• Equity bourses/futures are mixed but relatively contained around the unchanged mark in minimal newsflow; ES -0.1%, Euro Stoxx 50 +0.2%
• USD retains an underlying bid to the detriment of peers across the board though EUR/USD remains above current YTD lows
• US Senate passed the infrastructure bill as expected, most GOP Senators pledged to not help Democrats on the debt ceiling; subsequently passing the USD 3.5trl Democrat resolution
• Core debt is subdued pre-CPI as concession ahead of US issuance creeps in though EGBs are off lows post a 2031 Bund outing
• North Korea said it will make South Korea and the US feel a "massive security crisis every minute"
• Looking ahead, highlights include US CPI, Fed's Bostic & George, supply from the US

CORONAVIRUS UPDATE

The UK has ordered 35mln doses of the Pfizer (PFE) COVID vaccine for next year’s autumn booster campaign at a significantly higher cost - in response to demand. UK government is set to announce the GBP 1bln deal this week. (Times)

Australia's Victoria's State Premier extends Melbourne's lockdown for another seven days amid its COVID situation. (Newswires)

New Zealand has restricted travel from Fiji and Indonesia after labelling them very high-risk countries due to COVID. (Newswires)

South Korea's daily COVID cases surpass 2,200 for the first time - hitting a record, according to the Health Minister. (Newswires)

ASIA

APAC stocks saw a mixed session following the similar handover from Wall Street, which saw the SPX and DJIA pushed to new records, whilst the NDX was pressured by higher yields. Overnight, US equity futures opened flat and held a horizontal pattern, with a broad-based performance seen across the major contracts heading into the US CPI print later today. As such, the ASX 200 (+0.3%) was supported by its exposure to those sectors and hit a new intraday record high, whilst one of the “Big Four” banks CBA dipped post-earnings but then conformed to sector-wide gains. The Nikkei 225 (+0.7%) took an early lead on the back of strength in its industrial and financial names, but later pulled back towards the 28k mark whilst Softbank shares remained weak following underwhelming earnings. The KOSPI (-0.7%) stayed subdued after North Korea warned of “massive security crises every minute”, as the US and South Korea gear up for the annual military drills. The Hang Seng (+0.2%) was choppy and fluctuated between gains and losses whilst the Shanghai Comp (+0.1%) was somewhat stable following the volatile price action earlier this week.

• PBoC injected CNY 10bln via 7-day reverse repos at a maintained rate of 2.20% for a net neutral daily position. (Newswires)
• PBoC set USD/CNY mid-point at 6.4831 vs exp. 6.4835 (prev. 6.4842)

Chinese M2 Money Supply YY* (Jul) 8.3% vs. Exp. 8.7% (Prev. 8.6%)

• New Yuan Loans* (Jul) 1080B vs. Exp. 1200.0B (Prev. 2120.0B)
• Outstanding Loan Growth* (Jul) 12.3% vs. Exp. 12.3% (Prev. 12.3%)

CENTRAL BANKS

Fed's Evans (2021, 2023 voter) would like to see a few more jobs reports before a taper decision but noted that the Fed is likely to meet the taper benchmark of 'substantial further progress' later this year. Evans said he's perfectly comfortable waiting until there is more progress on employment, and the US economic outlook continues to be strong but some uncertainty remains. Evans said it would be fine if MBS and Treasuries were tapered in proportion to current purchases, but he has no strong view. Evans noted the recent price increases were "quite large" with "no sugarcoating" the pain felt by households and businesses. (Newswires)

The RBNZ announced new foundations to strengthen and modernise the Reserve Bank; a new "Governance Board" will be appointed beginning mid-2022. (RBNZ)

US

Most GOP Senators signed a pledge to not help Democrats on the debt ceiling, according to WSJ, with 46 Republicans signing the letter (WSJ) In the 50-50 split Senate, Democrats do not meet 60 votes threshold needed to pass a debt-ceiling raise via the ordinary legislative process. US Senate has voted 50-49 to approve the USD 3.5trl Democratic Budget plan; following this, Senate Majority Leader Schumer remarked that he wants the first drafts of legislation submitted by September 15th from the committees. (Newswires)

The US House is cutting its recess short and coming back August 23rd, according to Punchbowl's Sherman. The House will consider the Senate's Budget Resolution if they pass it by then. (Twitter/Newswires)

UK/EU

UK ministers are set to make traffic provisions to France indefinite amid expectation of further cross-Channel disruption. (Guardian)

GEOPOLITICAL

North Korea said it will make South Korea and the US feel a "massive security crisis every minute". (Yonhap)

