• Asia-Pac indices rose across the board following the constructive pick up from Wall St where all major indices surged and the DJIA posted gains of almost 1200 points 
• US House voted 415-2 to pass USD 8.3bln coronavirus bill as expected, which now goes to the Senate and US President Trump has stated he will sign the bill 
• Fed’s Bullard seemingly leaned away from an immediate further reduction in rates as he suggested that a barrier to cutting again this month is that action has just been taken 
• OPEC+ Ministerial Panel ended with no agreements as Russia was still reluctant for deeper production cuts according to a source 
• Bernie Sanders and Elizabeth Warren are reportedly in discussions of cooperating if the latter exits the presidential race 
• Looking ahead, highlights include US Initial Jobless Claims & Factory Orders, OPEC Meeting, Fed’s Williams & Kaplan, BoE’s Carney & Haldane, BoC’s Poloz. Supply from Spain, France, UK. Earnings from Continental, Hugo Boss, Henkel, Merck

CORONAVIRUS UPDATE 

Mainland China reported 139 additional cases of coronavirus and 31 additional deaths on March 4th vs. Prev. 119 additional cases and 38 deaths on March 3rd, with the total number of cases in mainland China now at 80,409 and death toll at 3,012. (Newswires) Reports noted that a 36-year old man thought to have recovered from coronavirus, died from respiratory failure in Wuhan 5 days after being discharged from hospital. (SCMP)

South Korea confirmed 438 additional coronavirus cases and 3 more deaths to take total cases to 5,766 and death toll to 35, while Italy’s confirmed coronavirus cases rose to 3089 (Prev. 2502) and deaths rose to 107 (Prev. 79). (Newswires)

US Vice President Pence said there are over 100 coronavirus cases in US and noted one additional death yesterday. In related news, the total confirmed cases in New York rose to 11 (Prev. 6) and cases in greater Seattle rose to 39 (Prev. 27), while California reported its first death from coronavirus and declared a state of emergency due to the coronavirus in which there are 53 confirmed cases in the state. (Newswires)

Another Carnival Corp. Grand Princess cruise ship was impacted by the coronavirus outbreak and has been ordered to return to port after a former passenger died following a recent cruise. (WSJ)

IMF MD Georgieva said IMF is to launch a USD 50bln aid package for the coronavirus and China is aiming to get 90% production by month-end. (Newswires)

US House voted 415-2 to pass USD 8.3bln coronavirus bill as expected which goes to the Senate and US President Trump has stated he will sign the bill. This followed reports that congressional negotiators agreed to a USD 8.3bln coronavirus emergency bill with USD 3bln designated for R&D of vaccines, therapies and diagnostics. (Newswires)

US Department of Health and Human Resources said it intends to buy 500mln N95 respirators to support healthcare staff in coronavirus outbreaks. (Newswires) Note: Largest suppliers of N95 respirators to the CDC are Honeywell (HON), 3M (MMM) and Kimberley-Clark (KMB).

ASIA-PAC

Asia-Pac indices rose across the board following the constructive pick up from Wall St where all major indices surged and the DJIA posted gains of almost 1200 points after Joe Biden’s Super Tuesday victory and with sentiment also underpinned by US data, as well as further response measures including the BoC’s 50bps rate cut and IMF’s USD 50bln aid package. ASX 200 (+1.1%) was underpinned by hopes of looming stimulus which Australian Finance Minister Cormann reiterated will be announced very soon and as healthcare tracked the outperformance of the sector stateside which was boosted after Biden overtook ’Medicare for All’ advocate Sanders as favourite in the Democrat nomination race, while TPG Telecom was the biggest gaining stock post-earnings and after the ACCC declared it will not appeal the decision to allow the Co.’s merger with Vodafone. Nikkei 225 (+1.2%) also benefitted from notable strength in pharmaceuticals including Takeda which is developing a coronavirus drug and completed the sale of certain OTC and non-core assets, although further upside in the broader market was capped by an indecisive currency. Elsewhere, Hang Seng (+1.9%) and Shanghai Comp. (+1.8%) conformed to the optimism and eventually outperformed despite early hesitation after the PBoC continued to hold off on liquidity operations and amid a slight increase in the mainland coronavirus cases, while reports also noted local companies and officials were falsely boosting metrics to achieve back-to-work targets. Finally, 10yr JGBs were choppy and initially slumped following the post-settlement declines in T-notes through 136.00 amid a return of corporate issuers to the market, although JGBs later recouped some of the losses following the break helped by the 30yr JGB auction which attracted higher prices before slipping back again to beneath 154.00.

