• Asian equity markets took their cues from a similar indecisive performance stateside
• Price action in the FX space is contained as DXY oscillates around the 92.50 mark
• Post-tropical storm Ida continued to cause havoc stateside with NYC declaring a state of emergency
• WTI crude futures are slightly lower after OPEC+ agreed to stick to the existing policy of gradual oil output hikes
• Looking ahead, highlights include Eurozone PPI, US Challenger Layoffs, IJC, Canadian Trade Balance, Factory Orders, Fed's Bostic, supply from Spain and France

CORONAVIRUS UPDATE

Moderna (MRNA) submitted initial data to the US FDA for its COVID-19 vaccine booster and stated mRNA-1273 at 50mg dose induced robust antibody responses of more than 40x against the Delta variant, while it expects to submit data to the EMA and other regulatory bodies around the world for its COVID-19 vaccine booster in the approaching days. In relevant news, the FDA will hold an advisory committee meeting on September 17th regarding the Pfizer (PFE) - BioNTech (BNTX) application for a COVID-19 vaccine booster. (Newswires)

European CDC stated the available evidence shows there is no urgent requirement for administering COVID-19 vaccine booster doses to the fully vaccinated. (Newswires)

UK is to give a third or booster COVID-19 vaccine doses to immunosuppressed. (Newswires)

ASIA

Asian equity markets took their cues from a similar indecisive performance stateside where price action was choppy and the major indices finished relatively flat as participants digested varied data releases, including the disappointing ADP Employment data which precedes Friday’s NFP jobs report. ASX 200 (-0.8%) was pressured amid a continued surge of COVID-19 infections and with the declines led by mining names after the recent losses in commodity prices and fresh bout of China’s state reserve selling, with mining giant BHP the worst hit as it traded ex-dividend. Nikkei 225 (+0.3%) lacked firm direction with Japan mulling extending the COVID-19 state of emergency by two weeks and the KOSPI (-1.0%) failed to benefit from the upgrade to Q2 GDP which confirmed the fastest growth in more than a decade, as the strong economic growth data and a 9-year high CPI, added to the case for a further BoK rate hike this year. Hang Seng (+0.1%) and Shanghai Comp. (+0.5%) were kept afloat after recent soft data releases stoked calls for PBoC easing, while China's Cabinet will reportedly step up support for smaller businesses in which it will add CNY 300bln in relending quota for small firms and provide rediscount support to help ease their financing burdens. Finally, 10yr JGBs were slightly higher as they continued to nurse Tuesday’s slump and after having found support near 152.00. There were also comments from BoJ’s Kataoka who suggested the central bank should aggressively buy bonds and push yields down to prop up capex and investment, although the impact was muted given that he is a notorious dovish dissenter at BoJ meetings and with mixed results at the latest 10yr JGB auction also capping price action.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a CNY 40bln net drain. (Newswires) PBoC set USD/CNY mid-point at 6.4594 vs exp. 6.4580 (prev. 6.4680)

PBoC will reportedly address the September funding gap and liquidity in money markets will remain reasonably ample. (China Securities Journal)

China's Foreign Minister Wang Yi stated China and the US should seek mutual respect and benefits. There were also separate reports that US Climate Envoy Kerry met virtually with China’s Foreign Minister Wang and urged China to do more to reduce emissions. (Newswires)

Chinese regulators including the Transport Ministry have summoned 11 ride hailing firms to a meeting. It was also reported that China National Radio and Television Administration said will bolster regulation on cultural programs and staff, while it will firmly oppose overly high salaries and crack down on tax evasion in the sector. (Newswires)

Japanese LDP leadership contender Kishida said some people feel the government may be optimistic about the COVID-19 situation, while he added that they aim to complete vaccination of all those that want it and that the government will give full support for development of COVID-19 oral drugs by year-end. Kishida stated that they need to swiftly conduct economic measures worth tens of trillions of yen to cope with the virus pain and that they need to implement business continuation support including payouts to households and businesses. Furthermore, he said they will provide cash payouts to non-regular workers, women and households with children that are facing a difficult situation due to the virus. (Newswires)