Chinese court has sentenced Canadian Michael Spavor to 11 years in prison for alleged espionage. The US Embassy in China calls for the immediate release of Canadians Spavor and Kovrig, according to a statement. (Newswires)Spavor and Kovrig were arrested in December 2018 after Huawei executive Meng was detained in Canada on a US extradition request

Mexican Foreign Minister said relations with the US are going "very well" and "are advancing" following a meeting with a top US official. (Newswires)

Iranian President Raisi has submitted the list of candidates for his cabinet to the parliament: (full list)

• Amir Abdollahian as Foreign Minister
• Javad Oji as Oil Minister

CRYPTO

Coinbase (COIN) Q2 2021 (USD): EPS 6.42 (exp. 2.33), Revenue 2.23bln (exp. 1.78bln). Trading volume USD 462bln vs exp. USD 381.64bln. Ethereum trading volumes surpassed Bitcoin trading volumes on Coinbase for the first time, driven by growth in the DeFi and NFT ecosystems. (businesswire) CEO said the Co. wants to be the "Amazon of assets" and list every legal crypto out there. (Newswires)

Hackers have stolen around USD 600mln in one of the largest cryptocurrency heists. Blockchain site Poly Network said hackers had exploited a vulnerability in its system and taken thousands of digital tokens such as Ether. (BBC)

EQUITIES

European equities (Eurostoxx 50 +0.2%) trade with marginal gains with the Stoxx 600 once again printing a fresh record high. Fresh macro developments for the region remain sparse with some of the discrepancies between individual indices dictated by earnings. The APAC lead was a relatively mixed one, whilst US futures currently trade with marginal losses after the SPX and DJIA rose to record highs during yesterday’s session. Developments stateside have seen the US Senate vote 50-49 to approve the USD 3.5trl Democratic Budget plan and thus pave the way for developing the budget bill and implementing priorities of the Biden administration. Elsewhere, the taper timeline debate remains at the forefront of market commentary with the latest Fed-speak from 2021 voter Evans suggesting that he would like to see a few more jobs reports before making a decision on tapering. Sectors trade predominantly firmer in Europe with minor outperformance in Media, Oil & Gas and Retail. To the downside, Travel & Leisure names lag as a by-product of Flutter Entertainment giving back some of yesterday’s earnings-inspired gains, whilst the rate-sensitive Tech sector is seen lower amid advances in global bond yields. Individual movers include ABN AMRO (+4.1%) at the top of the Stoxx 600 after reporting a firmer than expected recovery in net profit and announcing the resumption of dividend payments. Avast (+2.1%) sits at the top of the FTSE 100 after announcing that NortonLifeLock is to acquire the Co. in a USD 8.6bln deal. To the downside, ThyssenKrupp (-6.9%) sits at the foot of the Stoxx 600 after noting alongside earnings that contract structures at the Co. mean that there will be a delay in increased raw material and steel prices feeding through to revenues and earnings. Deliveroo (-4.4%) are also seen lower on the session post-encouraging earnings results with the Co. noting that it has not had any discussions with Delivery Hero since it invested and views it as just a financial investment.

FX

USD/EUR/GBP - The overriding theme is still Dollar outperformance, and with few exceptions to the rule as the DXY ventures further above 93.000 and nearer the final highs that stand in the way of the current 2021 pinnacle at 93.439 set right at the end of Q1. For the record, these stand at 93.194 from July 21 and 93.338 on April 1 vs 93.192 thus far in wake of last Friday’s strong US jobs data that has been widely recognised as constituting another step in the right direction for QE tapering by Fed officials including the ‘influencer’ and VC Clarida. However, the Euro is putting up a stern fight in defence of its y-t-d low and perhaps on the grounds that it resides in close proximity to a psychological level and Fib retracement just a few pips below 1.1700. Moreover, Eur/Usd may be deriving some traction indirectly via decent option expiry interest in the Eur/Gbp cross at the 0.8450 strike (1.1 bn) and the fact that this aligns with yesterday’s new 2021 base. Whatever the rationale, Eur/Usd is hovering within a 1.1726-06 range and Cable between 1.3844-07 parameters having retreated through technical support in the form of the 21 DMA (1.3830) and a Fib (1.3826 representing the 38.2% reversal 1.3982 to 1.3573) awaiting US CPI data, more Fed speak and the 2nd tranche of Quarterly Refunding.

