• Asia-Pac stocks were lower as the prior session’s firm rebound on Wall St failed to resonate across the region
• US equity futures staged a pullback after the White House press conference provided very few details regarding economic measures and President Trump was a no-show
• DXY slightly weakened as it gave back some of the prior day’s spoils but remained above the 96.00 level
• RBA Deputy Governor Debelle suggested there are scenarios where measures such as QE and forward guidance would be required
• Former VP Biden won primaries in Michigan, Missouri, Idaho and Mississippi. Reports suggest Sanders could drop out of the race
• Looking ahead, highlights include UK GDP, output, trade balance, budget, US CPI, DoEs, EIA STEO, OPEC Monthly Report, BoE’s Bailey, Supply from Germany and the US

CORONAVIRUS UPDATE 

Mainland China reported 24 additional cases of coronavirus and 22 additional deaths on March 10th vs. Prev. 19 additional cases and 17 additional deaths on March 9th, to bring the total number of cases in mainland China to 80778 and death toll at 3158. (Newswires) China's Hubei province said will implement return to work according to different levels of risk in an ordered manner and that key sectors in Wuhan are allowed to return to work including public transport, medical supplies and daily necessities, while it added it will continue to strictly ban people from leaving Wuhan and Hubei. (Newswires)

South Korea reported 242 additional coronavirus cases to bring total to 7555 and 6 additional deaths to increase death toll to 60. Elsewhere, Japan is reportedly planning to declare a state of emergency due to the coronavirus outbreak after the number of domestic cases rose by the largest daily increase of 59 to a total of 1278, while the total death toll was at 19 and there were 427 discharged from hospital on Tuesday. (Yonhap/Kyodo/NHK)

Italy’s total coronavirus cases rose to 10,149 (Prev. 9172) and the death toll increased to 631 from Prev. 463. Furthermore, Italian PM Conte called on the ECB to do whatever it takes and noted there is a need for a coordinated monetary and fiscal response, while there were also reports that Italy is discussing a stimulus package as much as EUR 16bln and raising the deficit target to just under 3%. (Newswires)

US cases of coronavirus surpassed 1000 and the director of the Centers for Disease Control and Prevention said some parts of the country are now beyond containment efforts. In related news, Washington state is mulling mandatory measures to contain the virus and New York Governor Cuomo is to establish a containment area in part of a New York suburb to stop the virus spread in which the National Guard will be deployed in the containment area for at least 2 weeks, while Michigan Governor Whitmer declared a state of emergency after 2 coronavirus cases were declared in the state. (Newswires/NYT)

US VP Pence said the US is bringing the full resources of Federal government to the virus efforts and that President Trump proposed a stimulus package to Congress which includes payroll tax relief. There were also comments from White House Economic Adviser Kudlow that President Trump would prefer payroll tax 'holiday' to continue through year-end, while he added they are working on economic package details right now and will outline a more detailed package in the near future. (Newswires)

EU Commission Head Von Der Leyen said EU executives will set up an investment fund from the coronavirus which will reach EUR 25bln and will release EUR 7.5bln for the fund, while she stated that there will be guidelines by the end of the week on the flexible use of fiscal and subsidy rules. (Newswires)

Canadian PM Trudeau is to make announcement about economic support measures against coronavirus today at 0900EDT, according to CBC Chief Political Correspondent Barton. (Twitter) 

ASIA-PAC

Asia-Pac stocks were lower as the prior session’s firm rebound on Wall St that was spurred by stimulus hopes, failed to resonate across the region and US equity futures also pulled back after the White House press conference provided very few details regarding economic measures and where President Trump was a no-show, which overshadowed the Democrat Primaries where mainstream candidate and former VP Biden is set for another decisive victory. ASX 200 (-3.6%) and Nikkei 225 (-2.2%) were lower with the former dragged by heavy losses in gold miners and its largest weighted financials sector to finish in bear market territory, while the Japanese benchmark extended its retreat from the 20k level to reach its lowest level since 2018 as USD/JPY slipped back below 105.00. Hang Seng (-1.2%) and Shanghai Comp. (-0.6%) were indecisive amid a lack of fresh catalysts and as the PBoC continued to withhold from liquidity operations, while the latest update from mainland China showed a slight pick-up in the number of additional coronavirus cases and related deaths although this was only marginal and in-fitting with the stabilization narrative. Finally, 10yr JGBs traded slightly higher amid weakness in Tokyo stocks and following the swings in T-notes, while the BoJ were also present in the market today for JPY 430bln of JGBs mainly concentrated in the belly.

PBoC skipped open market operations for a daily net neutral position. (Newswires)

PBoC set USD/CNY mid-point at 6.9612 vs. Exp. 6.9529 (Prev. 6.9389)

UK/EU

UK Chancellor Sunak is to signal end of austerity with a jump in borrowing and said the UK will triple average net investment seen over the past 40 years by the end of this Parliament, while other reports noted that the Budget is to boost infrastructure spending by GBP 100bln and public sector net investment is to rise to 3.0% of GDP from 2.2%. (ITV)

EU is gearing up to rebuff UK's demand for a quick decision on market access rights for London, with EU officials warning that the process will drag on until later in the year at a minimum. (FT) This comes after UK Chancellor Sunak urged the EU for rapid process on necessary approvals by a June deadline.

