• Asian stock markets mostly traded with hefty losses and US equity futures hit limit down amid further coronavirus-related disruptions and a rising death toll
• US Senate voted 47-47 on the coronavirus bill which failed to reach the 60 votes required to pass the first procedural hurdle
• US Senate Majority Leader McConnell initially said the Senate will re-vote on the motion to proceed
• German Government intends to set up a rescue package of EUR 500bln for companies and banks, authorize EUR 350bln in new debt to fight the coronavirus
• RBNZ announced a NZD 30bln large scale asset purchase programme of NZ government bonds over 12-months
• EU’s Dombrovskis said the EU Commission is likely to present a tool for the Euro zone’s ESM bailout fund to fight the effects of the coronavirus
• Fed’s Bullard said that unemployment could reach 30% in Q2 due to virus shutdowns, while he also suggested that GDP could decline greater than 50%
• Looking ahead, highlights include EZ Consumer Confidence

CORONAVIRUS UPDATE

Mainland China reported 39 additional cases of coronavirus and 9 additional deaths on March 22nd vs. Prev. 46 additional cases and 6 additional deaths on March 21st, which brings the total confirmed cases in mainland China to 81093 and death toll at 3270. In related news, Shanghai downgraded emergency alert level as coronavirus spread subsided. (Newswires)

South Korea reported 64 additional coronavirus cases to take total to 8961 and deaths increased by 7 to total of 111, while there was additional 257 that fully recovered to bring total to 3166. (Newswires)

US President Trump said US is marshalling every resource available to fight the "Chinese virus" and that it is important Americans follow guidance on social distancing. Furthermore, President Trump also stated we are fighting a war against an invisible enemy but added it is going to be a great victory. (Newswires) US President Trump approved New York, Washington and California disaster declarations which allows federal funds to flow into the states. (Newswires)

US Senate voted 47-47 on the coronavirus bill which failed to reach the 60 votes required to pass the first procedural hurdle, while Senate Democrats were reportedly sending signals to Republicans on the need to revise the bill while negotiations continue. Following the defeat, US Senate Majority Leader McConnell initially said the Senate will re-vote on the motion to proceed at 0945EDT on Monday, although reports later noted that this will be later than previously planned as the Senate is to return at 1200EDT, while Senate Democratic Leader Schumer believes coronavirus bill issues can be resolved in next 24 hours. (Newswires)

White House Economic Adviser Kudlow said coronavirus stimulus packages could be around 10% of GDP and that small businesses will be receiving a payroll tax holiday under the bill. (Newswires)

Italy raised COVID-19 restrictions in which it stated people cannot exercise outside and ordered a halt to almost all industrial production during a 2-week period. (Newswires) This comes after the death toll reached 5476 over the weekend, with 651 on Saturday alone.

UK PM Johnson announced the shutdown of cafes, pubs, gyms, theatres, cinemas and restaurants from Friday night, but noted that the government does not want to immobilize the tube or other travel networks. (Newswires)

German Chancellor Merkel tightens restriction amid the coronavirus in which no more than 2 people may be together in public places unless they are family or living together, while restaurants will be closed aside from takeout and delivery for initially a 2-week period. In other news, German Chancellor Merkel reportedly quarantined herself at home after coming into contact with a doctor that tested positive for coronavirus. (Newswires)

German Government intends to set up a rescue package of EUR 500bln for companies and banks, while Germany is expected to authorize EUR 350bln in new debt to fight the coronavirus. (Newswires/Der Spiegel) Government are expected to pass a EUR 156bln supplementary budget, which includes a EUR 33.5bln drop in tax-revenue; raising EUR 150bln in additional debt. Ministers are to seek authorisation to suspend the debt brake. (FT)

Spanish PM Sanchez is to seek parliamentary approval to extend state of emergency to April 11th. (Newswires)

Australian Prime Minister Scott Morrison ordered the closure of most venues from Monday, including pubs, casinos, gyms and cinemas, while there were comments from the Queensland Premier that the state government will close state borders in a move to stop the spread of coronavirus. (Newswires)