• Korea (Republic of) GDP Growth QQ Revised (Q2) 0.8% (Prev. 0.7%)
• Korea (Republic of) GDP Growth YY Revised (Q2) 6.0% (Prev. 5.9%)
• Korea (Republic of) CPI Growth MM (Aug) 0.6% vs. Exp. 0.3% (Prev. 0.2%)
• Korea (Republic of) CPI Growth YY (Aug) 2.6% vs. Exp. 2.3% (Prev. 2.6%)

UK/EU

UK shopper footfall in August was at 18.6% below pre-pandemic levels in August which is an improvement from July when footfall was 24.2% below pre-pandemic levels, according to Springboard data. (Newswires)

ECB reportedly told banks to prepare for climate tests that could hurt pay-outs, while the ECB sent banks confidential documents on climate data that are required and are to study the link between profits and carbon in bank portfolios. (Newswires)

FX

In FX markets, the DXY remained subdued around the 92.50 level following the mixed data in US where ISM Manufacturing PMI topped forecasts, but ADP Employment widely missed expectations ahead of Friday's key NFP jobs report. In terms of the latest central bank commentary, Fed's Bostic noted he is worried about a wave of evictions with the moratorium ending whereby a surge would have a negative impact on the recovery. Post-tropical storm Ida continued to cause havoc stateside with flash flooding warnings issued for parts of the north-eastern coast including NYC where Mayor De Blasio later declared a state of emergency. EUR/USD was flat at the 1.1800 handle but held on to most of the prior day’s gains owing to the softer greenback with traders also mindful of recent commentary from ECB officials. GBP/USD traded steady amid a lack of pertinent news flow aside from the recent appointment of Huw Pill as the BoE’s new Chief Economist, although the pair was kept afloat by a floor near the 50-HMA of 1.3766. USD/JPY traded rangebound and struggled to retain the 110.00 status, while antipodeans were uneventful with improved trade data from Australia and firmer-than-expected New Zealand Terms of Trade doing little to garner a reaction in their respective currencies.

• Australian Trade Balance (AUD)(Jul) 12.1B vs. Exp. 10.2B (Prev. 10.5B)
• Australian Exports (Jul) 5% (Prev. 4%)
• Australian Imports (Jul) 3% (Prev. 1%)
• New Zealand Terms of Trade QQ (Q2) 3.3% vs. Exp. 2.5% (Prev. 0.1%)
• New Zealand Export Prices SA (Q2) 8.3% vs. Exp. 3.0% (Prev. -0.8%)
• New Zealand Import Prices SA (Q2) 4.8% vs. Exp. 1.8% (Prev. -0.8%)

COMMODITIES

Commodities were mixed with WTI crude futures slightly lower in the aftermath of the OPEC+ meeting where they agreed to stick to the existing policy of gradual oil output hikes with an increase of 400k bpd, while while Energy Intel noted there were no additional requests made by any of the OPEC+ states to change their baseline production. Oil prices were volatile the prior day as a larger than expected drawdown in headline DOE inventories helped reverse some of the losses that were triggered by Russia's Novak who suggested that they are able to raise output above OPEC+ quotas. Furthermore, activity in the Gulf of Mexico is slowly returning as Ida has moved on to cause havoc in the eastern coast where a state of emergency was declared in NYC, and on the geopolitical front, Iran's Oil Minister suggested they are ready to boost oil output to maximum level to compensate for the losses once the 'illegal' sanctions are lifted, but later added that Tehran is determined to raise its oil exports despite the US sanctions. Gold remained flat and copper traded steady which provided some respite from the recent pressure that was triggered by weak data and renewed state reserve selling in China, while Chile's central bank had also forecast lower prices of USD 4.15/lb for 2021.

OPEC+ is set to hold its next meeting on October 4th and Energy Intel noted that no additional requests were made by any of the OPEC+ states to change their baseline production. (Newswires/Twitter)

White House said it is glad OPEC is continuing with gradual increases to oil output and it continues to engage with OPEC+ members regarding the importance of competitive market when setting prices and doing more to assist the recovery. (Newswires)

Kuwaiti Oil Minister said OPEC+ is keen on providing markets with enough supplies and it has succeeded at bringing balance and stability to the global economy. (Newswires)

Russian Deputy PM Novak said OPEC+ compliance in July was at 109% and that Russia will return to pre-COVID production by May 2022, while he added that global oil demand is to recover by 6mln BPD in 2021. (Newswires)

Algerian Oil Minister stated that overall compliance with OPEC+ agreements reached 110% in August, while its oil production will be 932k BPD in September and 942k BPD in October. (Newswires)

