I. Yesterday's News
International News
1. The United Nations Security Council unanimously stepped up sanctions against North Korea on Monday over the country's sixth and most powerful nuclear test on Sept. 3, imposing a ban on the country's textile exports and capping imports of crude oil. It was the ninth sanctions resolution unanimously adopted by the 15-member council since 2006 over North Korea's ballistic missile and nuclear programs. The United States watered down an initial tougher draft resolution to win the support of Pyongyang ally China and Russia. Textiles were North Korea's second-biggest export after coal and other minerals in 2016, totaling $752 million, according to data from the Korea Trade-Investment Promotion Agency. Nearly 80 percent of the textile exports went to China. The resolution imposes a ban on condensates and natural gas liquids, a cap of 2 million barrels a year on refined petroleum products, and a cap on crude oil exports to North Korea at current levels.

2. Six European Central Bank policymakers prepared the ground on Monday for a gradual roll-back of the ECB's aggressive monetary stimulus, in light of stronger economic growth in the euro zone. After 2-1/2 years of unprecedented money printing, the ECB is preparing to dial back its 2.3 trillion euros bond-buying programme. ECB board directors Sabine Lautenschlaeger, Yves Mersch and Benoit Coeure, and the central bank governors of the Netherlands, Austria and Estonia all discussed the prospect on Monday of a gradual reduction in ECB support. "We have to be prepared to take tough decisions in good time. We also have to adapt our communications accordingly," said Lautenschlaeger. Coeure, however, cautioned that ECB's policy was set to remain easy for a long time and played down a drag on inflation from a recent rally in the euro. Seeking to downplay these fears, Mersch, Estonian governor Ardo Hansson and his Austrian colleague Ewald Nowotny said any reduction would be gradual.

3. The OPEC-led supply cut deal is helping to rebalance the global oil market, OPEC Secretary-General Mohammad Barkindo said on Monday, and higher demand in the rest of this year should lead to further reductions in oil inventories. "It is clear the rebalancing process is under way, supported by the high conformity levels of OPEC member countries and participating non OPEC countries," he said.

4. British lawmakers voted on Tuesday against an opposition Labour Party attempt to block the progress of legislation which will sever Britain's political, financial and legal ties with the European Union. Labour had called on the government to make concessions on the EU withdrawal bill, saying several clauses in the legislation amount to a "power grab" by government. After more than eight hours of debate on Monday, lawmakers voted by 318 to 296 against Labour's amendment, which would have stopped the bill from moving to the next phase of the parliamentary process.

Domestic News
5. China's inflation data came out better than expected. Consumer inflation quickened more than forecast to a seven-month high in August, and producer price inflation also accelerated more than expected to a four-month high, fueled by strong gains in food and raw materials. But upstream price gains had not trickled through to core inflation. Analysts said price gains remain modest and there is little pressure on the central bank to tighten policy further.

6. China's public budget revenue increased by 7.2 percent annually to CNY1.0652 trillion in August and public budget expenditure rose 2.9 percent to CNY1.4647 trillion, the Ministry of Finance said. It is the smallest rise since October last year, mainly because some spending was front-loaded early in the year.

7. The major objective and core of China's reforms on state-owned enterprises (SOEs) is to make the SOEs bigger and stronger, instead of removing them from economy or undermining their dominate and leading position, the official People's Daily said.

8. China's State Council said, China plans to foster a modern system for the grain industry and raise the ratio of high-quality grain by around 10 percentage points by 2020. China is also eyeing an annual average expansion of around 7 percent in the added value of the industry. By 2020, the number of grain companies with yearly business revenue of more than 10 billion yuan ($1.5 billion) should exceed 50, the guideline said.

II. Market Overview
FX
1. Global Market
The dollar rose on Monday, spurred by relief that Hurricane Irma weakened to a tropical storm and North Korea did not conduct a nuclear test over the weekend as feared. The dollar index, which tracks the greenback against a basket of six major currencies, was 0.66 percent higher at 91.957. The dollar was up 1.5 percent against the Japanese yen, on pace for its best daily percentage gain in nearly eight months. The euro was down 0.68 percent at $1.1951. Britain's pound rose to a three-and-a-half-week high against the euro, helped by speculation that the Bank of England may sound more hawkish on interest rates this week in defence of the currency. The Canadian dollar edged higher against its U.S. counterpart, supported by further gains in Canada's bond yields.

