Newsquawk Daily Asia-Pac Opening News

CORONAVIRUS UPDATE

US CDC advisers unanimously voted in favour of recommending the Pfizer (PFE) and BioNTech (BNTX) COVID-19 vaccine in individuals 16 and over. (Newswires)

US FDA stated Moderna (MRNA) COVID-19 vaccine fact sheet has been updated in which post-marketing data demonstrated higher risks of myocarditis and pericarditis, particularly within seven days after the second dose, while it has observed risk is greater among males under 40 years of age than among females and older males. (Newswires)

EU countries agreed to remove the US from safe travel list, likely leading to greater curbs on US visitors. It was later reported that the US state department raised the travel alert for Germany and Canada to level 3. (Newswires)

Indonesia’s President said COVID-19 restrictions are to be adjusted from August 31st to September 6th and that more areas are to be eased. (Newswires)

ASIA-PAC

China is to enhance anti-monopoly oversight and is to step up management of state reserves including improving the adjustment mechanism of strategic reserves. (CCTV)

China's FX regulators conducted a "rare" survey of banks and companies to probe their risk management processes and ability to handle volatility in the Yuan, according to sources. Furthermore, the survey was similar to one in 2014 and 2016 where banks were asked to provide details about how they managed companies' expectations and how they had helped corporate clients hedge their FX exposure. (Newswires)

China's market regulator said it will further regulate the sharing consumption sector and is investigating Meituan's (3690 HK) acquisition of Mobike, while China's Banking and Insurance Regulator is probing Ping An Insurance's (2318 HK) property market investments, according to sources. (Newswires)

China unveiled new restrictions on young people playing online games whereby gaming names are to only allow minors one hour of play on Friday's, weekends and holidays. Furthermore, it will conduct inspections of game firms to promote anti-addiction work. (Xinhua)

Japan's ruling party's (LDP) influential member Nikai has called for bold spending on emergency budget reserves as part of a stimulus package as Japan faces difficulty in reviving the economy given the dire fiscal situation. It was also reported that the Japanese government is said to be considering holding a general election on October 17th. (Newswires/Kyodo)

UK/EU

ECB's Villeroy said that France and the EZ should be back to pre-COVID levels in early 2022 or maybe before this, while he added there is no risk of higher inflation at this stage. Villeroy also stated the PEPP will remain until at least March 2022 and that it is not urgent to decide on it at the September gathering. (Newswires)

Insa poll for Bild showed Chancellor Merkel's CDU/CSU bloc at 20%, SPD at 25% and Greens at 16.5%. (Newswires)

Dutch Cabinet is to halt COVID-19 support measures from October 1st. (Newswires)

• EU Economic Sentiment (Aug) 117.5 vs. Exp. 117.9 (Prev. 119.0)


• EU Industrial Sentiment (Aug) 13.7 vs. Exp. 13.4 (Prev. 14.6, Rev. 14.5)


• EU Services Sentiment (Aug) 16.8 vs. Exp. 18.8 (Prev. 19.3, Rev. 18.9)


• EU Consumer Confidence (Aug) -5.3 vs. Exp. -5.3 (Prev. -5.3, Rev. -4.4)


• German CPI Prelim MM * (Aug) 0.0% vs. Exp. 0.1% (Prev. 0.9%)


• German CPI Prelim YY * (Aug) 3.9% vs. Exp. 3.9% (Prev. 3.8%)

COMMODITIES 

BSEE Gulf of Mexico production shut-in 94.60% or 1.722mln BOPD (prev. 95.65% or 1.740mln BOPD on Sunday). There were also comments from the White House that it has not seen any issues with fuel shortages from Ida, as of yet. Furthermore, NHC stated that Hurricane Ida weakened to a Tropical Storm and is expected to weaken to a Tropical Depression on Monday evening, while HHS Secretary Becerra declared public health emergencies for Louisiana and Mississippi due to Ida. (Newswires)

Colonial Pipeline expects to resume service once the company assesses the impact from hurricane Ida and stated that fuel supply from the pipeline is available throughout southeast from numerous terminals located along supply route, while it later noted that it expects to return lines 1 and 2 to service Monday evening. There were also comments from BP (BP/ LN) that it will not restart offshore operations until pipeline companies confirm systems are working properly. (Newswires)

Exxon Mobil (XOM) said it began post-hurricane assessment after Ida to determine if offshore and onshore facilities were affected, while it noted that the Baytown and Beaumont refineries in Texas are operating normally. Furthermore, it said the Baton Rouge refinery and chemical complex did not sustain any significant damage but it shut down units to stabilize operations and it is expected to return to normal ops after access to feedstocks and third-party utilities are obtained. (Newswires)

OPEC+ is likely to roll over its output policies this week, with a planned 400k BPD hike from September, according to sources. Furthermore, OPEC+ sources said the recent rise in oil prices was temporary and deemed USD 70/bbl oil prices as "okay". (Newswires)

China's aluminium smelters vowed to ensure supply and avoid price surges. (Newswires)

