Original insights into market moving news

[PODCAST] US Open Rundown 2nd August 2021

  • Risk sentiment is constructive though EU action has been minimal and focused on earnings/weekend newsflow as we await risk events; ES +0.6%
  • The DXY is sedate on the new-month with peers benefitting but only modestly so; core debt is deviating with USTs firmer
  • A vote on the USD 1tln infrastructure bill could be held “in a matter of days,” Senate Democratic leader Schumer said
  • Fed's Brainard (voter) said she would like to have the September jobs data at hand to assess improvements in the labour market
  • China has called for more communication with the US regarding overseas IPOs
  • US Secretary of State Blinken said the US is confident that Iran conducted the attack on the ship off the coast of Oman
  • Looking ahead, highlights include US Manufacturing PMI (Final), US ISM Manufacturing PMI


UK Chancellor Sunak has called on UK PM Johnson to ease travel restrictions, warning that the rules were damaging the economy and the tourism sector in particular. (Times) This comes ahead of the August travel rules review on Thursday

The UK is said to be preparing to lift its travel ban on airport hubs to individuals and businesses from the Far East, Middle East, and Australia. (Telegraph)

COVID 19 booster vaccines are to be offered to 32mln people in the UK early next month, with up to 2,000 set to deliver the programme. (Telegraph) Young people in the UK will be offered discounted takeaways and car travel to get their COVID jabs in a bid to boost vaccine uptake. (BBC)

Australia's Brisbane has joined Sydney in lockdown after the discovery of six new cases of the Delta variant. (Newswires) Australia's Southeast Queensland lockdown extended by eight days until Sunday 8th August. (Twitter)

China said 14 provinces reported new local COVID cases in July; separately, Beijing is discouraging residents from leaving the city if the travel is unnecessary amid a new local COVID-19 case (Newswires)

Pfizer (PFE) and Moderna (MRNA) have upped the prices for their COVID 19 vaccines in the latest supply contracts with the EU. Pfizer's shot now costs EUR 19.50 vs prev. EUR 15.50, and Moderna's USD 25.50 vs prev. USD 22.60, according to sources. (FT)

NIH's Dr. Fauci said the US is unlikely to return to lockdowns. (ABC)


Asia-Pac equities shrugged off the lacklustre performance on Wall Street on Friday, in which the majors posted mild losses ranging from 0.4-0.7%, whilst Amazon shares held onto post-earning declines to close lower by around 7.5%. Overnight, US equity futures kicked off the first trading day of August with mild gains, which then extended throughout the APAC session as US senators worked over the weekend to pave the way for a vote on the USD 1trln infrastructure bill this week - in turn guiding the ES and NQ back above 4,400 and 15,000 respectively. Back to APAC, the ASX 200 (+1.4%) gained traction and hit a record high ahead of tomorrow’s RBA announcement, which is expected to walk back on the July taper decision amid the worsening domestic COVID situation. The index was also supported by Afterpay surging over 30% at the open after NYSE-listed Square offered to acquire the Aussie payment company in a USD 29bln deal. The Nikkei 225 (+1.9%) was bolstered with gains seen in every sector, with materials and tech leading the charge. South Korea’s KOSPI (+0.4%) lagged as North Korean leader Kim Jung Un’s influential sister warned that the annual military drills between South Korea and the US this month will undermine prospects for better ties between the Koreas. Hang Seng (+1.1%) and Shanghai Comp (+1.5%) were initially subdued amid the ongoing US-Sino tensions and after sub-par PMI metrics. The bourses then rebounded despite a lack of news flow, with some pointing to continued loose policy as an analyst piece on China Daily (seen as the CCP's mouthpiece) suggested that Chinese leaders are expected to intensify policy support in H2 amid a deceleration in growth. There were also reports that the China Securities Regulatory Commission is ramping up talks with the US SEC to find a suitable resolution after the US SEC halted IPOs of Chinese firms. The Hang Seng was also supported by Evergrande shares as the indebted property developer offloaded its stake in its internet unit to raise funds. Finally, 10yr JGBs track the recent leg higher in the US T-note future as US Senators unveiled the bipartisan infrastructure bill expected to pass this week.

