• Asian equity markets initially crashed overnight before rebounding, ASX outperformed; US equity futures rose to positive territory 
• Fed announced that it is to provide USD 1.5tln in temporary liquidity amid "highly unusual disruptions" in Treasury financing markets 
• Eurogroup President Centeno said EZ Finance Ministers will agreed to a ‘very large’ policy response to the coronavirus  
• UK and EU have agreed to “dial down the rhetoric” over Brexit with both sides expected to produce legal texts of their negotiating positions next week  
• In FX, DXY remained flat, EUR/USD nursed some of the losses, GBP/USD depreciated, USD/JPY reclaimed 105.00 overnight  
• Looking ahead, highlights include German CPI (Final), US University of Michigan (Prelim), BoE Emergency Meeting Minutes

CORONAVIRUS UPDATE 

Mainland China reported 8 additional cases of coronavirus and 7 additional deaths on March 12th vs. Prev. 15 additional cases and 11 additional deaths on March 11th, to bring China's total confirmed cases to 80813 and death toll at 3176. (Newswires)

Italy total coronavirus cases increased to 15113 (Prev. 12462) and the death toll rose to 1016 (Prev. 827), while Switzerland is reportedly to discuss closing its border with Italy today. (Newswires)

South Korea reported 110 additional coronavirus cases for a total of 7979 and death toll increased by 1 to a total 67, while the number of cured exceeded daily infections for the first time. (Newswires)

UK Scientific Adviser said it is likely the UK has somewhere between 5k-10k people infected at the moment, while the Chief Medical officer raised risk of coronavirus to high and confirmed we are now in the delay stage, moving from trying to contain the spread. (Newswires/Sky News)

Canadian PM Trudeau’s wife has tested positive for coronavirus. (BBC) This comes after the PM announced that he is in self-isolation after his wife showed symptoms of the virus.

Eurogroup President Centeno said EZ Finance Ministers will agreed to a ‘very large’ policy response to the coronavirus, expecting it to be above the EUR 27bln aggregate level ECB’s Lagarde called for; expects measures to be endorsed on Monday and outlined today. (FT) EU's Economic Commissioner Gentiloni will reveal a coronavirus package on Friday, and added we need coordinated action in Europe and US. (Newswires)

French President Macron said ECB measures on Thursday were not sufficient and stated that the March tax is to be postponed with the state to take on salaries of those who have to work from home. (Newswires)

USTR granted additional tariff exclusions on medical products from China, while there were separate comments from NIH’s Fauci that additional travel restrictions would be seriously considered if the dynamics of the outbreak mandate it. (Newswires)

Belgium PM Wilmes announced to close all bars, restaurants, sports events and schools due to coronavirus until April 3rd, while public transport will continue to run although companies are encouraged to allow staff to work from home. Elsewhere, Portugal is to shut all schools nationwide beginning on Monday and will re-evaluate on April 9th. (Newswires)

ASIA-PAC

Asian equity markets initially crashed overnight as the global turmoil persisted amid further coronavirus-related disruptions and following the near-double-digit losses on Wall St where stocks had their worst day since the Black Monday of 1987. Investor sentiment took a hit from all angles including the lack of solid stimulus efforts so far from US and its ban on travel from the EU, while some countries, businesses and sporting events also announced shutdown measures. ASX 200 (+4.4%) was in panic mode at the open and was dragged lower by heavy losses in financials and the commodity-related sectors with gold miners the worst performers as the precious metal proved to be no hiding place for the ongoing bloodbath, although the index then rebounded as stock markets and US futures recovered from lows with some also attributing it to the RBA injecting AUD 8.8bln of funds through repos during the early morning chaos. Nikkei 225 (-6.2%) saw losses of over 1500 points and briefly slipped below the 17k level for the first time since 2016, before momentarily retracing the majority of the declines. Elsewhere, Hang Seng (-3.2%) and Shanghai Comp. (-1.3%) conformed to the overnight disarray amid further PBoC liquidity inaction and as China’s industry ministry suggested the global coronavirus epidemic places uncertainty on China's work resumption, while stock markets in South Korea, India, Indonesia and Philippines all triggered circuit breakers earlier in the session but then recouped most the losses in which India briefly retraced the full 10% slump. Finally, 10yr JGBs failed to benefit from the wide-spread risk aversion and off-schedule BoJ announcement to buy a total of JPY 700bln of JGBs, as prices extended on the prior day’s selling to test the 153.00 level where support eventually held.

PBoC skipped open market operations for a daily net neutral position. (Newswires) PBoC set USD/CNY mid-point at 7.0033 vs. Exp. 6.9908 (Prev. 6.9641)

China Vice Industry Minister said work resumption for small and medium sized firms outside of Hubei is around 60% and for larger scale firms the rate is over 95%, although the Industry Ministry also noted that the global coronavirus epidemic brings uncertainty to China's work resumption. (Newswires)

China Banking Regulator official said banking institutions have issued CNY 1.4tln in loans related to virus control and prevention, while China is also to stabilize and increase people's property income. (Newswires)

Indonesia confirmed a 2nd fiscal stimulus package to tackle the impact of the coronavirus in which IDR 120tln or 0.8% of GDP will be provided to the economy. (Newswires)

