MNI US OPEN

US EXECUTIVE SUMMARY:

• CHINA TAKES OVER US CONSULATE PREMISES IN CHENGDU FOLLOWING ORDERED CLOSURE
• RISKS OF FURTHER TRAVEL BANS HIT EUROPEAN TOURISM INDUSTRY
• UK: POTENTIAL TAXES ON OVER 40'S TO END SOCIAL CARE CRISIS

NEWS:

US-CHINA (REUTERS): China took over the premises of the U.S. consulate in
the southwestern city of Chengdu on Monday, after ordering the facility to be
vacated in retaliation for China's ouster last week from its consulate in Houston,
Texas. The seizure capped a dramatic escalation in tensions between the world's
two biggest economies that began when employees at China's Houston consulate
were seen burning documents in a courtyard last Tuesday, hours before Beijing
announced that it had been ordered to leave the facility. The U.S. consulate in
Chengdu, in Sichuan province, was closed as of 10 a.m (0200) on Monday, and
Chinese authorities had entered the building from the front door, China's Ministry
of Foreign Affairs said in a statement.

EUROPE (FT): Shares in Europe's biggest travel companies tumbled on Monday as
newly imposed travel curbs following a string of local spikes in coronavirus
infections raised fears over the pandemic's lasting impact on the industry. Low-cost
carrier easyJet led the declines among major airlines with a fall of more than 13
per cent, while British Airways owner IAG lost 9 per cent. Tour operator Tui slid
more than 15 per cent. Ryanair slipped 8 per cent, having posted a major loss
earlier on Monday and warned that a new wave of infection in the autumn was

"our biggest fear right now." Spain's tourism sector is particularly feeling the brunt
of the latest caution, prompting an angry response from Madrid. "Spain is a safe
country," said foreign minister Arancha González Laya.

UK (GUARDIAN): Everyone over 40 would start contributing towards the cost of
care in later life under radical plans being studied by ministers to finally end the
crisis in social care, the Guardian can reveal. Under the plan over-40s would have
to pay more in tax or national insurance, or be compelled to insure themselves
against hefty bills for care when they are older. The money raised would then be
used to pay for the help that frail elderly people need with washing, dressing and
other activities if still at home, or to cover their stay in a care home. The plans are
being examined by Boris Johnson's new health and social care taskforce and the
Department of Health and Social Care (DHSC). They are gaining support as the
government's answer to the politically perilous question of who should pay for
social care.

DATA:

• JUL IFO BUSINESS CLIMATE INDEX 90.5; JUN 86.3
• JUL IFO CURRENT CONDITIONS 84.5; JUN 81.3
• JUL IFO EXPECTATIONS 97.0; JUN 91.6

• EZ JUN LOANS TO HOUSEHOLDS 3.0% Y/Y; MAY 3.0% Y/Y
• EZ JUN LOANS TO NON-FINANCIAL CORPS 7.1% Y/Y; MAY 7.3% Y/Y

FIXED INCOME: A mixed morning for markets with core fixed income generally a bit higher
and European peripheral spreads a bit wider but equities are more mixed
with European equities generally a little lower and US equity futures generally a little higher.

• Spain has seen a rise in the number of Covid cases over the weekend
  but there has been no real divergence between Spanish spreads and
  other European peripheral spreads this morning (despite Spanish
  equities underperforming). Covid case numbers will continue to be
  watched globally.
• This week will be dominated by Phase 4 of the US fiscal response
  with negotiations likely to begin this week while Wednesday's FOMC
  meeting will be closely watched for any changes to forward guidance.
• TY1 futures are up 0-4 today at 139-22+ with Bund futures up 0.32 at
  176.41 and Gilt futures up 0.24 at 138.14.

FOREX: The USD has started the week poorly in what's likely to be a frenetic and

busy week. Broad-based USD weakness has fed into higher precious metals
prices, with spot gold piercing a new alltime high at $1944.71 to add to
the already technically overbought outlook. MNI Tech now sees next
resistance at Fibonacci projection levels of $1967.00.

The tit-for-tat escalation of US/China consulate closures remains
the key driver for risk, boosting haven currencies and working against
the USD. This has kept haven FX bid, resulting in JPY outperforming
(although this hasn't extended to CHF at the midpoint of the European morning.

Escalating COVID-case counts in Spain have kept a lid on European
equities, promping the IBEX-35 to sink over 1.5%.

It's a frenetic week for earnings, with close to 50% of the S&P500
by market cap due to report. The busiest session is Thursday, with
Apple, Amazon and Alphabet all due. Prelim US durable goods for June
are the data highlight.

STOCKS: Asian stocks traded mixed with Japan's Nikkei 225 down 35.76 pts or -0.16% at

22715.85 and the TOPIX up 3.73 pts or +0.24% at 1576.69. China's Shanhai
Composite closed up 8.459 pts or +0.26% at 3205.227 and the Hang Seng ended

102.07 pts lower or -0.41% at 24603.26.

European stocks are similarly mixed with the German Dax up 11.57 pts or +0.09%

at 12883.79, FTSE down 12.71 pts or -0.21% at 6099.26, CAC 4 down 17.58 pts

or -0.35%.

US stocks push higher with the Dow Jones up 105 pts or +0.4% at 26399, S&P 500

up 13.75 pts or +0.43% at 3215, Nasdaq up 63.75 pts or +0.61%.

COMMODITIES:

Commodities trade mixed.

• WTI Crude down $0.1 or -0.24% at $41.04
• Natural Gas down $0.04 or -2.05% at $1.764
• Gold Spot up $38.12 or +2% at $1938.49
• Copper Futures up $0.5 or +0.17% at $289.15
• Silver Spot up $1.32 or +5.82% at $24.0566
• Platinum up $21.23 or +2.31% at $934.8

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