2. Home Market
China's yuan pulled back almost 500 pips to around 6.51 per dollar in the morning session on Monday, while the central bank raised its official yuan midpoint above 6.50. Yuan is expected to linger around $6.50 with limited gains in the near term after regulator's moves to cool down expectations over forex settlement.

Precious Metals
Gold prices fell more than 1 percent on Monday from the previous session's 13-month high as relief that North Korea did not conduct a missile test over the weekend helped to lift global stocks, the U.S. dollar and bond yields. Spot gold was down 1.4 percent at $1,326.92 an ounce. U.S. gold futures for December delivery settled down 1.2 percent at $1,335.70. In other precious metals, silver fell 0.8 percent to $17.8 an ounce, while platinum was down 1.5 percent at $990.

Commodities
1.Crude Oil
Oil prices rose on Monday as key U.S. refineries began restarts following Hurricane Harvey, which may help revive crude oil processing, while fuel prices fell as Hurricane Irma is likely to clip demand for gasoline and diesel. Brent crude oil futures settled up 6 cents, or 0.1 percent, to $53.84 a barrel while U.S. West Texas Intermediate crude rose by 59 cents, or 1.2 percent, to $48.07. Both U.S. product futures ended lower - gasoline dropped 0.7 percent and heating oil fell 1.4 percent.

2.Base Metals
Zinc and other base metal prices rebounded on Monday as investors and consumers took advantage of a sell-off on Friday to buy at lower levels, with strong economic data from top metals consumer China also supporting the market. Benchmark zinc closed on the London Metal Exchange 1.7 percent higher at $3,083 a tonne. LME three-month copper rose 0.8 percent to end at $6,748 a tonne. LME lead ended 0.5 percent firmer at $2,277 a tonne. Nickel bounced 1.5 percent to finish at $11,750. Aluminium rose 1.1 percent to $2,122.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasury yields rose on Monday after a quiet weekend unmarred by expectations of negative news about North Korea that had pushed risk appetite higher, and a lackluster three-year note auction also pressured bond prices. U.S. long-dated and short-end yields, which move inversely to prices, climbed to one-week peaks. In late trading, benchmark 10-year Treasury yields rose to 2.123 percent, from 2.061 percent late on Friday. Ten-year yields earlier rose to 2.134 percent, a one-week high. U.S. 30-year bond yields rose to 2.736 percent.

2. Chinese bonds
China's cash bonds were traded in a tight range in interbank bond market on Monday, while T-bonds futures edged down. Higher-than-expected inflation data was muted in the market. Caution mounted after recent drop in bond yields. Investors shall closely watch other incoming macro financial data.

Stock Market
1. U.S. Equities
The S&P 500 surged over 1 percent to a record high close on Monday as tropical storm Irma caused less damage than expected in Florida, and after North Korea did not test-fire missiles over the weekend, which some had feared. The Dow Jones Industrial Average rose 259.58 points or 1.19 percent to end at 22,057.37 points in its largest one-day gain since February. The S&P 500 gained 26.68 points or 1.08 percent to 2,488.11 and the Nasdaq Composite added 72.072 points or 1.13 percent to 6,432.26. The CBOE volatility index, a widely-followed measure of market anxiety, fell 1.36 points to 10.76.

2. Hong Kong Equities
Hong Kong stocks rose the most in more than a week on Monday, encouraged by another case of Chinese state enterprise reforms and Beijing's loosening of controls to curb outflows that underlined rising confidence over the yuan's value. The improved mood was in line with generally upbeat Asian markets, as investors breathed a sigh of relief, after North Korea celebrated its national day on Sunday with a concert and performance, instead of firing another missile. The Hang Seng index rose 1.0 percent, to 27,955.13, while the China Enterprises Index gained 0.6 percent, to 11,221.13 points.

3. China Equities
China's stocks edged up slightly as the pullback in insurance, cyclical sectors was offset by strong new-energy autos. The Shanghai Composite Index settled at 3,376.42, up 11.18 points or 0.33 percent. The trading volume of Shanghai A shares rose to 256.4 billion yuan from 234.3 billion yuan.