UK/EU

UK and EU have agreed to “dial down the rhetoric” over Brexit with both sides expected to produce legal texts of their negotiating positions next week; with diplomatic sources claiming both sides agreed to “lower the temperature”. (Guardian)

UK Chancellor Sunak is expected to deliver a “painful” budget in November as previous tax-raising plans were shelved amid the virus outbreak, according to sources. (Telegraph)

German Chancellor Merkel said Economy and Finance Ministers will present more broad measures to support the economy and that they will take measures in close contact with EU partners. (Newswires)

France is to permit use of some Huawei equipment in 5G network rollout in the non-core parts according to sources. (Newswires)

Italy’s market regulator is to introduce temporary short-selling ban on some stocks on Friday in which it stated that the short-selling ban applies to 85 stocks and strengthens the ban on naked short-selling, while Spain’s market regulator is to ban short selling of 69 Spanish stocks. (Newswires)

No ECB policymaker proposed a rate cut, or a different amount of QE than the final decision, according to sources. (Newswires)

FX

In FX markets, price action was relatively tame with the DXY stable around the 97.50 level after having retreated from above 98.00 following the Fed’s USD 1.5tln injection announcement in response to the highly unusual market disruptions, while its major counterparts were mixed which added to the lack of firm overnight direction. EUR/USD nursed some of the losses seen post-ECB despite the central bank disappointing hopes of a rate cut, with the single currency attempting to reclaim 1.1200 and with GBP/USD continuing to depreciate after this week’s emergency BoE 50bps cut with the pair stuck around 1.2550. In terms of the coronavirus front, there were alarming comments from the UK Scientific Adviser who suggested there could be between 5k-10k people infected in the country at the moment, while Portugal and Belgium have announced containment steps including the closure of all bars, restaurants, sports events and schools in the latter. Elsewhere, USD/JPY ignored the early panic in equity markets and eventually reclaimed the 105.00 handle to the upside as stocks recovered from their lows, while antipodeans were also range-bound amid a lack of data points and recent selling fatigue. 

COMMODITIES

Commodities nursed losses overnight with the initial lacklustre tone seen across the complex amid early panic selling in stocks, but then saw mild support as the chaos in equities moderated which lifted WTI crude futures to test USD 32.00/bbl level, but with gains limited amid ongoing coronavirus concerns and with Goldman Sachs estimating a 4.5mln bpd hit to global demand. Elsewhere, gold mirrored the uneventful greenback for most the session but was then lifted in line with most commodities including copper as the initial market chaos receded.

CME raised palladium futures NYMEX margins by 9.8% to USD 28000/contract from USD 25500/contract and raised platinum futures NYMEX margins by 20% to USD 3000/contract from USD 2500/contract. (Newswires)

Goldman Sachs said it continues to expect Brent to underperform WTI as US export incentive will need to shut, while it estimates global demand lost is near 4.5mln bpd. (Newswires)

Brazilian miner Vale said it could undertake contingency measures or eventually suspend operations due to coronavirus concerns. (Newswires)

GEOPOLITICS

Twitter sources reported US jets over Iraq skies as multiple Kata’ib Hezbollah positions in Iraq were targeted by heavy airstrikes and US officials later confirmed they launched retaliation strikes for recent attack on Camp Taji, while there were also reports of a rocket attack on the US base in Kirkuk, Iraq. (Twitter)

US 

A choppy day for Treasuries as initial overnight gains were reversed amid investors fleeing to cash from major asset classes. The risk sell-off after the Trump presser overnight commenced the bid in government debt, although as US participants arrived, The TPLEX was offered amid poor liquidity; equity futures reaching limit down prior to the cash open only added to the panic. Desks noted the ongoing profit-taking in the long end, on top of likely demand for cash amid the market turmoil. However, the selling found some short-lived reprieve after the NY Fed announced its USD 1.5trln of additional repo operation offerings over Thursday and Friday, as well as its new Treasury purchase schedule which now extends the whole way out the curve. Although yields shortly began rising again, where the 30-year auction, which tailed the 1.28% WI by a sizeable 4bps, catalysed the move. By settlement, yields had risen by around 4bps in the 10-year, 2bps in the 30-year, while 2s, 3s, and 5s were little changed. US T-note futures (H0) settled 8 ticks lower at 1363-28+.

NY Fed announced a USD 500bln three-month repo operation in which it accepted all USD 78.40bln in bids submitted and will offer the same amount again today alongside another USD 500bln one-month term, while three- and one-month operations for 500bln will be offered on a weekly basis for the remainder of the monthly schedule. (Newswires)

US House Speaker Pelosi said lawmakers and the White House have neared an agreement on coronavirus legislative package and hopes to make an announcement on Friday, while she noted that the coronavirus bill includes free coronavirus testing and paid sick leave. (Newswires)

US Senate Majority Leader McConnell said talks are ongoing between Trump administration and House Speaker Pelosi, while he hopes a bipartisan package can be passed in congress. There were also reports the US Senate is to delay its recess and will work on COVID-19 economic relief bill next week according to an aide. (Newswires)

Polling USA tweeted that Biden was ahead of Sanders in Florida (65% vs. 27%), Ohio (57% vs. 35%) and Illinois (57% vs. 36%) in an Emerson telephone survey conducted yesterday. (Newswires)