• Asia-Pac stocks traded cautiously amid a deluge of earnings releases and as markets await Jackson Hole
• US equity futures trickled lower overnight following another consecutive day of record highs on Wall St
• The BoK became the first major Asian central bank to hike rates since the pandemic began
• In FX, the DXY remains lacklustre beneath 93.00, EUR/USD and GBP/USD remain steady on 1.17 and 1.37 handles respectively
• Looking ahead, highlights include German GFK Consumer Sentiment, ECB Minutes, US GDP (2nd), IJC, Fed's Kaplan, Bullard, ECB's Schnabel, supply from Italy & the US

CORONAVIRUS UPDATE

US President Biden’s administration plans COVID vaccine boosters at six months instead of eight months. (WSJ)

UK is reportedly gearing to begin inoculations for 12-year-olds with the NHS drawing up plans and health officials have stated that children would not need parental consent to receive jabs under a vaccination programme in schools. (Telegraph)

Takeda (4502 JT) suspended the use of 1.63mln doses of the Moderna (MRNA) vaccine and unused Moderna doses were said to have 'foreign materials'. Furthermore, Moderna confirmed it was notified and that it is investigating cases of particulate matter in product vials of its COVID-19 vaccine in 1 lot distributed in Japan, while it has placed one product lot and two adjacent lots on hold. (Newswires/Kyodo)

Australia's New South Wales reported 1,029 new locally transmitted COVID-19 cases and it was announced that the state-wide lockdown is to be extended to September 10th. (Newswires)

ASIA

Asia-Pac stocks traded cautiously amid a deluge of earnings releases and as markets await the Jackson Hole Symposium, while US equity futures trickled lower overnight following another consecutive day of record highs on Wall St where financials led but tech lagged amid the rising yield environment. ASX 200 (-0.7%) was negative with the index dragged lower by underperformance in gold miners and defensive sectors, with price action also influenced by an overload of earnings releases and another daily record of COVID-19 infections in New South Wales where the regional lockdown will be extended to at least September 10th. Nikkei 225 (Unch.) wiped out opening gains with sentiment hampered by COVID-19 concerns which recently prompted a widening of the state of emergency and the KOSPI (-0.7%) also retraced early advances after the BoK became the first major Asian central bank to hike rates since the pandemic began. Hang Seng (-1.5%) and Shanghai Comp. (-0.5%) declined with stocks such as AAC Technologies and Xiaomi underperforming in Hong Kong despite their improved earnings releases and with Evergrande flagging a 29%-39% decline in profits. In addition, regulatory concerns lingered after China’s MIIT removed 67 apps from stores on Wednesday due to failures to conclude required rectifications around irregular collection of personal information. Finally, 10yr JGBs were lower as yields in the Asia-Pac region tracked their counterparts in where the curve bear steepened which was attributed to positioning for a hawkish Fed and roll activity, while the regional also digested the BoK rate hike and mixed results at the 20yr JGB auction.

PBoC injected CNY 50bln via 7-day reverse repos with the rate at 2.20% for a net daily injection of CNY 40bln. (Newswires) PBoC set USD/CNY mid-point at 6.4730 vs exp. 6.4699 (prev. 6.4728)

BoK increased the 7-Day Repo Rate by 25bps to 0.75%, as expected, with the decision not unanimous as board member Joo dissented. BoK maintained 2021 growth forecast at 4.0% which it sees slowing to 3.0% in 2022 and increased 2021 inflation forecast to 2.1% from 1.8% and raised 2022 inflation forecast to 1.5% from 1.4%. BoK Governor Lee stated that monetary policy alone won't fix financial imbalances and that the timing for additional rate hike depends on COVID-19 and pace of debt growth, while he also noted that recent declines in the KRW seem to be due to a stronger USD. (Newswires)

Japan's ruling LDP agreed to conduct the leadership election on September 29th and the Ishihara faction of Japan's LDP is to support PM Suga's re-election at the party leadership vote. Furthermore, it was separately reported that the lower house election is likely to be in October or later. (Newswires/Sankei)