FX

DXY slightly weakened as it gave back some of the prior day’s spoils but remained above the 96.00 level following the recent rebound in yields and with price action hanging on stimulus package hopes which have yet to transpire. Furthermore, another firm victory by Biden at the Democrat Primaries was largely ignored by the greenback with former VP Biden so far projected to win Idaho, Missouri, Mississippi and the key battleground of Michigan which was the largest among the states for contention in terms of delegates. The pullback in USD provided some much-needed reprieve for its major counterparts including EUR/USD which reclaimed the 1.1300 handle before breaching several shorter-term MA levels including its 5-Day moving average of 1.1323, and GBP/USD rose back above 1.2900 although upside was capped heading into today’s Budget announcement which is expected to flag the end of austerity with a jump in borrowing and GBP 100bln boost to infrastructure spending. Elsewhere, USD/JPY slipped below the 105.00 level and antipodeans nursed losses but with price action restricted by a lack of tier-1 data and a weaker CNY reference rate setting, while RBA Deputy Governor Debelle also noted increases in risks from the coronavirus and suggested there are scenarios where measures such as QE and forward guidance would be required.

RBA Deputy Governor Debelle said coronavirus is causing large increase in risk aversion and uncertainty, while he added the global economy will be materially weaker in Q1 and period ahead but also noted lower interest rates will help offset demand shock from virus. Furthermore, Debelle also stated that there are scenarios where QE would have to be considered and that they would also consider forward guidance as well as keeping bond yields low. (Newswires)

COMMODITIES

Commodities edged mild gains with the early upside in crude helped by the firm rebound on Wall St, although oil prices then retreated as sentiment in Asia steadily deteriorated throughout the session with prices also not helped by the recent private inventory report which showed a larger than expected build in headline crude stockpiles. Elsewhere, gold eked marginal gains after the greenback reversed some of the prior day’s gains and as risk sentiment soured which also kept copper to within a tight overnight range.

US Private Inventory Crude Stocks +6.4mln vs. Exp. +2.3mln (Prev. +1.7mln). (Newswires)

Oil lobbyists were reportedly calling on the Trump administration to take advantage of the recent collapse in prices and purchase oil barrels on the cheap to replenish the SPR. (Newswires)

Kuwait set export crude OSP to Asia at Dubai/Oman minus USD 4.65/bbl which is USD 6/bbl lower from the prior month. (Newswires)

CME raised natgas Henry Hub futures maintenance margins by 11.5% to USD 1450/contract from USD 1300/contract. (Newswires)

US 

The TPLEX bear steepened amid a (dead-cat?) bounce back in the equity complex, although yields were off their highs by settlement in another wide-ranging day, particularly in the long-end. Note that US equity futures hit their 5% limit ups in the pre-market alongside rising rates, before drifting lower, which Treasuries found a bid on the back of, as desks noted real money behind equity and oil sales. However, the risk aversion found its limit at the tail-end of European trade and yields then rose again, although not as high as earlier in the session. Note that there was some knee-jerk selling pressure in the belly of the curve after the 3-year Treasury auction tailed by 2.7bps, with a weaker than average B/C ratio, seeing Dealers takedown a larger than usual portion of the offering – coming ahead of the 10-year and 30-year auctions on Wednesday and Thursday, respectively. By settlement, the 2-year yield had risen 15bps, 10-year yield +25bps, and 30-year yield +30bps. US T-note futures (H0) settled 1 point 24 ticks lower at 137-17+.

Former VP Biden has won primaries in Michigan, Idaho, Missouri and Mississippi, while Biden and Sanders were tied at 33% each in the Washington Democrat Primary after an estimated two-thirds of the vote count, while Twitter reports noted unconfirmed rumours Sanders is to pull out of campaign. (Newswires)

US President Trump said he had a great meeting with Republicans on Capitol Hill and that they are working hard on a lot of things but offered no details on stimulus plans, while he told Republican Senators that he wants the payroll tax waived through the election. (Newswires)

US President Trump reportedly told GOP senators two options from the COVID-19 relief plan would be to waive payroll tax through year end or to make the tax cut permanent, according to a source. In related news, US Republican Senator Rubio said scope of payroll tax cuts being considered for coronavirus relief could be around USD 300bln, although there were also comments from Republican sources that payroll tax cut discussions have fallen flat and senators were reportedly "far from united" as administration plans were still in the concept phase. (Newswires/Washington Post)

US Treasury Secretary Mnuchin said there is a bipartisan urgency to pass a relief package and there are some things the Treasury can do on its own to provide relief which are being explored, while it was later reported that the US Treasury is likely to delay April 15th tax filing deadline as part of an effort to mitigate the effects of the coronavirus on US households and businesses. (Newswires/WSJ)

White House plans to meet with tech giants to discuss coronavirus and said that it had sent principles for drug pricing reform to Capitol Hill, while the White House is also likely to pursue Federal aid for shale companies that are hit by the virus and oil shock. (Newswires/Washington)