Iranian Oil Minister said that as soon as the US’ unilateral illegal sanctions are lifted, Iran is ready to increase its oil output to the highest possible level to compensate for the losses caused by the US sanctions, while he also noted that Tehran is determined to raise its oil exports despite US sanctions. (Newswires/Energy Intel)

BSEE Gulf of Mexico production shut-in at 79.96% or 1.455mln BPD (prev. 93.69% or 1.705mln BPD on Tuesday). It was also reported that Chevron (CVX) said it has begun to redeploy personnel to provide closer assessments of Gulf of Mexico facilities and restore production when possible, while its offshore facilities appear to be undamaged after Hurricane Ida. Furthermore, BHP Group (BHP LN) is also to re-staff its Shenzi platform in the Gulf of Mexico as soon as Wednesday after no damages were identified and the US Coast Guard working with Entergy (ETR) to remove the downed powerline from Mississippi River by late Friday. (Newswires)

UBS said with oil demand poised to continue to rise, it expects the oil market to stay undersupplied and support prices. UBS added that oil demand will exceed 99mln BPD later this year and inventories will decline further, while it sees Brent prices reaching USD 75/bbl again this year. (Newswires)

Chile will seek USD 150bln of investments to achieve its copper output target of 9mln tonnes by 2050 and it expects 7mln tonnes of annual production by 2030 which will depend on at least 70% of 49 proposed projects coming to fruition. (Newswires)

GEOPOLITICAL

US President Biden said the US remains firmly committed to Ukraine sovereignty in the face of Russian aggression. (Newswires)

US

Treasuries reversed Bund-led weakness seen earlier on Wednesday after ADP and ISM Mfg. Employment misses stoke concerns ahead of NFP. By settlement, 2s +0.2bps at 0.211%, 3s +0.8bps at 0.407%, 5s +0.9bps at 0.780%, 7s +0.2bps at 1.081%, 10s +0.0bps at 1.302%, 20s -0.6bps at 1.842%, 30s -0.8bps at 1.919%; TYZ1 volumes were average. 5yr TIPS -3.9bps at -1.769%, 10yr TIPS +4.7bps at -1.037%, 30yr TIPS +4.2bps at -0.310%. SOFR unchanged at 5bps. EFFR fell to 6bps from 8bps amid month-end factors. 3m $ Libor was just above record lows. Eurodollars were little changed in light trade, matching action in Treasuries. The bid for USTs gained traction after the downbeat ADP employment report cast a shadow ahead of Friday's NFP (although note ADP has been particularly uncorrelated to the BLS figures recently). One desk noted that some of the buying had been linked to passive index-linked accounts to march their portfolios to benchmark indices for the new month. T-Notes hit session highs of 133-20 into the ISM Mfg. report, which was mixed as a solid headline beat was offset by the lowest Prices Paid sub-index of the year, while the employment sub-index fell into contraction (adding to ADP's omen ahead of Friday). USTs then gradually pared to the unchanged mark and hovered sideways into the settlement. Looking ahead, Thursday brings Jobless Claims, Factory Orders, and International Trade data, as well as next week's auction size announcements. However, participants will be cautious to build exposure ahead of the jobs report Friday. T-note (Z1) futures settled flat at 133-14+.

Fed's Bostic (2021, 2024 voter) said he is worried about a wave of evictions with the moratorium ending, where a surge would have a negative impact on the recovery. (Newswires)

Steel consuming industries are making a new push to persuade US President Biden to lift Trump's Section 232 tariffs, according to journalist citing the Coalition of American Metal Manufacturers and Users. (Twitter)

NHC said post-tropical cyclone Ida is bringing widespread heavy rain and areas of life-threatening flash flooding, as well as enhanced risk for tornadoes across northeast New Jersey and southern New York, while the National Weather Service issued a flash flood emergency warning for New York City and its Mayor De Blasio later declared a state of emergency for the city. (Newswires)

Japan's FTC closed its investigation into the Apple (AAPL) App Store as the US tech giant announced an update that will allow developers of "reader" apps to include an in-app link to their website to allow users to set up or manage an account, while Apple will apply this change globally to all reader apps. Furthermore, a Japan FTC official later stated that a future antimonopoly investigation of Apple App games is possible. (Newswires)