New Zealand PM Ardern said coronavirus alert level is raised to 3 today which will go to the highest level of 4 within 48 hours, while she added all non-essential businesses must close and country must prepare to go to self-isolation. (Newswires) New Zealand Finance Minister Robertson announced to expand wage subsidies and that the government is freezing rent increases in New Zealand, while it is also looking at significant support for mortgage holders. (Newswires) RBNZ announced a NZD 30bln large scale asset purchase programme of NZ government bonds over 12-months which is to be purchased across a range of maturities in the secondary market. (Newswires)

India announced all districts in New Delhi are to be locked down and that the financial hub around Mumbai must keep non-essential business closed until March 31st. (Newswires) 

ASIA

Asian stock markets mostly traded with hefty losses amid further coronavirus-related disruptions and a rising death toll. As such, risk sentiment was spooked which was exacerbated as US equity futures hit limit down within a matter of minutes from the open to set the gloomy tone across the Asia-Pac region with ASX 200 (-5.6%) weighed heavily amid double digit losses across the big 4 banks and with NZX 50 (-6.6%) registering its worst intraday drop on record of more than 10% after the announcement of shutdown measures. Elsewhere, Hang Seng (-4.5%) and Shanghai Comp. (-2.7%) were lower as China conformed to the global coronavirus fears and after continued PBoC liquidity inaction, although not all was doom and gloom with Li & Fung shares almost doubling after it received an offer to go private valued at a 150% premium. Nikkei 225 (+1.9%) also bucked the trend on return from its extended weekend and with some finding comfort after Japanese PM Abe ruled out the cancellation of the Olympics but was instead open to a postponement, while SoftBank shares surged on the announcement of a JPY 4.5tln asset sale to fund a share buyback in which the Co. will retire 45% of stock. Finally, 10yr JGBs were higher amid the predominantly negative overnight risk tone and with the BoJ also present in the market today which includes unscheduled purchases of JPY 300bln in 3-5yr and JPY 500bln in 5yr-10yr JGBs.

PBoC skipped open market operations for a daily net neutral position. (Newswires) PBoC sets USD/CNY mid-point at 7.0940 vs. Exp. 7.0985 (Prev. 7.1052)

Japanese Finance Minister Aso and BoJ Governor Kuroda are to participate in G20 Finance Ministers and Central Bank Governors emergency conference call today, although sources noted that the G20 will not issue a statement after its conference call on Monday. (Newswires)

Japanese PM Abe said may have to postpone Olympics if holding them in complete form is impossible but added that cancelling the Tokyo games is not an option. (Newswires) 

UK/EU

UK Chancellor Sunak announced a combination of measures on jobs and incomes for the first time in which the government will help to pay wages. The measures allows any employer to be eligible for grants covering wages of those who have been furloughed and kept on salary in which the grant will cover 80% of salary of retained workers of up to GBP 2,500 per month, backdated to March 1st, for at least three months with no limit on funding available. Furthermore, COVID-19 loans scheme will be interest free for 12 months (prev. 6 months) and no business VAT will be paid until June-end, while Universal Credit increased by GBP 1,000 for the next 12 months and working tax credit also increased by GBP 1,000. (Newswires)

ECB’s De Guindos warned the virus outbreak will place Europe into a recession but noted it should be transitory and that the regional economy will be back into expansion on the 2nd semester, while he added Eu should consider Eurobonds to deal with the coronavirus. (Newswires)

ECB’s Schnabel said the ECB is in a comfortable position of having a large set of tools which have not been used to full extent, while she added we stand ready to conduct further measures if required. (Newswires)

EU’s Dombrovskis said the EU Commission is likely to present a tool for the Euro zone’s ESM bailout fund to fight the effects of the coronavirus epidemic which could unlock unlimited sovereign bond buying. (Newswires)

EU Economic Commissioner Gentiloni believes a fiscal support deal from the EU could be agreed in time for an EU Leaders video conference on Thursday. With three cited options: ESM credit lines, narrow liquidity facilities for emergency health-care and introduction of coronabonds. (FT)