US SEC has halted IPOs of Chinese companies until they boost disclosures of risks posed to shareholders. China has called for more communication with the US regarding overseas IPOs. The China Securities Regulatory Commission is ramping up talks with the US SEC to find a suitable resolution, according to a statement. (Newswires)

Chinese leaders are expected to intensify policy support in the second half of the year to bolster the country's economic growth, which has shown signs of decelerating, analysts said on Sunday. (China Daily)

  • PBoC set USD/CNY mid-point at 6.4660 vs exp. 6.4663 (prev. 6.4602). (Newswires)
  • PBoC injected CNY 10bln via 7-day reverse repos at a maintained rate of 2.20% for a net neutral daily position

PBoC reiterated that it will not resort to flood-like stimulus and called on virtual platforms to satisfy regulations. Beijing Market Regulators have fined three private tutoring firms, via state media. (Newswires)

A high level Chinese official has predicted US-China relations will not improve significantly but believes bilateral relations will be better in H2 vs H1. (SGH Macro Advisors)

  • South Korean Import Growth Prelim (Jul) 38.2% vs. Exp. 42.0% (Prev. 40.7%)
  • South Korean Export Growth Prelim (Jul) 29.6% vs. Exp. 30.2% (Prev. 39.8%)
  • South Korean Trade Balance Prelim (Jul) 1.76B (Prev. 4.45B) (Newswires)

Chinese Caixin Manufacturing PMI (Jul) 50.3 vs Exp. 51.0 (Prev. 51.3) The release noted "A key factor weighing on the headline reading was a renewed fall in total new business during July. Though only marginal, it marked the first decline in sales for 14 months. Some companies noted that higher factory gate prices had dampened customer demand. At the same time, new export orders rose only slightly as the pandemic continued to hinder sales overseas."

  • Chinese NBS Composite PMI* (Jul) 52.4 (Prev. 52.9)
  • Chinese NBS Non-Manufacturing PMI (Jul) 53.3 vs Exp. 53.3 (Prev. 53.5)
  • Chinese NBS Manufacturing PMI (Jul) 50.4 vs. Exp. 50.8 (Prev. 50.9)


Fed's Brainard (voter) said the economy has not yet reached the goals for reducing QE, noting that joblessness remains quite high. Brainard backs more aggressive financial stability tools, whilst inflation risks have increased to the upside - Fed will react if inflation is persistently and materially over 2%. Brainard said employment has some way to go to meet the taper test and she would like to have the September jobs data at hand to assess improvements in the labour market. Brainard noted that the existing composition of asset purchases is having the effect the Fed wants. (Newswires)

US Senators worked over the weekend to finalise legislation on the USD 1tln bipartisan infrastructure bill. A vote on the infrastructure bill could be held “in a matter of days,” Senate Democratic leader Schumer said Sunday. (Newswires) US Republican Senator Collins believes a minimum of 10 Republicans will support the measure, enabling the bill to clear a 60-vote procedural hurdle. (CNN) The bipartisan group of US senators have finalised the text of the infrastructure bill. (Twitter) The bill includes USD 550bln in new spending (in line with prior reports), new spending will occur over five years, and includes USD 65bln in funding for expanded broadband access. (Newswires)

US House Speaker Pelosi has asked President Biden to extend the eviction moratorium to October 18th. (Newswires)

Square (SQ) is to acquire Afterpay (APT AT) in a USD 29bln deal; transaction expected to close in Q1 2022; Square has agreed to a secondary listing on the Australian Securities Exchange. (businesswire)


One in five firms plan on letting staff go in response to Sunday's furlough policy change, which will see employers contribute more, according to a survey by the British Chamber of Commerce including 250 businesses. From Sunday, government payments reduce to 60% towards salaries, with employers paying 20%. (BBC)

A YouGov survey suggests that the Conservative party could lose 17 seats at the next election as support for UK PM Johnson declines in the southeast and east of England. (Times)

UK Chancellor Sunak is contemplating a suspension of the Conservative's "triple lock" election manifesto pledge in an attempt to save billions. (Telegraph)

UK Trade Secretary Truss said the UK is close to a Free Trade Agreement (FTA) with New Zealand. (Sky News)

UK Markit/CIPS Manufacturing PMI Final (Jul) 60.4 vs. Exp. 60.4 (Prev. 60.4)

EU Markit Manufacturing Final PMI (Jul) 62.8 vs. Exp. 62.6 (Prev. 62.6)

  • German Markit/BME Manufacturing PMI (Jul) 65.9 vs. Exp. 65.6 (Prev. 65.6)

UK Lloyds Business Barometer (Jul) 30 (Prev. 33). (Newswires)