GEOPOLITICAL

US Central Command Commander General McKenzie said US military has completed its withdrawal of forces from Afghanistan which marks an end to the nearly 20-year mission in Afghanistan and that the last American left Kabul about 12 hours ago, while he believes there could be in the ‘very low hundreds’ of US civilian citizens still in Afghanistan. (Newswires)

US senior administration official said the report that North Korea appears to have restarted nuclear reactor underscores "urgent need for dialogue and diplomacy", while the US is closely coordinating with allies and partners on North Korea developments. (Newswires)

US

Fed's Mester (2022 voter) stated inflation criteria for interest rate hike has not been met yet and the US labour market is not yet at maximum employment, while she noted upside risks to inflation and that the Fed must be very attuned to that. Mester said she expects some of the high inflation readings noticed this year to modify next year as supply chain challenges are settled but some may last longer and is focused on whether price raises are being set in as higher inflation expectations. Mester believes growth will remain strong, but the large risk is how the economy is going to respond to the COVID Delta variant and noted the US economy is 'basically there' in terms of substantial further progress required in employment and inflation to taper asset purchases. Furthermore, she reiterated the Fed should begin tapering purchases this year and complete the purchases by the middle of next year, while monetary policy will remain accommodative after the Fed begins tapering asset purchases. (Newswires)

More than 100 House Republicans signed a letter in which they vowed not to vote to increase the debt ceiling. (Fox)

• US Pending Sales Change MM (Jul) -1.8% vs. Exp. 0.4% (Prev. -1.9%, Rev. -2.0%)

MARKET RECAP

Stocks were mixed on Monday as tech/growth names continued to new highs, with the NDX up over 1% as Treasuries were buoyed. Meanwhile, cyclicals and value suffered, seeing the Russell 2k trade lower by around 0.5%. Given the Bank Holiday in the UK and quiet overnight trade, most of the action occurred in the US session, although there were little fresh catalysts aside from a disappointing US Pending Home Sales print. The impulse for tech strength appeared to come from rates, where the belly of the Treasury curve continued to lead the rally in continuation from Powell's walk back on rate hike expectations at Jackson Hole, while month-end duration-extension looms. Affirm (AFRM) announced a partnership with Amazon (AMZN) that its flexible payment solution will soon be available to Amazon customers at checkout. Following a report in AppleInsider which noted Apple (AAPL) iPhone13 model is expected to support low-earth-orbit satellite communications, Globalstar (GSAT) saw significant upside amid the possibility it creates many potential scenarios for Apple's business model to cooperate with Globalstar. It was a tough day for exchanges in general, with names such as Robinhood (HOOD), Charles Schwab (SCHW) and Interactive Brokers Group (IBKR) all seeing downside. It began with reports PayPal (PYPL) is exploring the launch of a stock trading feature for 2022 and has hired a brokerage industry veteran to lead “Invest at PayPal”, via CNBC. Moreover, the downside for these Cos. was further exasperated by SEC Chairman Gensler in Barron's noting a banning of payment for order flow is "on the table". Airlines and cruises were other industries badly hit with disruptions in the Gulf of Mexico from Ida adding to the broader pressure in cyclicals; EU confirming the removal of the US from its safe-travel country list was an additional factor. SPX +0.43% at 4,528, NDX +1.12% at 15,605, DJIA -0.16% at 35,399, RUT -0.41% at 2,268.

Treasuries were bid on Monday as the belly continued to lead the rally in continuation from Powell's walk back on rate hike expectations at Jackson Hole, while month-end looms. By settlement, 2s -1.2bps at 0.205%, 3s -1.6bps at 0.404%, 5s -2.6bps at 0.774%, 7s -2.7bps at 1.072%, 10s -2.5bps at 1.287%, 20s -2.1bps at 1.826%, 30s -1.6bps at 1.903%; TYZ1 volumes were lower than recent sessions amid declining roll activity. 5yr TIPS -9.1bps at -1.821%, 10yr TIPS +0.0bps at -1.084%, 30yr TIPS +1.1bps at -0.341%. EFFR fell to 8bps from 9bps ahead of month-end and abundant liquidity in money markets. SOFR remains unchanged at 5bps. The entry of US participants saw activity pick-up on Monday, with the belly of the curve extending its gains from Friday, with analysts citing the well-communicated divorcement of rate hikes from tapering in Powell's Jackson Hole speech. Traders have lifted the offer on the belly of the curve the most as rate hike probabilities get pared back. A surprise decline in July Pending Home Sales also added fuel to the bid, which carried through into the European close – with T-Notes printing highs of 133-18 – then trading sideways into the futures settlement. One desk observes some bullish activity in the options space too, where December 136 calls, which target around 1% in the 10yr yield, currently have about 38K open interest and are leading all calls for that expiration, with 14K traded Friday and a similar amount traded Monday. Meanwhile, it's worth highlighting also that there could be some front-running of expected month-end buying, where 0.12yr of duration extension is expected. Traders are now looking to this week's data highlight on Friday, the US jobs report, although Consumer Confidence and ISM Mfg. on Tuesday and Wednesday, respectively, are also looming in lack of Treasury supply this week. T-note (Z1) futures settled 7 ticks higher at 133-17.

30 Aug 2021 - 22:15- Asian Research- Source: Newswires