• Asian stocks traded mixed with the region indecisive following a lacklustre lead from Wall St. where both S&P 500 and Dow slipped from all-time highs
• According to reports, the UK cabinet is said to give PM May's Brexit plan two weeks for progress
• Looking ahead highlights include US consumer confidence, APIs, BoE’s Vleighe, ECB’s Praet, Makuch, Coeure, supply from the US

ASIA

Asian stocks traded mixed with the region indecisive following a lacklustre lead from Wall St. where both S&P 500 and Dow slipped from all-time highs on trade related concerns. ASX 200 (+0.1%) losses were led by weakness in the financial sector while Nikkei 225 (Unch) was choppy in lock-step with an indecisive currency. The Shanghai Composite (-0.8%) underperformed on the return from the long weekend and took its first opportunity to react to China’s cancellation of trade discussions, while the PBoC conducted a net liquidity drain and China was also reportedly to create a national system to monitor government spending. Elsewhere, Hang Seng and KOSPI are closed due to public holidays. Finally, 10yr JGBs were marginally lower in which prices tested the 150.00 level to the downside coinciding with weakness in T-notes, while the BoJ’s Rinban announcement was for a relatively reserved JPY 475bln.

PBoC injected CNY 60bln via 14-day reverse repos for a net daily drain of CNY 90bln. (Newswires)
PBoC set CNY mid-point at 6.8440 (Prev. 6.8357)

China's Vice Commerce Minister said China is willing to promote US-China trade in a fairer fashion and is hoping US takes more positive steps as well, although he added trade talks with the US are hard to proceed as US has abandoned mutual understanding and the restart of trade talks depends completely on the US. (Newswires)

China's NDRC Vice Chairman said China is able to offset trade risks through expanding domestic demand and that China will give more support for Chinese firms to expand into international markets including EU, Japan and Africa, while he reiterated the domestic economy is resilient. (Newswires)

BoJ Minutes from July meeting noted that most members stated it was appropriate to continue persistent easing and a few said it was appropriate to adopt forward guidance to strengthen commitment to reach target. Most members agreed to the proposal that Governor Kuroda should make it clear at the briefing that yield would be allowed to move both directions at double the current range and some members said flexible control of long-term yields would contribute to maintaining and improvement of market function. (Newswires)

Japan's Chief Cabinet Secretary Suga confirmed US-Japan trade talks are to take place on Tuesday 25th September. (Newswires)

UK/EU

UK PM May said it was always clear there would come a critical point in Brexit negotiations and now is the time to hold nerve, while there were separate reports the UK cabinet is said to give PM May's Brexit plan 2 weeks for progress. (Newswires/The Sun)

UK Brexit Minister Raab said healthy discussions were made in cabinet on Brexit and added UK continue to seek a negotiated deal, while it was also reported that no cabinet minister challenged UK PM May's Chequers Brexit proposal at the meeting on Monday. (Newswires)

UK PM May is to meet US President Trump on Wednesday to discuss Brexit and a post-Brexit trade deal, according to a British official. (Newswires)

In the UK, EU migrants will not be given preferential treatment after Brexit and the number coming to the UK will fall significantly under Government plans. (Telegraph)

EU trade commissioner Malmstrom said EU talks with the US are still in an exploratory phase. (Newswires)

Italy are reportedly heading towards a compromise deficit of 1.9% after Di Maio initially suggested 2.8% before back-tracking. (Stampa) 

FX

FX markets were little changed with DXY steady and back above 94.00 following the prior day’s intra-day rebound while EUR/USD remained subdued after having erased post-Draghi gains and GBP/USD just about held onto the 1.3100 level. Elsewhere, antipodeans were lacklustre as with most currencies against the greenback heading into this week’s FOMC meeting, while choppy price action was seen in USD/JPY and JPY crosses amid an indecisive risk tone and following an uneventful BoJ minutes.

COMMODITIES

Commodities traded mixed overnight with news flow for the complex has been light, although Brent eyed USD 81.50/bbl to the upside (after hitting fresh 4-year highs) while WTI sat comfortably above USD 72.00/bbl following the weekend meeting of OPEC's monitoring committee in which they refrained from signalling an output boost. Elsewhere, gold was uneventful with price action constrained as the greenback held firm while copper continued to be subdued on trade concerns and amid underperformance in mainland China.

Canada said it sees evidence of stainless-steel dumping, potentially from China, India and South Korea. (Newswires)

GEOPOLITICS

US Defense Secretary Mattis said he is unconcerned by Iranian threats. Elsewhere, there were comments from EU's Foreign Policy Head Mogherini said EU will set up a legal entity to facilitate legitimate financial transactions to allow continued trade with Iran. (Newswires)

US President Trump and South Korea's Moon discussed the continuation of sanctions against North Korea. (Newswires)

US

Treasuries saw modest selling on Monday; in the European afternoon, the TPLEX fell in sympathy with Bunds, which sold-off after ECB President Draghi said he sees a “vigorous” pick-up in inflation. Yield on 2s and 3s printed fresh decade+ highs.  The US sold 2-year paper at a high yield of 2.829%, tailing by 0.4bps – the largest tail since April. Cover was also soft at  2.44x, below recent auction averages. The poor showing may have been a result of the FOMC’s anticipated 25bps hike on Wednesday, analysts said. US T-note futures (Z8) settle 1+ ticks lower at 118-20

White House Trade Adviser Navarro said US is happy to listen to China whenever they want to talk but commented that it is tougher to get a trade deal with China than with Mexico. Furthermore, Navarro said Trump's trade strategy may create market volatility but will be bullish in the long-term. (CNBC)