• Asia-Pac stocks mostly weakened at month-end with the region occupied by a slew of earnings and data releases
• Amazon was seen lower by 7.4% after-hours following a disappointing earnings report and guidance
• In FX, the DXY heads into the European open around the 92.00 mark, EUR/USD trades sub-1.19 and GBP/USD maintains 1.39 status
• Looking ahead, highlights include German GDP, Eurozone CPI, GDP, US Personal Income, PCE, Canadian GDP, Fed's Bullard
• Earnings from BNP Paribas, Renault, IAG, NatWest, Exxon, Chevron, Caterpillar, P&G

CORONAVIRUS UPDATE

US President Biden said it is possible a booster will be required in the future although it is not currently needed and the Biden administration said they are open to returning to lockdowns if the CDC advises it. There were also comments from the US Treasury that President Biden was calling on state, local and territorial governments to provide USD 100 to every newly vaccinated American and that the USD 350bln in COVID aid to state and local governments is allowed to be used for vaccine incentives. Furthermore, the Treasury added that it is expanding tax credit for paid leave for workers to get time off for vaccinations. (Newswires)

A number of UK Conservative party MPs said that they do not think the government will follow through and actually introduce domestic vaccine passports. (Sky News)

Portugal's government is to lift restrictions on opening hours for restaurants and shops, while it is to lift the night-time curfew from some locations from Sunday onwards. (Newswires)

British holidaymakers in Spain are set to evade quarantine next week after ministers were shown data that revealed there are no beta variant COVID cases in the nation's main tourist areas. (Telegraph)

Japanese Economic Minister Nishimura said they propose adding four prefectures to the state of emergency and an extension to the emergency declaration in Tokyo and Okinawa to August 31st. Nishimura later stated it is likely that COVID-19 infections are not at a peak yet and responded that they will take macro-policy steps without hesitation when asked about need for additional stimulus. (Newswires/Nikkei)

Philippines President Duterte is to place capital region under lockdown measures from August 6th-20th to prevent the spread of the Delta variant, while the country extends travel ban on 10 countries including India, Thailand and Indonesia to August 15th. (Newswires)

ASIA

Asia-Pac stocks mostly weakened at month-end with the region occupied by a slew of earnings and data releases, while US equity futures also pulled back after the prior day’s fresh record levels on Wall St. following earnings from Amazon which disappointed on revenue and guidance. ASX 200 (Unch.) was subdued by underperformance in the defensive sectors and with Origin Energy the worst performer after it flagged significant impairments, although the losses for the index were cushioned by resilience in mining names after further production updates. Nikkei 225 (-1.6%) retreated to its lowest level since early January with the government likely to add four prefectures to the state of emergency and extend the emergency status in Tokyo and Okinawa to August 31st. In addition, the list of worst-performing stocks was heavily dominated by Co.s that recently announced earnings despite some actually reporting improved results, while the mostly better than expected data from Japan including the fastest pace of growth in Industrial Production since July last year, failed to spur risk appetite. Hang Seng (-1.9%) and Shanghai Comp. (-0.5%) were negative as the recent aggressive tech-rebound lost steam which saw yesterday’s best performers in Hong Kong languish at the other end of the spectrum and as Chinese money market rates increase heading into month-end with the PBoC opting again for another tepid increase in its liquidity operations. Notable weakness was also seen in the likes of Sinochem and Sinofert after reports China's state planner summoned key fertilizers firms and warned them regarding hoarding and speculation. Finally, 10yr JGBs failed to benefit from the weakness in stocks and traded flat with demand sapped amid the recent indecisive mood in T-notes and firm Japanese data, as well as the lack of BoJ purchases in the market today.

PBoC injected CNY 30bln via 7-day reverse repos with the rate at 2.20% for a net daily injection of CNY 20bln PBoC set USD/CNY mid-point at 6.4602 vs exp. 6.4596 (prev. 6.4942)

China's NDRC summoned key fertilizers firms for talks and warned them regarding hoarding and speculation, while key fertilizer companies said they are to suspend exports of fertilizer. In other news, China's CBIRC issued rules to clean up non-finance units and businesses of trust firms. (Newswires)

China media reported that regulators requested consumer finance firms, banks and financial institutions nationwide to keep interest rates for personal loans below 24%, while they must rectify loans with higher rates by June next year. It was also separately reported that the China housing ministry urged five cities to stabilise their housing markets. (Newswires/CNBC/Twitter)

US is deeply concerned regarding increasingly tough surveillance, harassment and intimidation of American and other foreign journalists in China, according to the State Department. It was also reported that US Republican Senators urged transparency for US-listed Chinese companies and said the SEC needs to act after the DiDi (DIDI) IPO "debacle". (Newswires)

• Japanese Industrial Production MM (Jun P) 6.2% vs. Exp. 5.0% (Prev. -6.5%)
• Japanese Industrial Production YY (Jun P) 22.6% vs Exp. 20.7% (Prev. 21.1%)
• Japanese Retail Sales MM (Jun) 3.1% vs Exp. 2.7% (Prev. -0.4%)
• Japanese Retail Sales YY (Jun) 0.1% vs. Exp. 0.2% (Prev. 8.2%, Rev. 8.3%)
• Japanese Unemployment Rate (Jun) 2.9% vs. Exp. 3.0% (Prev. 3.0%)