FX

DXY continued to retreat from resistance at the 103.00 level to give back some of last week’s stellar gains, with price action not helped after the coronavirus relief bill failed to get enough votes to pass through the first procedural hurdle at the Senate amid ongoing negotiations, although there will be another attempt on later today. The pullback in USD provided some reprieve for its transatlantic peers in which EUR/USD rebounded from its lowest since 2017 to reclaim the 1.0700 handle and with GBP/USD surmounting 1.1650 as it gets some reprieve from the recent sell-off which saw the pair slump to its weakest since 1985. Elsewhere, USD/JPY fell below 110.00 and JPY-crosses were pressured on the broad safe-haven flows, while antipodeans were weighed on the risk averse tone and following lockdown announcements on both sides of the Tasman, with NZD also pressured from the recent RBNZannouncement of a NZD 30bln large scale asset purchase programme but with losses in AUD/USD and NZD/USD eventually stemmed by support at 0.5700 and 0.5600 respectively.

Banxico cut rates by 50bps to 6.50% in an emergency move, while it will add liquidity measures to provide liquidity and improve functioning of financial markets. (Newswires) 

COMMODITIES

Commodities were mixed in which WTI crude futures briefly tested the USD 21/bbl level to the downside and Brent crude slipped below USD 25/bbl as US equity futures slumped to hit limit down minutes after the re-open. However, oil prices then gradually recovered throughout the session with WTI edging marginal gains heading into the European open and although the pertinent newsflow for the complex was light, there were reports that the US is to send a special energy envoy to work on stabilizing the global oil market and there were also bullish comments from WoodMac that suggested China is known to build strategic reserves when prices are low. Elsewhere, gold prices were rangebound with the precious metal failing to benefit from the pullback in USD and the predominantly negative risk tone, while copper underperformed amid similar pressure seen in Chinese commodity prices.

Baker Hughes US Rig Count (w/e 20th March): Oil rigs -19 at 664, Nat Gas rigs -1 at 106. (Newswires)

Some US energy officials were reportedly calling on Saudi to leave OPEC and are proposing a US-Saudi led partnership according to sources, while there were separate reports US President Trump will send a special envoy to Saudi Arabi. (Newswires/WSJ)

US officials said Russia will be sanctioned to the degree if it is caught lifting up Venezuelan oil. (Newswires)

Wood Mackenzie said China crude reserves to reach 1.15bln bbls this year and that China is known to build strategic reserves when prices are low which could support prices on top of sluggish recovery of global demand. (Newswires)

US

The TPLEX bull flattened to end the week - 2s10s -10bps to 57.70; 2-year yield 0.356%, 10-year yield 0.94%, 30-year yield 1.58%. The bid was felt throughout the session, coming alongside equities rolling lower. Support was also found amid the Fed’s continued Treasury purchases, filling offers in poor liquidity as many participants are physically absent from their screens. Meanwhile, corporate IG issuance continued, following Thursday’s slew, with Intel and Coke raising USD 8bln and 5bln, respectively, while credit spreads narrowed slightly. Across the pond, the Euro issuance market even had a revival, no doubt the ECB’s latest PEPP package providing some confidence, seeing Engie and Unilever raise EUR 2.5bln and 2bln, respectively. T-note futures (M0) settled 1 point 16+ higher at 136-23+.

NY Fed is to make MBS purchases of at least USD 100bln in the upcoming week and will release a schedule each day for next day’s operations, while it is purchasing USD 40bln on Monday. (Newswires)

Fed's Kashkari (Voter, Dove) said the US will at least have a mild recession and that that the Fed will ensure banks have enough cash to meet demand. Kashkari also stated the Fed is being very aggressive but there is more we can do if needed and that the Fed has infinite cash to support the financial system. (Newswires)

Fed’s Bullard (non-voter, dove) reiterated that the Fed was willing to do more to help address the coronavirus crisis and warned that unless more was fiscally done, unemployment could reach 30% in Q2 due to virus shutdowns, while he also suggested that GDP could decline greater than 50%. (Newswires)

US Senator Romney is going into self-isolation as he was reported to have sat next to Senator Paul for extended periods recently, and Senator Paul had recently tested positive for coronavirus. (Newswires)