• Asia-Pac stocks sustained the momentum from Wall St; US equity futures traded sideways overnight
• In FX, the DXY traded on either side of 93.000, EUR/USD encountered resistance ahead of 1.1750, and antipodeans outperformed
• Chinese President Xi Jinping may not attend the G20 summit in Rome at the end of October which would delay a potential meeting with President Biden
• US VP Harris said China's actions in the South China Sea continue to undermine rules-based order and sovereignty of nations
• The latest German election poll puts Chancellor Merkel's conservatives neck-and-neck with the SPD at 23%
• Looking ahead, highlights include US New Home Sales, ECB's Schnabel, and supply from the UK, Germany and the US

CORONAVIRUS UPDATE

The White House said the review of COVID origins is due on Tuesday, but it will take a few days to put together the unclassified version. (Newswires)

Pfizer (PFE) & BioNTech (BNTX) intend to submit supplemental BLA to support potential full FDA approval of its COVID vaccine (Comirnaty) in individuals aged 12-15. (Newswires)

Australia's New South Wales state reported 753 locally transmitted cases and reports noted that NSW Premier will announce an easing of restrictions later this week for those that are fully vaccinated. Elsewhere, New Zealand reported 41 new cases of COVID-19. (Newswires)

Japan is reportedly to include Hokkaido and 3 other prefectures to the state of emergency. (Newswires)

UK booster jabs for the most vulnerable people could start within two weeks but the healthy over-70s may have to wait. (Times)

ASIA

Asia-Pac stocks sustained the momentum from Wall St where the S&P 500 and Nasdaq notched fresh record highs, while the advances were led by energy after oil prices rallied over 5% and with some tailwinds from the FDA's full approval of the Pfizer/BioNTech COVID vaccine. The ASX 200 (+0.3%) was propped up by strength in energy names and gold miners - which were buoyed by the recent upside in underlying commodity prices, but with gains in the index capped amid ongoing Delta variant concerns and as participants digested a slew of earnings with the list of worst-performing stocks heavily populated by Cos that reported. The Nikkei 225 (+1.0%) was positive as most exporters benefitted from the recent currency moves and the global constructive mood which helped the index brush off reports of a potential expansion of the State of Emergency to Hokkaido and three other prefectures. The Hang Seng (+1.5%) and Shanghai Comp. (+1.0%) both traded higher as tech spearheaded the outperformance in Hong Kong with the sector also encouraged as JD.com shares rallied following a beat on earnings, although the mainland had a sluggish start after the US SEC issued disclosure requirements for Chinese companies seeking a US listing which added to the recent IPO-related woes following yesterday’s reports that Chinese bourses halted processing of over 40 IPOs amid investigations concerning intermediaries in the deals. Finally, 10yr JGBs are flat with demand subdued by the broad positive risk sentiment and despite the slightly improved results at this month's 5-year JGB auction, while the Aussie 10yr yield was higher by around 3bps after Australia sold AUD 3.25bln in 2032 indexed-bonds through syndication.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position. (Newswires)PBoC set USD/CNY mid-point at 6.4805 vs exp. 6.4827 (prev. 6.4969)

China reportedly warned officials in Alibaba’s (BABA) hometown of Hangzhou to root out “conflicts of interest” after the city’s Communist Party boss was detained amid rumours of investment links to Ant IPO which Ant denies, while it was also said that Beijing is to probe possible illegal loans and ties to spouses or children, according to CNBC's Yoon. (Twitter)

Didi (DIDI) reportedly pulled its UK launch for at least 12 months amid privacy fears. (The Telegraph)

UK/EU

German Chancellor Merkel's conservatives support was at 23%, SPD at 23% and Greens at 17%, according to an INSA poll for BildTV. (Newswires)

FX

In FX, the DXY attempted to nurse some of the prior day’s weakness where it had briefly dipped to below the 93.000 level amid the upside in stocks and with the greenback not helped by mixed US data including the miss on Manufacturing and Services PMI data. The index traded on either side of 93.000 but with price action contained as the focus remains on the upcoming Jackson Hole Symposium - which will now be a one-day virtual event on Friday. EUR/USD held on to most its recent gains above 1.1700 but stalled after hitting resistance at 1.1750, and GBP/USD was steady near the softer end of the 1.37 handle, and with technicians eyeing the 1.3748 level to the upside which represents the 38.2% Fibonacci retracement of the late-July to August downtrend. USD/JPY was lacklustre but JPY-crosses remain elevated with the recent price moves dictated by their base currencies, while antipodeans remained afloat due to their high beta statuses and recent commodity rebound. In addition, there were comments by Morgan Stanley which despite remaining neutral view on AUD/USD, shifted to a more positive view on AUD-crosses and continues to target AUD/NZD to gain to 1.08 from the current 1.04 handle.

