Subdued trading and lack of fresh news sees most markets tread water

General trend

- Australia's ASX outperformed +0.8% and hit another fresh all-time-high in subdued Asian trading.

- Trade talk developments today out of Asia again only saw comments around the margin, such as Korea asking for the US tariff cuts on autos to be as soon as possible. Japan also continued to wish for something in writing out of the US in order to ‘implement’ the US-Japan trade deal.

- Japanese workers’ earnings are going up, but still at less than the rate of inflation. Labor cash along with real cash earnings (which fell for the 6th straight month) and full-time pay were below estimates across the board for June.

- New Zealand Q2 jobless rate ticked up further, but was below estimates. Bond market little changed with NZ 2-year yields+1.3bps.

- Japanese LDP Politician Kono Taro added his voice to the various calling for higher rates to strengthen the Yen [Kono made similar comments in Jul 2024]. JPY/USD did tick higher post-Kono’s comments. [** However, though not expected, should enough LDP members vote at Friday’s LDP plenary meeting on Aug 8th to depose PM Ishiba and if Sanae Takaichi should take over as LDP leader, she is a known dove, previously keen to pause hikes, which would likely soften the Yen and steepen the yield curve].

- US June trade balance already shows a significant adjustment to America’s chronic trade deficits with its major trading partners. In Asia; China: -$9.5B v -$14.0B prior and Japan: -$5.2B v -$5.8B prior. The EU saw a huge drop to -$9.9B v -$22.5B prior. Falls also for Canada: -$1.3B v -$2.8B prior and Mexico: -$16.8B v -$17.1B prior. Overall, US monthly trade deficit of ~$60B less than half of what it was at the beginning of the year in January ~$130B.

- Pres Trump to make 'an announcement' on Wed at 4:30 PM ET. [Note: Could perhaps be Fed replacement for Gov Kugler, or tariff news related to India which is due, otherwise pharmaceuticals, chips or potentially Russian sanctions (though implied “10-day” deadline last week for Russia not until Aug 8th].

- US equity FUTs +0.1% to +0.2% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Thu Aug 7th AU Jun Trade Balance, PH Q2 GDP, CN July Trade Balance (Thu eve UK BOE rate decision).

- Fri Aug 8th JP Jun Household Spending, BOJ Summary of Opinions.

- Sat Aug 9th CN July CPI/PPI.

Holidays in Asia this week

- N/A.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.2% at 8,786.

- New Zealand Q2 Unemployment Rate: 5.2% v 5.3%e.

- New Zealand Fin Min Willis: Expects unemployment to fall later in 2025 (comments following NZ Q2 jobs reports).

- Fonterra Global Dairy Trade Auction Dairy Trade price index: +0.7% v +1.1% prior [overnight update].

- New Zealand July Cotality Home Value M/M: -0.2% v -0.1% prior [overnight update].

China/Hong Kong

- Hang Seng opens -0.2% at 24,864; Shanghai Composite opens -0.1% at 3,615.

- US Govt charges Chinese nationals with illegally exporting Nvidia chips - press [overnight update].

- China PBoC: To attract long-term capital for tech push; enhance financial support for industrialization [overnight update].

- China PBOC sets Yuan reference rate: 7.1409 v 7.1366 prior.

- China PBOC Open Market Operation (OMO): Injects CNY139B in 7-day reverse repos; Net drains CNY171B v drains CNY289B prior.

Japan

- Nikkei 225 opens -0.3% at 40,454.

- JAPAN JUN LABOR CASH EARNINGS Y/Y: 2.5% V 3.1%E.

- Japan Trade Negotiator Akazawa: It took 54 days for the US-UK trade deal to be implemented.

- Japan PM Ishiba: Affirms it is important for the US trade deal to be implemented.

- Japan LDP Politician Kono Taro: Necessary to raise rates to strengthen the Yen [made similar comments in Jul 2024].

- Japan Chief Cabinet Sec Hayashi: Agreed with the US that Japan pharma will not be at 'disadvantage'.

- Bank of Japan (BOJ) announcement related to outright bond buying operations: <1 Year; 1-3 Years; 3-5 Years; 10-25 Years; (Purchase amounts as planned for August).

- Japan Cabinet Office said to cut FY25 GDP growth forecast – Nikkei [overnight update].

- Japan PM Ishiba: Will shift Japan towards increasing rice production [overnight update].

Korea

- Kospi opens -0.5% at 3,182.

- Bank of Korea (BOK) Gov Rhee will not attend Jackson Hole in Aug, another board member will attend in place - financial press.

- South Korea Industry Min Kim: Needs further talks with US on timing of US tariff cuts on autos - financial press.