UK/EU

Optimism is increasing amongst UK government officials regarding prospects for a firm recovery in the economy during H2 with Chancellor Sunak praising data that showed the number of people that received furlough money last month declined by 560k to a total of 1.9mln. In other news, press reports noted that speculation is increasing that Chancellor Sunak will delay the budget until next year after he instructed the spending watchdog to publish new forecasts but refrained from announcing a date for the budget. (FT/The Times)

ECB's De Guindos said that if the recovery takes hold and there is a return to the pre-pandemic output level and if growth is back to potential and inflation reaches 2% target, then they should start to normalise monetary policy, while he added that they need to fulfil the price stability mandate under all circumstances. De Guindos stated that they still have time to decide about the future of PEPP and will set the pace of the purchases for Q4 in September and for Q1 2022 in December. Furthermore, he said that PEPP should end when the emergency is over and its dampening effect on inflation disappears. (ECB/Handelsblatt)

FX

In FX markets, the DXY heads into the European open hovering around the 92.00 mark. Note, Citi’s FX hedging model points to mild USD selling at month-end. EUR/USD was flat after having stalled again on approach towards 1.1900 and with ECB's De Guindos stating that the ECB still has time to decide about the future of PEPP and will set the pace of the purchases for Q4 in September and for Q1 2022 in December. GBP/USD reverted to the 1.3950 level and briefly tested the nearby 50DMA with price action contained by a lack of fresh cross-Channel developments although Brussels did confirm it has put on hold plans to trigger the dispute mechanism regarding Northern Ireland. USD/JPY languished amid the broad risk aversion and antipodeans lacked direction as tailwinds from the recent upside in commodities and firmest PBoC fix in a month, were counterbalanced by the currencies’ high-beta statuses.

COMMODITIES

Commodities were lacklustre overnight amid the subdued risk tone which saw WTI crude futures retrace some of yesterday's gains although prices remained above the USD 73.00/bbl after having benefitted from a weaker greenback and in tandem with the cyclical-led advances that had briefly underpinned Wall St. to fresh record highs. Gold was flat but retained most the prior day's spoils owing to the softer USD and copper languished alongside the risk aversion, as well as pressure in Chinese commodity prices which was attributed to a weaker demand outlook and after China recently released 170k tons of commodities from state reserves.

Workers at Codelco's Andina copper mine in Chile voted to strike. (Newswires)

GEOPOLITICAL

Chinese President Xi reportedly vowed efforts to defend, consolidate and develop ties with North Korea, according to reports in Yonhap citing North Korean state media. (Yonhap)

United Kingdom Marine Trade Operations said it received reports of a vessel being attacked off the coast of Oman which it is investigating and described the attack as non-piracy. (Newswires)

US

Treasuries were little changed as late-Wednesday strength was faded in APAC as China woes eased and US supply picked up. By settlement, 2s -0.9bps at 0.202%, 3s -1.4bps at 0.372%, 5s -0.7bps at 0.734%, 7s +1.0bps at 1.030%, 10s +0.8bps at 1.271%, 20s +0.5bps at 1.836%, 30s +0.5bps at 1.916%; TYU1 volumes were average. 5yr TIPS -5.8bps at -1.947%, 10yr TIPS -4.0bps at -1.145%, 30yr TIPS -2.2bps at -0.354%. SOFR and EFFR both unchanged at 5bps and 10bps, respectively. There was a big bid for Treasuries on the back of disappointing Jobless Claims data and the miss on Q2 GDP, but that didn't sustain and yields soon moved back to their pre-announcement levels. Analysts pointed to heavy rate-locking flow on the back of a bubbling corporate issuance slate today – including a four-part, USD 6.5bln Apple deal – and additional bearish flows from dealers ahead of the 7yr auction. However, once the rate-lock flows subsided, a disappointing Pending Home Sales print saw another flutter of buying for Treasuries, which again proved fleeting as dealers used the pop to sell into ahead of the Treasury auction. On which, the disappointing USD 62bln offering –more details below – failed to ignite any moves for the curve, with yields hugging little changed levels through into the futures settlement. Participants now look to PCE data on Friday, where the first post-FOMC Fed speak should start to filter through ahead of the weekend. T-note (U1) futures settle 1+ ticks lower at 134-07.

US Republican Senator Scott said that they need to see the infrastructure bill text and are not going to raise debt. (Newswires)

Amazon (AMZN) - Q2 2021 (USD) EPS 15.12 (exp. 12.30), Revenue 113.10bln (exp. 115.20bln). Q3 guidance beneath expectations. AWS net sales USD 14.81bln (exp. 14.18bln). Online stores net sales USD 53.16bln (exp. 56.71bln). Q3 2021 Revenue View: 106bln-112bln (exp. 118.89bln). Q3 2021 Operating Income View 2.5-6.0bln (exp. 8.1bln). CFO said the Co. sees a step down in revenue growth continuing for the next few quarters due to lapping growth from pandemic and additional mobility among customers (businesswire/Newswires) Shares fell 7.5% aftermarket. [4.9% SPX weight, 10.1% NDX weight]