NZD/AUD/CAD - Cross-currents are also impacting trade down under as Aud/Nzd chops and changes from circa 1.0511 to 1.0471, and is probing the downside at present to the benefit of the Kiwi relative to the Aussie that is also contending with unfolding virus developments. On that very note, lockdown in Melbourne has been extended for another week to keep Aud/Usd depressed beneath 0.7350 along with consumer confidence, while Nzd/Usd continues to pivot 0.7000. Elsewhere, the Loonie continues to draw some comfort from comparative stability in WTI crude and is holding above 1.2550.

CHF/JPY - The low yielders remain weak against the backdrop of more pronounced US Treasury bear-steepening, with the Franc now struggling to keep its head afloat of 0.9250 and the Yen trying to arrest a decline into 111.00 with little left in the way of support aside from mid/late June and early July troughs at 110.81 and 110.97.

EM - Not much reaction to weaker than forecast Chinese new Yuan loans, but the Cnh and Cny have slipped towards 6.5000 vs the Usd and other EM currencies are also mostly on the back foot, bar the Mxn that is keeping its head above the 200 DMA, while the Brl is likely to glean impetus from more hawkish BCB commentary to offset any investor angst over political unrest. To recap, Monetary Policy Director Serra said the Bank is worried about the possibility of not hitting the midpoint of the 2021 target, adding that 5.25% is still low for the SELIC rate by Brazilian standards. He also stated that the BCB has been intervening occasionally to keep the FX market functioning and is not concerned with the level of the exchange rate, but may evaluate using options to intervene in the future even though they are not a good tool to deal with volatility. Meanwhile, the Lower House voted down proposals backed by President Bolsonaro to rejig the voting system.

Notable FX Expiries, NY Cut:

• EUR/GBP: 0.8350 (620M), 0.8450 (1.1BLN)

Brazil's Lower House voted down proposals backed by President Bolsonaro to rejig the voting system. (Newswires)

FIXED

No real or marked rebound in Bunds, but perhaps a degree of post-German issuance relief as the 10 year debt future hovers above a fresh 176.21 Eurex low. Meanwhile, Gilts have also pared some losses from 129.30, but not to the extent that Short Sterling contracts have managed amidst ongoing curve steepening and a deeper retreat in the Pound vs main currency rivals. Elsewhere, USTs are rooted towards the bottom of overnight ranges awaiting US inflation metrics, comments from Fed’s George with keener interest than Bostic who has been vocal of late, and the Usd 41 bn 10 year leg of this week’s trio of offerings to see of the reception is as warm as it was for the 3 year note last night.

COMMODITIES

WTI and Brent are currently in proximity to the unchanged mark on the session, having given up the European morning’s initial modest gains, which took the benchmarks to highs of USD 68.78/bbl and USD 71.17/bbl respectively. Newsflow throughout the APAC session and this morning has been very minimal and not changed the dial for the complex at any point; for reference, the Private Inventories last night came in at a marginally smaller build than expected for the headline with the internals mixed and the report overlooked. Elsewhere, Iranian President Raisi has submitted his list of candidates for Parliamentary Cabinet positions which pertinently has Amir-Abdollahian as the Foreign Minister and Javad Oji as the Oil Minister. The foreign minister has historically been in charge of nuclear talks but Officials cited by the Times of Israel write that at this stage it is unclear if this will continue to be the case or if responsibility will transition to the National Security Council, for instance. Moving to metals, where it is once again a relatively uneventful session for spot gold and silver which haven’t been too afflicted by either the firmer USD or elevated yields thus far; currently, posting gains of 0.3% on the session. For the session ahead the US CPI print is the next point to watch for the metal and a preview of the release is available within the US Premarket Themes post. Elsewhere, copper prices are a touch softer in respite from the modest gains seen at this time yesterday as attention around the metal centres on negotiations around BHPs Escondida, Chile mine; which, thus far, have not resulted in a deal and as such government-mediated talks are ongoing. As a reminder, in the event a deal is not attained then the Union would be able to instigate strike action.

Workers at BHP's Escondida mine do not reach a deal; negotiations will continue, according to a statement. (Newswires)

US Energy Inventory Data (bbls): Crude -0.82mln (exp. -1.3mln), Cushing -0.41mln, Distillates +0.67mln (exp. -0.5mln), Gasoline -1.11mln (exp. -1.7mln). (Newswires)

Goldman Sachs noted the net impact on oil from the Delta variant remains moderate and their base case remains that the Delta wave will impact oil demand (including in China) for only two months - consistent with prior cycles. GS now forecast August and September global oil demand at around 97.8mln BPD, with Q3 only 800k BPD lower vs pre-Delta forecasts. (Newswires)

Tropical Disturbance Six has developed into Tropical Storm Fred just south of Puerto Rico. (NHC)