US Secretary of State Blinken said the US is confident that Iran conducted the attack on the "Mercer Street" which killed two people using one-way explosive UAVs. (Newswires)

Israel is considering various options to retaliate against Iran over its strike on an oil tanker. (Times of Israel) Iran said the attack on the Israel-linked ship was retaliation to the attack on the Al-Dabaa Airbase, according to Al Alam TV. (Newswires)

North Korean Leader Kim's sister has warned military drills between South Korean and U.S. troops will undermine prospects for better ties between the Koreas. (Newswires) South Korea will deal with the issue of joint military drills with the US in a "wise and "flexible" manner so as to not heighten tensions on the Korean Peninsula, the unification ministry said. (Yonhap)

US DoJ said the US seizes an oil tanker used to violate sanctions against North Korea. (Newswires)

Saudi-led coalition intercepted a drone attack on a Saudi commercial vessel, state media reports. (Newswires)


It was initially reported that Saudi Aramco is said to be planning to start Bitcoin mining, according to Brazilian Bitcoin miner Ray Nasser during an interview. Flared gas will reportedly be used to power the network. These reports were later denied by Saudi Aramco (

PBoC said it will continue to exert heavy regulatory pressure on crypto trading. (Newswires)


European equities (Euro Stoxx 50 +0.6%) have kicked the week off on a firmer footing as August trade gets underway. Many news outlets have highlighted the positivity surrounding the US 1tln bipartisan infrastructure bill whereby a vote on the bill could take place “in a matter of days”, according to Senate Democratic Leader Schumer. However, gains for Europe are potentially more a by-product of clawing back Friday’s losses with the macro landscape for the region relatively unchanged since last week’s close asides from a minor revision higher for the EZ manufacturing PMI print. Sectoral performance sees outperformance in cyclical names with upside in Retail, Autos and Basic Resources, whilst Health Care and Insurance names lag. Of note for the Insurance sector, positivity from AXA earnings (+3.9%) has been offset by losses in Allianz (-7.7%) after the Co. flagged a potential financial impact from an escalating legal dispute over actions its US investment funds undertook as the pandemic commenced; albeit, no provision has been allocated at this moment in time. Newsflow surrounding the Travel & Leisure sector has picked up ahead of the UK’s travel review later in the week. There appears to be a fight within the UK government amid reports that ministers are holding talks over creating a new amber watchlist of nations that could move to the government’s travel list with little warning. Naturally, this has received pushback from the industry, however, some optimism for airline bosses might stem from other repots suggesting that UK Chancellor Sunak has called on UK PM Johnson to ease travel restrictions. Large cap earnings today have included HSBC (+0.6%), who trade firmer after reporting better than expected H1 profits and reinstating dividend payments. Heineken (+1.2%) trade broadly inline with the market after reporting an increase in profits whilst flagging the potential for increasing commodity costs for H2. Finally, Meggitt (+56.9%) sits at the top of the Stoxx 600 after the Co’s directors recommended the GBP 8.00/shr takeover offer from Parker-Hannifin.

Please see here for the Daily European Equity Opening News and the Additional Equity News for the morning's European earnings/stories.

Chinese EV producer Xpeng has begun building a new plant in central China that aims to have an annual capacity of 100k vehicles. (Caixin Global)

Devon Energy (DVN), ConocoPhillips (COP) and Chevron (CVX) are reportedly among the potential companies interested in Shell's (RDSA LN) Permian Basin assets which could be worth as much as USD 10bln, according to sources. (Newswires)


DXY - A relatively sedate start to the new week and month, but the Dollar has lost some recovery momentum and is moderately softer vs high beta and cyclical counterparts amidst a general improvement in risk sentiment. Hence, the index slipped back beneath 92.000 within a 92.174-91.962 band before finding a base and awaiting the final US Markit manufacturing PMI, construction spending and ISM in particular for the survey breakdown and first jobs proxy for Friday’s NFP.

AUD/NZD/EUR/GBP - The Aussie and Kiwi have both regained some composure to pare overnight losses incurred on the back of further COVID restrictions, a Chinese manufacturing PMI miss, technical and cross-related factors. However, Aud/Usd remains heavy above 0.7350 and unlikely to trouble hefty option expiry interest at the 0.7400 strike (1.2 bn) ahead of the RBA tomorrow given expectations that the ongoing pandemic outbreaks could well force the Bank to backtrack on QE tapering plans. Meanwhile, Nzd/Usd is still rotating around the 21 DMA that comes in at 0.6979 today having failed to retain grasp of the 0.7000 handle, and the Euro is back below 1.1900 where 1.4 bn option expiries reside in wake of broadly softer than expected Eurozone manufacturing PMIs, bar Germany’s upgrade. Conversely, Cable is back over 1.3900 and Eur/Gbp is holding under 0.8550 following an unrevised final UK manufacturing PMI in advance of Thursday’s BoE.