COMMODITIES

WTI crude futures marginally extended on the prior day's upside above USD 65/bbl after having rallied by more than 5% in the prior session where it snapped a seven-day losing streak, with prices underpinned by the constructive risk tone and recent weakness in the greenback. However, gains overnight are only moderate with resistance seen ahead of the USD 66/bbl level and with the focus shifting to the latest inventory reports. Gold slightly eased as the greenback nursed losses but with the precious metal holding on to its USD 1800/oz status, with participants awaiting clues from Friday's Jackson Hole, while copper was flat with price action sideways despite the broad constructive mood.

US DoE announced planned sale of up to 20mln barrels of oil from the Strategic Petroleum Reserve. (Newswires)

GEOPOLITICAL

Chinese President Xi Jinping may not attend the G20 summit in Rome at the end of October which would delay a potential meeting with President Biden, according to SCMP. It would be the longest delay before a newly inaugurated US president met his Chinese counterpart since 1997 if the leaders do not meet in October, while the report also noted that Politburo Standing Committee members have not taken any overseas trips since the pandemic and President Xi has not hosted a foreign state leader since March 2020. (SCMP)

US Vice President Harris said South East Asia is critically important for US security and that partnerships with Singapore, the South East and Indo Pacific are top priorities for the US. Furthermore, VP Harris said Beijing continues to coerce and intimidate in the South China Sea, while she added that China's actions continue to undermine rules based order and sovereignty of nations. (Newswires)

US President Biden is expected to decide within 24 hours on whether to extend the August 31st withdrawal deadline from Afghanistan to provide the Pentagon time to prepare although some advisers oppose an extension due to security reasons, while President Biden is to speak at 12:00EDT regarding the Afghanistan withdrawal deadline. (Newswires)

US National Security Adviser Sullivan stated that President Biden is not considering speaking to Taliban leadership at present and there were separate comments from US House Intelligence Committee Chairman Schiff who thinks it is very unlikely that US will complete the evacuation from Afghanistan by August 31st. Furthermore, a NATO diplomat said all foreign force members are working towards meeting the August 31st deadline for evacuating from Afghanistan and that Taliban officials have been briefed about evacuation and logistical process at Kabul Airport. (Newswires)

US Army said China has improved the accuracy of its missile force. (Newswires)

North Korean newspaper called for Japan to make reparations for colonial-era brutality and stated that Japan had forced Korea to sign a treaty in 1910 which was a "fabricated" and "illegitimate" treaty. (Yonhap)

US

Treasuries reverse earlier steepening ahead of supply and Jackson Hole. By settlement, 2s +0.2bps at 0.226%, 3s -0.8bps at 0.436%, 5s -1.5bps at 0.771%, 7s -1.2bps at 1.045%, 10s -0.7bps at 1.253%, 20s -0.4bps at 1.789%, 30s -0.3bps at 1.870%; 5yr TIPS +1.6bps at -1.721% 10yr TIPS +2.0bps at -1.028% 30yr TIPS +0.3bps at -0.308%. SOFR unch. at 5bps and EFFR unch. at 9bps. In another quiet summer days trade Treasuries started the day on a steeper footing after encouraging COVID news out of China despite lockdown extensions in Victoria and New Zealand. T-notes saw a low at 133-30 this morning, but as the move pared throughout the session T-notes reached a high of 134-07+ in the afternoon. The newsflow during the US session was light but the curve reversed its earlier steepening and traded rather flat with data being light, aside from existing home sales which was better than expected, but had little impact on the treasury complex. With focus on supply this week ahead of the Jackson Hole Symposium, rate traders will likely be sitting on the side-lines until these key events. In terms of corporate supply, IFR highlights the pipeline is empty this week. T-note (U1) futures settled 3 ticks higher at 134-07.

US President Biden's administration has asked the US Supreme Court to leave the federal ban on evictions in place, according to a court filing. (Newswires)

Punchbowl News' Sherman initially tweeted that the House rule vote planned for last night would be to deem the budget passed and does not include any specific language regarding infrastructure being brought up by a certain date, although it was later noted that House will not vote on Monday night and that House Speaker Pelosi said the House will be in at noon to consider the rule for budget and infrastructure. (Twitter)