructuring plans, Guardian citing workers remarks. (Newswires)

FX

CHF/NOK - The SNB and Norges Bank both maintained benchmark rates, as widely expected, but the reaction in respective currencies has been quite contrasting given relative stability in the Franc around 0.9250 vs the Dollar and 1.0775 against the Euro compared to Eur/Nok rallying further through 11.0000 towards 11.1750 at one stage. It seems that the former has acknowledged no change in the Swiss Central Bank’s valuation of the Chf and perhaps more regular updates on intervention, while the Krona is taking heed of the rate path projecting steady policy for the next couple of years against some expectation that a hike may come before the 4th quarter of 2022.

USD - Demand for the Dollar has accelerated again, and this time mainly on safe-haven grounds after a sharp retreat in US stocks and knock-on declines in global amidst the ongoing recurrence of COVID-19. The DXY has duly extended gains to 94.558 and pull-backs are getting shallower and more fleeting with the latest bout of consolidation stopping well ahead of 94.000, at 94.235. However, some G10 rivals continue to display a degree of resilience and resistance for the index resides relatively close by around 94.632 (March 9 high).

AUD/NZD - No respite for the beleaguered Aussie or Kiwi, as Aud/Usd straddles 0.7050 having let go of the 0.7100 handle and Nzd/Usd struggles to retain 0.6500+ status following NZ trade data for August showing a deficit vs surplus due to a marked slowdown in exports rather than moderately higher imports.

GBP/JPY/EUR/CAD - Sterling continues to defy the odds and gravity, with Cable resisting pressure below 1.2700 and Eur/Gbp probing 0.9150 after the cross formed a near double top around 0.9220 on Tuesday and yesterday ahead of Chancellor Sunak’s mini budget and more commentary from BoE Governor Bailey. Meanwhile, support at 105.50 seems to have arrested the Yen’s reversal from circa 104.00 and Usd/Jpy may be kept in check by decent option expiry interest spanning 104.45-55 (1.1 bn) to 105.70-75 (1.4 bn) with even more rolling off at the 105.00 strike (1.7 bn). Similarly, after a rather non-descript German Ifo survey in terms of key metrics vs consensus and an even more forgettable monthly ECB report, the Euro could be contained by expiries between 1.1600-10 and 1.1700-10 (1.7 bn and 1.2 bn respectively), though veering towards the downside after a hefty TLTRO3 take up. Elsewhere, the Loonie has recoiled to sub-1.3400 in wake of Canadian PM Trudeau’s stark warning that an Autumn bout of the coronavirus could be significantly worse than the original one in Spring, as a 2nd wave is already spreading across the country’s 4 biggest provinces.

SEK/EM - Rhetoric from Riksbank’s Skingsley underlining limited space to cut the Swedish repo rate and discounting Crown developments have not prevented the Sek depreciating to almost 10.6000 before bouncing vs the Eur, but the Try and Mxn will be hoping for more support from the CBRT and Banxico. On that note, the NBH has helped the Huf via a 15 bp hike in the 1 week deposit rate having left the benchmark on hold on Tuesday.

Notable FX Expiries, NY Cut:

-        EUR/USD: 1.1600-10 (1.7BLN), 1.1625 (525M), 1.1650-60 (500M), 1.1675  (325M), 1.1700-10 (1.2BLN), 1.1725-30 (800M), 1.1750 (1.1BLN)

-        AUD/USD: 0.7100-10 (1.7BLN), 0.7135 (660M), 0.7180 (735M)

-        USD/JPY: 104.45-55 (1.1BLN), 104.90 (830M), 105.00 (1.7BLN), 105.10  (844M), 105.25 (570M), 105.70-75 (1.4BLN)

New Zealand Trade Balance (Aug) -353M (Prev. 282M, Rev. 447M). (Newswires) New Zealand Exports (Aug) 4.41B (Prev. 4.91B, Rev. 5.04B) New Zealand Exports (Aug) 4.41B (Prev. 4.91B, Rev. 5.04B)

FIXED INCOME

UK bonds did not have long to digest the results of a strong shorter-dated DMO sale before a big beat in headline CBI distribute trades hit the wires and the spotlight shifted to 10 year linker supply, bit the pull-back from 136.30 Liffe highs to 136.08 in the 10 year debt future may well be due to the looming statement from Chancellor Sunak and funding considerations. Meanwhile, Bunds have seen more of a gradual slippage from 174.72 and US Treasuries are mid-range and the curve fractionally flatter ahead of IJC, housing data, yet more Fed speak and the final auction of the week stateside (Usd 50bn 7-year notes).

COMMODITIES

WTI and Brent front month futures are essentially flat firmly off overnight lows and relatively contained in early European hours amid a lack of fresh fundamental catalysts ahead of a raft of Central Bank speakers. Complex-specific newsflow has also been light, although the Iraqi oil ministry denied earlier reports, citing the Iraqi oil minister, that OPEC+ agreed for Iraq to increase oil exports. Iraq added that it is fully committed to the supply deal. WTI resides just below USD 40.00bbl (vs. current range of 39.12-40.00) while its Brent counterpart trades towards the top end of today’s range around USD 41.75/bbl (vs. current range 41.27-84). Elsewhere, spot gold mirrors USD action and briefly dipped below USD 1850/oz, while spot silver remains on a downward trajectory and underperforms in the precious metal space as it probes USD 22/oz to the downside. In terms of base metals, LME copper prices are softer amid the firmer USD and broad losses across equities. Conversely, Shanghai steel futures rose almost 3% amid future demand speculation as prices flipped into backwardation.

Iraqi oil ministry denies earlier reports citing the oil minister as saying OPEC+ agreed to a rise in Iraqi oil exports, adding they are fully committed to the deal. (Newswires)

GEOPOLITICAL

South Korea’s Defence Ministry confirmed that North Korea killed a South Korean fisheries official that went missing earlier this week and who was said to be attempting to defect to the North, while it condemned North Korea's actions, as well as demanded punishment for those responsible. (Newswires/Yonhap)

US Ambassador to Turkey has said the non-payment of money from Turkey’s state hospitals to international healthcare Co’s, totalling ~USD 2.3bln, has become a significant issue in US-Turkey trade relations. (FT)