CAD/JPY/CHF - All very narrowly divergent vs the Greenback, and the Loonie holding up well in the face of weakness in WTI crude circa 1.2470, while the Yen is meandering from 109.60-77 in the run up to Tokyo inflation data on Tuesday and the Franc is straddling 0.9055 after in line Swiss CPI, a slowdown in retail sales vs pick up in the manufacturing PMI and weekly sight deposits showing just a small rise on domestic bank balances.

SCANDI/EM - Contrasting manufacturing PMIs from Sweden and Norway, as the former dipped and latter gathered pace, but the Sek is straddling 10.2100 against the Eur with assistance from the aforementioned pick-up in overall risk appetite, while the Nok wanes within a 10.4910-10.4530 range due to a pull-back in Brent prices from Usd 75+/brl towards Usd 74.00. Conversely, the Try is buoyed by cheaper oil around 6.40000 vs the Usd and a rise in Turkey’s manufacturing PMI, while the Cny and Cnh are taking comfort from pledges of intensified policy support in H2 to bolster economic growth, which has shown signs of decelerating, according to a

Notable FX Expiries, NY Cut:

  • EUR/USD: 1.1800-15 (1.1BLN), 1.1900 (1.4BLN)
  • AUD/USD: 0.7360 (524M), 0.7400 (1.2BLN)

Brazil's Government is preparing the Constitutional Amendment Project to change the rule for the payment of precatory, which would impede the government spending cap, according to sources at Agência Estado. (Newswires)


Debt futures have settled down somewhat in terms of turnover, but not price action or movement and divergence as Bunds slip to a new 176.35 Eurex low and nearer Friday’s session base, while Gilts hold up a bit better after notching a fresh Liffe high at 129.88 (+9 ticks vs -15 ticks) in line with relatively resilient US Treasuries. However, risk sentiment in general is rather indecisive at the beginning of August with EU equities mixed and oil under renewed pressure. Ahead, a pretty busy pm agenda highlighted by the US manufacturing ISM that will provide more inflation and labour market insight via prices paid and employment components post-FOMC and pre-NFP.


WTI and Brent have commenced the week on the backfoot, with the benchmarks lower by USD 1.00/bbl on the session. Such pressure comes in spite of the generally modestly constructive risk tone in a quiet European session with final PMIs not moving the dial much; with attention more on the weeks macro themes as outlined above. In crude specifics, updates have been very sparse throughout the session and as such the complex is more focus on COVID-19 related dynamics. With the demand-side of the equation torn between the ongoing case increases in Tokyo, among other areas, but on the flip-side supported by a push from top UK Cabinet Officials for an easing of travel restrictions and more broadly as NIH’s Fauci now does not believe the US is likely to return to lockdowns. Elsewhere, attention is on the geopolitical front and specifically last week’s attack on a ship off the Oman coast on which the US Secretary of State is confident that Iran is behind this attack. Moving to metals, spot gold and silver are modestly pressured with not too much read across from a choppy USD as we stand and likely on the back of the aforementioned broader risk tone; for reference, the yellow metal still holds the USD 1800/oz mark. Separately, much of the mornings focus is on copper where BHPs Escondida, Chile facility is facing strike action after the union rejected BHPs final labour offer. As such, Government-mediated discussions will last for 5-10 days and if the status quo is maintained and there is no breakthrough then strike action will formally commence. Given the uncertainty, LME Copper is supported on the session albeit still well off the pivotal USD 10k/t mark vs the current high USD 9799/t.

Workers at BHP's (BHP LN) Escondida mine overwhelmingly rejected (99.5%) the Co's final wage offer. Mining will continue during a period of obligatory government mediation. If no deal is reached in the 5-10 day period then strike action will begin. BHP has requested mediation in an attempt to reach a deal. (Newswires) Escondida is the world's largest copper mine and accounts for almost 5% of global copper supply. BHP holds around a 58% stake in the mine.

UAE's ADNOC set September Murban crude OSP at USD 73.50/bbl (vs USD 72.34/bbl in August). (Newswires)