PBoC skipped open market operations for a daily net neutral position. (Newswires) PBoC set USD/CNY mid-point at 6.9403 vs. Exp. 6.9378 (Prev. 6.9514)

US Senator Grassley suggested the US should give China leeway in implementing the trade deal due to coronavirus, while he added the outbreak would likely delay the start of negotiations on a Phase 2 trade agreement. (Newswires)

China Global Times tweeted that as US economy faces rising pressure from coronavirus, the US could be more compelled to suspend tariffs on China and a turning point in the trade war might be reached due to the epidemic citing Chinese trade experts. (Newswires)

Local companies and officials are reportedly fraudulently boosting electricity consumption and other metrics amid stringent new back-to-work target, according to an investigation by Chinese press. (Caixin)

UK/EU

BoE's Broadbent said there could be a role for economic policy to support activity and credit provision amid the COVID-19 outbreak, while he added they are in regular and close contact with government officials and other central banks. (Newswires)

The Times’s Matt Chorley tweeted that UK Parliament could break for Easter and not come back until September citing a senior parliamentary source, while other reports also noted that Downing Street confirmed PM Johnson is in talks with the parliamentary authorities about a possible shutdown if the outbreak continues to get worse. (Twitter/Times/Sky News) 

FX

DXY traded steady after having mildly benefitted from strong data including ISM Non-Manufacturing PMI and better than expected ADP Employment numbers ahead of Friday’s NFP release. There were also comments from Fed’s Bullard who seemingly leaned away from an immediate further reduction in rates as he suggested that a barrier to cutting again this month is that action has just been taken and they would need data to justify another cut, while he noted there will not be much new information on hand at the March meeting but added that Fed has plenty of flexibility and shown it can act between meetings in volatile situations. The greenback’s major counterparts were uneventful as EUR/USD languished just below 1.1150 and GBP/USD plateaued at the prior day’s highs after having recently springboarded off 1.2800 to take out a cluster of hourly moving average levels before stalling at the 200-Hour MA of 1.2875. Elsewhere, USD/JPY was choppy as it traded back and forth of 107.50 and antipodeans were also indecisive following mixed Australian trade data and after the PBoC set a firmer reference rate albeit not as firm as what was anticipated.

Australian Trade Balance (AUD)(Jan) 5.21bln vs. Exp. 4.80bln (Prev. 5.22bln, Rev. 5.38bln). (Newswires) Australian Exports (Jan) M/M -3% (Prev. 1.0%) Australian Imports (Jan) M/M -3% (Prev. 2.0%) 

COMMODITIES

Commodities are mostly higher amid the broad upbeat sentiment with WTI crude futures testing the USD 47.50 level although price action was relatively tepid in comparison to the prior day’s near-4% fluctuations amid second-guessing heading into today’s OPEC meeting. There were initial reports yesterday that OPEC+ will agree to a 1mln bpd cut and were even said to be discussing an option of 1.5mln bpd, although the ministerial panel failed to reach an agreement with Russia said to be reluctant for deeper cuts. Elsewhere, gold traded sideways with price action contained by a flat greenback and the heightened risk appetite which also spurred mild gains for copper.

OPEC+ Ministerial Panel ended with no agreements as Russia was still reluctant for deeper production cuts according to a source, Furthermore, Iran Oil Minister Zanganeh confirmed no final deal has been made with non-OPEC producers and UAE Energy Minister said OPEC+ JMMC made a recommendation which he did not reveal but said Russia is onboard. (Newswires/Twitter)

Mexico private sector has drafted plan of investment in the energy sector valued around USD 92bln. (Newswires)

GEOPOLITICS

Syrian air defences intercepted hostile targets over Homs, while reports noted that Israeli jets targeted the Hezbollah HQ in Homs and that Iranian-backed militias' weapons depots were destroyed in Quneitra. (Twitter) 

US 

The Treasury curve bull steepened pronouncedly as the front-end rallied amid global monetary policy easing – BoC being the latest G7 to cut rates. Desks noted a slew of real money/CTAs engaging in steepeners on Wednesday, finding some momentum on the back of a strong ADP employment report (183k vs. exp. 170k) and ISM Non-Mfg. (57.3 vs. exp. 54.9), in addition to a pickup in appetite for equities. Meanwhile, as more corporate IG issuers return to the dollar market, the belly- to long-end was under additional pressure as issuance played catch up following the two-week dry spell. Although one desk noted a particular asset manager who was keeping a lid on the steepening, selling a total of 34,452 TUs (2s) while buying 11,175 TNs (10s). The overhanging virus and potential QE is likely providing some support further out the curve. By settlement, 10-year yield had risen back to 1.00%, whilst the whole curve had steepened with the 2-year yield down 8bps and the 30-year yield unchanged on the day. US T-note futures (H0) settled 8 ticks higher at 136-08.

Fed Beige Book stated that the US Economic activity expanded at a modest to moderate rate over past several weeks with COVID-19 being cited as a risk which was already weighing on travel and tourism. Manufacturing activity expanded in most of the US although some supply chain delays due to the virus were reported and producers feared further disruption, while consumer spending generally picked up although growth was uneven across the US. Furthermore, most near-term outlooks were for modest growth with the virus and the Presidential election cited as a risk. (Newswires)

Fed's Bullard (Non-Voter, Dove) said the situation around coronavirus remains volatile and Fed is monitoring it daily, while he added he will not prejudge March meeting and that a barrier to cutting again this month is that action has just been taken and would need further data to justify another cut. Furthermore, Bullard said he does not want the market to overfocus on the March meeting so there will not be much new information on hand and noted the Fed has plenty of flexibility and shown it can act between meetings in volatile situations. (Newswires)

Fed adopted final rule establishing stress capital buffer for large US banks which Fed staff estimate would increase capital requirements for the largest banks and lower requirements for smaller, less complex banks. (Newswires)

Bernie Sanders and Elizabeth Warren are reportedly in discussions of cooperating if the latter exits the presidential race. (Washington Post)