- South Korea Presidential Office: 'Monitoring' equity market moves [asked about capital gains tax].

- South Korea to provide temporary visa waiver for China group tourists from Sept 29th - Yonhap.

Other Asia

- Vietnam July Trade Balance: $2.3B v $2.5Be.

- Vietnam July Industrial Production Y/Y: 8.5% v 10.5%e.

- Vietnam July CPI Y/Y: 3.2% v 3.4%e.

- Philippines President Marcos: Confirms suspension of rice imports, effective for 60 days from Sept 1st.

- Philippines Central Bank (BSP) Gov Remolona: Will not have to follow Fed rate move in Sept [overnight update].

North America

- (US) Trump to make 'an announcement' on Wed at 4:30 PM ET - financial press.

- (CA) Canada Government: To provide C$700M in loan guarantees to the lumber industry; to also invest C$500M in lumber industry production and market diversification.

- (US) Pres Trump: Labor statistics are antiquated and very political; Mulls 4 candidates for Fed position; Taking Bessent off the list; Decision to come soon and considering naming next Fed Chair immediately to fill Kugler vacancy - CNBC.

- (US) Trump: EU will “pay tariffs of 35%” if the bloc does not make $600B worth of investments in the US; Will raise tariffs on India over next 24 hours; Putting small tariff on pharma initially, then will go up to 150% then 250% eventually; Chip tariffs plans to be announced in next week or so.

- (US) JUN TRADE BALANCE: -$60.2B V -$61.0BE.

- (CA) CANADA JUN INT'L MERCHANDISE TRADE (CAD): -5.9B V -6.3BE.

- (BR) Brazil July Services PMI: 46.3 v 49.3 prior (4th month of contraction).

- (US) July preliminary NA Class 8 Net Orders 12.7K units, +42% m/m, -7% y/y - FTRintel.com.

- (US) JULY FINAL S&P SERVICES PMI: 55.7 V 55.1E (confirms 30th month of expansion).

- (US) JULY ISM SERVICES INDEX: 50.1 V 51.5E.

- (BR) Brazil Fin Min Haddad: Only about 4% of Brazil exports will be affected by US tariffs.

- (US) TREASURY'S $58B 3-YEAR NOTE AUCTION RESULTS: DRAWS 3.669% V 3.891% PRIOR; BTC 2.53 V 2.51 PRIOR AND 2.60 OVER THE LAST 8 AUCTIONS.

- (US) TREASURY'S $58B 3-YEAR NOTE AUCTION RESULTS: DRAWS 3.669% V 3.891% PRIOR; BTC 2.53 V 2.51 PRIOR AND 2.60 OVER THE LAST 8 AUCTIONS.

- (US) FCC to begin review of business data services rules with a focus on eliminating ex-ante price controls and tariff obligations.

- White House trade adviser Navarro: China rare earths exposed vulnerabilities; Copper tariffs are great for companies like Revere Copper.

Europe

- ECB's Holzmann (outgoing member; hawk/dissenter, Austria): Reiterates no reason to cut rates again - financial press.

- (IE) Ireland July PMI Services: 50.9 v 51.5 prior (52nd month of expansion).

- (UK) NIESR [think tank]: Expects BOE to cut the key rate on Thursday, then once more in 2025.

- (RU) Reportedly Russia Pres Putin doubts potency of Trump's ultimatum to end the war; Putin's goal is to fully capture the Ukrainian regions of Donetsk, Luhansk, Zaporizhzhia and Kherson, which Russia has claimed as its own, and then to talk about a peace agreement - press.

- (CH) Switzerland Govt: Aim is to present US with more attractive offer to reduce tariff level.

- (UR) Ukraine Pres Zelenskiy: Recently discussed Russia sanctions by phone with US Pres Trump.

- (UR) Russia said to consider offering a Ukraine air truce as a concession to Trump in effort to prevent secondary tariffs being implemented on Russian energy customers - press [US envoy Witkoff to visit Moscow this week ahead of Trump's Aug 8th deadline for Russian peace proposal].

Levels as of 01:20 ET

- Nikkei 225 +0.4%, ASX 200 +0.8%, Hang Seng flat; Shanghai Composite +0.2%; Kospi -0.5%.

- Equity S&P500 Futures +0.2%; Nasdaq100 +0.1%; DAX +0.5%; FTSE100 +0.3%.

- EUR 1.1528-1.1588; JPY 147.31-147.75; AUD 0.6466-0.6495; NZD 0.5891-5927.

- Gold -0.2% at $3,426/oz; BTC -0.5% at $113.970; Crude Oil +0.6% at $65.58/bbl; Copper +0.2% at $4.3898/lb.