UK/EU

UK Investment Minister Grimstone suggested that the UK is not turning more protectionist and that the country welcomes Chinese investment as long as it is to the UK’s advantage. (FT)

UK’s HS2 high-speed railway project that will run from London to northern England is reportedly set to be scaled back with the eastern branch of the project between Birmingham and Leeds in doubt as cutting it could save GBP 40bln. (FT)

FX

In FX markets, the DXY remained lacklustre after having recently slipped back beneath the 93.00 level despite rising yields stateside with the greenback restricted as participants await the Jackson Hole event. EUR/USD slightly pulled back from the highs seen during the prior session where price action was choppy amid mixed German IFO data and as the latest rhetoric from ECB officials had little bearing on the single currency including comments from ECB's Lane who stated it is too early to discuss the conclusion of PEPP at the September meeting and that the ECB is willing to move if action from the Fed creates spillovers. GBP/USD gave back some of its gains but with the downside stemmed amid a lack pertinent news flow from the UK and with support at the 1.3750. USD/JPY and JPY-crosses were kept afloat after recent underperformance of the Japanese currency alongside COVID-19 concerns, while antipodeans were contained overnight owing to the cautious mood and after a beat on Capex data from Australia was largely ignored. KRW strengthened in a knee-jerk reaction to the BoK rate hike which was as expected but viewed by some to be a near coin flip, although the reaction was only brief with Governor Lee noting that the timing for an additional rate hike depends on the virus and pace of debt growth.

• Australian Capital Expenditure (Q2) 4.4% vs. Exp. 2.5% (Prev. 6.3%)
• Australian Private Capital Expenditure 2020-2021 (Est. 7) 125.7B (Prev. 124.0B)
• Australian Private Capital Expenditure 2021-2022 (Est. 3) 127.7B (Prev. 113.6B)

COMMODITIES

Commodities were softer overnight amid the risk aversion and COVID-19 concerns in the Asia-Pac region which saw WTI crude futures pull back from yesterday's highs to beneath the USD 68/bbl level, but with downside limited in the aftermath of the latest EIA inventory report that showed a larger than expected draw in headline crude inventories. Gold prices were lacklustre beneath USD 1800/oz, while copper was pressured by the uninspired mood in Asia and despite reports that Chile's Salvador copper mine workers' union deemed the Codelco wage offer as unacceptable.

GEOPOLITICAL

US senior official said President Biden will discuss concerns with Israeli PM Bennett that Iran has broken out of the box ever since former President Trump abandoned the nuclear deal, while the official added that the US remains committed to a diplomatic path, but there are alternatives if it fails which the official did not elaborate on. (Newswires)

US Secretary of State Blinken said the US is developing plans for helping departures after the August 31st deadline. It was separately reported that the US Embassy advised Americans not to travel to Kabul Airport and for US citizens at the airport's Abbey Gate, East Gate and North Gate to leave immediately. Furthermore, NATO Secretary-General Stoltenberg warned that the threat of a terror attack at Kabul Airport was increasing every day, while Australia's Foreign Minister also stated there is an ongoing and very high threat of a terrorist attack at Kabul Airport. (Newswires)

US

The Treasury curve bear-steepened on Wednesday, amid an absence of specific catalysts driving the upside in yield. Some desks attributed block selling in the 5s space to fast money ahead of the 5yr Treasury auction; there was also talk of sell-stops being triggered from weak longs, as well as some reports of insurers selling in the long-end. Macro players were also suggesting that the moves higher in oil may have provided yields with a lift. Volume has been heavy, with roll activity likely contributing ahead of first notice next Tuesday; the Sep/Dec roll is now over 25% complete, analysts said, with the roll in the long-end progressing more quickly. The Treasury sold USD 61bln of 5yr notes, tailing by a small 0.2bps; cover metrics were in line with recent averages; internals showed increase indirect participation. Elsewhere, the Fed's RRP operation on Wednesday saw USD 1.147trln (new record) across 77 bidders at 5bps. T-note (U1) futures settled 11+ ticks lower at 133-20.