Mnuchin says legislation needed for capital gains tax cut

That’s a change in stance and it’s weighing on the dollar

That's a change in stance and it's weighing on the dollar
The Trump administration for years has been floating the idea of indexing capital gains to inflation. That picked up again this week and was briefly a tailwind for stock markets to start the week.
Mnuchin’s comment here evidently confirms that the White House has decided that unilaterally indexing capital gains isn’t possible and says it will take legislation. That’s not going to happen in the current congress and is very unlikely so long as Democrats control the House.
So the short story here is that it’s dead.
The US dollar is falling on this headline.

OPEC lowers global oil demand forecast

The latest forecasts in OPEC’s monthly report

The latest forecasts in OPEC's monthly report
OPEC now sees 2020 world oil demand down by 9.06 mbpd compared to a drop of 8.95 mbpd in the previous monthly report.
They say the second-half outlook points to the need for continued efforts to support a rebalancing in the market through OPEC+ adjustments.
With that, they cut their forecast for OPEC crude by 400K bpd this year and 500K bpd in 2021. Part of that is due to higher non-OPEC supply.
Crude is unmoved by the news and up 59-cents to $42.20/barrel on the day.
The main worry for oil is that OPEC starts to ramp up production again. Non-OPEC producers are filling in gaps from the huge cuts and that’s not going to fly forever.

Russia says first batch of coronavirus vaccine expected within two weeks

The vaccine clinical test results will also be published in that time frame

This according to Russian health minister, Mikhail Murashko. On the headline, I reckon he is referring to mass production. It’ll be interesting to see how this pans out over the coming months and how it will impact other countries to produce “breakthroughs”.

 

Meanwhile, the country itself just reported another 5,102 new virus cases and that sees the total confirmed cases exceeding 900,000 (~180,000 active cases). Another 129 deaths were also reported, bringing the tally on that front to 15,260 persons.

China reaffirms that US’ TikTok ban has nothing to do with national security

Comments by the Chinese foreign ministry

US China
  • Beijing has been ‘consistent’ on trade deal
  • Declines to comment on further trade specifics
  • Says position on US sanctions is clear and consistent
  • Says US sanctions are irrational, groundless
  • Reiterates opposition towards ties between US and Taiwan
There’s nothing really new here as this has been China’s stance all along but it does reaffirm expectations that both sides have a lot more than just the Phase One trade deal to discuss if they were to meet later this week.

UK’s Sunak: There will be many more job losses in the coming months

Comments by UK finance minister, Rishi Sunak, on the latest GDP report

  • UK economy is now in ‘hard times’, the figures today confirm that
  • Hundreds of thousands of people have already lost their jobs
  • Sadly, many more will in the coming months
The June monthly report was better-than-expected but it mainly just reaffirms sentiment that the economy is picking up further amid the easing of lockdown restrictions.
But as mentioned before, the government furlough program is still masking a lot of the underlying weakness in the economy for the time being.
As such, the outlook – especially in the latter stages of Q3 and Q4 – remains uncertain as there may be a bigger hit to the labour market, in turn the economy, moving forward.
Cable is now up to 1.3050 from around 1.3030 prior to the release of the figures but I don’t see this as being a material game changer for the pound. The dollar side of the equation still holds all the cards in trading at the moment.

Nikkei 225 closes higher by 0.41% at 22,843.96

A mixed session for Asian equities but mostly lower

Nikkei 12-08
The decline in tech stocks in the US overnight is weighing on sentiment today, though Japanese exporter stocks are benefiting from a weaker yen. Chinese equities are the ones leading losses today, with the Shanghai Composite seen down 1.7% currently.

 

The rout in precious metals is also part of the reason weighing on the risk mood with stimulus talks in Congress facing yet another stalemate.
In the currencies space, the dollar is keeping firmer as such with EUR/USD down to 1.1720 and AUD/USD weighed lower at 0.7110-20 levels at the moment.

HK press – Chinese military told not to fire first shot in stand-off with US forces

A report overnight in the South China Morning Post that China’s military forces have been ordered not to fire first in confrontations with the US ….   is good news … I guess:

Says the Post:
  • Sources say that troops have been given orders not to escalate situation as both sides step up their activities in the disputed waters
  • Beijing said to be keen to cool the ‘tense and dangerous situation’ and agreed to a conversation between defence ministers after initially snubbing the request
Link to the Post is here for more, may be gated
Let’s hope a mistake is not made.
A report overnight in the South China Morning Post that China's military forces have been ordered not to fire first in confrontations with the US ….   is good news … I guess:

Trump says he agreed with Moderna for 100m doses of potential coronavirus vaccine

A dual Trump pump … for the stock market and his electoral chances

Moderna (MRNA) are working hard to develop a cov1 COVID-19 vaccine. Trump jumping onto the bandwagon. The government deal with Moderna is worth around USD1.5bn to the firm.