• Asian equity markets were mostly higher as the region took its cue from gains on Wall St, where all major indices closed higher
• UK new PM announcement due between 1100-1200BST today, in which a win by hardliner Brexiteer Boris Johnson is seen as a forgone conclusion
• White House confirmed US President Trump met with CEO's of large tech firms regarding Huawei and 5G technology
• Looking ahead, highlights include, US Existing Home Sales, US API Crude Stocks, NZ Trade Balance, Hungarian Rate Decision, BoE’s Haldane, Saunders, supply from the UK and US
• Earnings: Lockheed Martin, AMD, Biogen, Chubb, Discover Financial, Hasbro, Harley-Davidson, Kimberly Clark, Coca-Cola, Visa, United Technologies, Santander, ASM, UBS, Lindt & Spruengli

ASIA-PAC

Asian equity markets were mostly higher as the region took its cue from the gains on Wall St, where all major indices closed higher led by the Nasdaq after White House officials agreed to meet blue-chip tech executives regarding Huawei and with energy stocks also underpinned as geopolitical concerns surrounding Iran lifted oil prices. ASX 200 (+0.4%) andNikkei 225 (+1.1%) both advanced with Australia led by energy and tech as they tracked the outperformance of the sectors stateside, while the Japanese benchmark coat tailed on currency moves. Hang Seng (+0.1%) and Shanghai Comp. (+0.1%) were relatively indecisive and only edged marginal gains despite the encouraging trade-related reports in which US trade negotiators are likely to visit China next week for the first face-to-face meeting since the G20 and with China said to consider a plan to boost purchases of US soybeans, while the PBoC skipped open market operations but instead announced to lend CNY 200bln in 1yr MLF and CNY 297.7bln in 1yr targeted MLF loans. Finally, 10yr JGBs held near the prior day’s best levels following recent comments from BoJ Governor Kuroda who stated that that it is not easy to continue powerful measures for a long time but suggested that with zero lower bound for short-term interest rates, it might be better to directly affect long-term rates through large-scale asset purchases. Today’s 40yr JGB auction also failed to spur any significant price moves, as the results were mixed in which the b/c declined from prior but saw higher accepted prices.

PBoC skipped open market operations but later announced to lend CNY 200bln through 1yr medium-term lending facility at 3.30% and CNY 297.7bln in 1yr targeted medium-term lending facility at 3.15%. (Newswires) PBoC set CNY mid-point at 6.8818 (Prev. 6.8759)

White House confirmed US President Trump met with CEO's of large tech firms regarding Huawei and 5G technology in which President Trump agreed to CEO request for timely licensing decisions on sales to Huawei. In related news, Huawei said it is cutting 600 jobs at its Futurewei Technologies unit in US. (Newswires)

China Mofcom began anti-dumping investigation on propanol and other related products from US. (Newswires)

UK/EU

A cross-party group of MPs and peers is seeking a ruling in Scotland’s Court of Session to ensure the next PM cannot suspend parliament to force through a no-deal Brexit. (Independent)

People’s Vote supporters alleged that Boris Johnson has ‘no intention’ of keeping promises he made during Brexit campaign. (Independent)

Several US Democrats on the Ways and Means Committee raised the potential blocking of a US-UK trade deal to UK Trade Secretary Fox if Brexit saw a hardening of Irish border or impact on the Good Friday agreement, according to BBC’s Faisal Islam. (Twitter/BBC)

FX

DXY extended on the prior day’s gains following a breakout from Monday’s thin ranges and as its major counterparts languished in which EUR/USD gave up the 1.1200 handle, and with GBP/USD subdued firmly below 1.2500 ahead of today’s Tory leadership and PM announcement (due between 1100-1200BST) in which a win by hardliner Brexiteer Boris Johnson is seen as a forgone conclusion. USD/JPY rose above 108.00 as a function of the strength in the base currency and risk appetite, while antipodeans were kept lacklustre amid the firmer greenback, subdued metals complex and quiet calendar with NZD/USD also briefly ruffled by reports the RBNZ are looking at unconventional policy strategies.

RBNZ are looking at unconventional policy strategies with unconventional policy work at a very early stage. (Newswires) 

COMMODITIES

Commodities were mixed in which WTI crude futures eked marginal gains overnight as prices were kept afloat by support around USD 56.00/bbl and ongoing geopolitical concerns, with focus for the energy complex now shifting to this week’s inventory numbers beginning with the APIs later today. Elsewhere, gold saw mild losses as the greenback remained firm with the precious metal dipping below the neckline of a head and shoulder pattern in the 30min and 1hr charts, while copper was lacklustre with only minimal upside seen amid the cautious gains in its largest buyer China.

Libya’s Zawiya Oil Refinery (120k BPD) has reportedly been shut for two weeks due to power issues, according to sources. (Newswires)

GEOPOLITICS

UK Foreign Minister Hunt said Iran had no right to board the UK vessel which was an act of piracy and urged Iran to release the vessel and its crew. Hunt added that there is no comparison between seizure of the tanker and EU sanctions. Hunt added UK will seek to put together a European led maritime mission as well as compliment US proposals in the area of maritime security, while he also suggested that if Iran continues on this dangerous path they must accept the price of a larger western military presence along their coastline. (Newswires)

US President Trump said he is going to sit back and wait with regards to Iran and reiterated ‘we’ll see what happens’, while he added it is getting harder for him to make a deal and that it could go either way very easily. (Newswires)

US President Trump said there was very positive correspondence with North Korea and will meet for nuclear talks when North Korea is ready, while there were separate reports that North Korea Leader Kim inspected a newly built submarine which will be deployed soon. (Yonhap/Twitter/KCNA)

South Korea military fired a warning shot at Russian military plane after it entered South Korean air space. (Newswires)

US

The T-plex ultimately edged higher on Monday, as participants tread carefully ahead of Thursday’s ECB meeting, where speculation is rife on when and how the ECB will provide monetary accommodation. Some constructive headlines from China over the weekend, who reportedly made goodwill gestures in trade negotiations, saw some mild pressure in government debt in the early session, but was later reversed as traders bought the dip. Bidding pressure was complimented by a surprise dip in the Chicago Fed June National Index -0.02 (exp. 0.08), as well as the overhang of geopolitics. At settlement yields were modestly negative, with the belly seeing the most pronounced action, the 5-year yield fell by just under 2bps. US T-note futures (U9) settled 2 ticks higher at 127-19.

US President Trump said the White House and Congress reached deal to extend the debt limit and for a 2-year budget, while reports added the budget deal would raise US discretionary spending to USD 1.37tln in fiscal 2020 from USD 1.32tln this year. (Newswires)