• European price action has been choppy equity-wise, as focus remains on the progression of stimulus as well as the rising COVID-19 count
• US Senate voted unanimously (96-0) to pass the USD 2tln coronavirus response bill which sends the bill to the House
• US House Majority Leader Hoyer's office stated the House will convene at 0900EDT on Friday to consider the bill
• Spain's total coronavirus cases rise to 56,188 on Thursday from 47,610 on Wednesday
• ECB stated the self-imposed issuer limits used in QE will not apply to the temporary pandemic emergency purchase programme; ECB says they have today begun purchases under this
• FX sees the DXY approaching the 100.00 mark to the downside, much to the benefit of G10 peers
• Looking ahead, highlights include BoE Rate Decision, US GDP (Final), PCE Price (Final), & Initial Jobless Claims, Fed’s Bullard, supply from the US

CORONAVIRUS UPDATE

US Senate voted unanimously (96-0) to pass the USD 2tln coronavirus response bill which sends the bill to the House, while Senator Sasse’s amendment to change unemployment insurance provisions in the bill was voted 48-48 and fell short of the 60 needed for passage. (Newswires)

US President Trump said he approved disaster declarations by various states and said probably some sections of the country can return to work before other sections. President Trump also stated Congress is very close to passing stimulus bill and that he will sign coronavirus relief bill as soon as it reaches his desk, while he added they are open to more stimulus and suggested they will go back for more money if needed. (Newswires)

US House Majority Leader Hoyer's office stated the House will convene at 0900EDT on Friday to consider the bill and it expected the bill will pass by voice vote, while there were also comments from House Speaker Pelosi that she is optimistic the bill will pass in the House and suggested there will be further legislation from Congress to address the coronavirus. (Newswires)

G7 Foreign Minister failed to agree on a statement on Wednesday as the Trump administration insisted on referring to the coronavirus outbreak as the Wuhan virus. In related news, China and US are expected to set aside their coronavirus blame game and focus on the challenges of the pandemic when G20 leaders hold a video conference today. (Washington Post/Twitter/SCMP)

Spain's total coronavirus cases rise to 56,188 on Thursday from 47,610 on Wednesday; death toll 4,089 from 3,434 on Wednesday. (Newswires)

UK coronavirus cases rose to 9529 from 8077 and death toll rose to 463 from 422. (Newswires)

Italian PM Conte is aiming for a new stimulus package worth in excess of EUR 25bln. (Newswires)

Mainland China reported 67 additional cases and 6 additional deaths on March 25th vs. 47 additional cases and 4 deaths on March 24th, which brings the total number of cases in mainland China to 81285 and the total death toll to 3287. (Newswires)

South Korea reported 104 additional coronavirus cases to take total to 9241 and 5 additional deaths for a total of 131, while there were 414 newly recovered to take the total to 4144. (Newswires)

ASIA

Asian equity markets traded cautiously amid headwinds from the US where most major indices finished in the green although pulled back heading into the Wall St. close after the USD 2tln coronavirus relief bill hit a snag at the Senate. This follows reports GOP Senators Graham, Sasse and Scott noted they won't speed up the bill until a drafting error in the stimulus bill is addressed which otherwise could provide an incentive for employees to be laid off, while Democrat Senator Sanders threatened he will demand restrictions on USD 500bln fund for corporates if the 3 Republican Senators do not drop their objections to unemployment insurance expansions. Nonetheless, the bill was eventually passed via unanimous vote which gets sent to the House for a vote on Friday. ASX 200 (+2.3%) gained as the RBA remained active in its QE efforts and with notable outperformance in tech and defensive sectors such as healthcare and utilities. Nikkei 225 (-4.5%) was heavily pressured as exporters including index heavyweight Fast Retailing staggered on the detrimental currency flows and with SoftBank also among the worst hit after its credit rating was downgraded 2 notches and deeper into junk status by Moody’s, while participants were also ruffled by the Tokyo Governor’s requests for residents to stay at home during the weekend to curb the spread of COVID-19. Hang Seng (-0.7%) and Shanghai Comp. (-0.6%) were indecisive as focus also shifted to earnings including the upcoming releases by the Big 4 banks which are set to begin announcing their results from today. Finally, 10yr JGBs were higher due to the underperformance of risk sentiment in Japan and following similar rebound in T-notes, with weaker results at the latest 40yr JGB auction doing little to stall the overnight bond rally.

PBoC skipped open market operations and sold CNY 10bln of 6-month bills in Hong Kong. (Newswires) PBoC set USD/CNY mid-point at 7.0692 vs. Exp. 7.0839 (Prev. 7.0742)

Japanese government lowers its economic assessment in March; situation is seen as "severe" due to COVID-19 and removes language which described the economy as "recovering" for 1st time in nearly 7 years. (Newswires)

BoJ board member Adachi says there is now need to take additional steps now but is carefully watching developments. Additionally, Adachi says there is scope to lower rates further into negative territory but such a move will only be an option after the economy emerges from the hit imposed by COVID-19. (Newswires)

BoK is planning weekly repo purchase system and is to expand operations for 3 months to provide unlimited liquidity which a BoK official can be viewed as QE, while the BoK is said to be concerned about possible quarter-end liquidity crunch at financial institutions and may purchase more government bonds if required. (Newswires)

Singapore GDP (Q1) Q/Q -10.6% vs. Exp. -6.3% (Prev. 0.6%)

Singapore GDP (Q1) Y/Y -2.2% vs. Exp. -1.5% (Prev. 1.0%)

US

Fed Chair Powell says Fed has the ability to use emergency lending, there is unlimited authority to lend; Powell says there could be a good rebound, and Fed is trying to ensure rebound is vigorous. US may already be in a recession; not a blank cheque, but Fed will lend aggressively, does not see risks around the Fed's recent actions, and says the Fed will not run out of ammunition when it comes to upcoming lending. (Newswires)

UK/EU

ECB stated the self-imposed issuer limits used in QE will not apply to the temporary pandemic emergency purchase programme, according to the legal text. (Newswires) Subsequently, ECB's Vasiliauskas says OMT is part of the ECB's toolbox and could be used. Additionally, ECB have begun purchases under the emergency programme today, PEPP.

UK Retail Sales MM (Feb) -0.3% vs. Exp. 0.2% (Prev. 0.9%, Rev. 1.1%); YY 0.0% vs. Exp. 0.8% (Prev. 0.8%, Rev. 0.9%)

GEOPOLITICS

There were reports of explosions in Baghdad's Green Zone in Iraq and that sirens are sounding at the US Embassy, while other reports noted that 2 rockets were launched at the Green Zone area. (Newswires)

EQUITIES

European equity markets remain under-pressure (Euro Stoxx 50 -2.2%) and are on course to snap its two-day winning streak following a mostly downbeat APAC session. The positive sentiment faded following the anticipated passage of the US coronavirus bill through Senate, with eyes now on the House vote – with House Speaker Pelosi refusing to provide timings as the legislation needs to be closely examined. US equity futures also succumb to the broad stock sell-off as traders eye the key initial jobless claims data due at 1230GMT as an initial gauge of the COVID-19 impact on State-side jobs.  In terms of Europe, cash and futures markets remain off lows with modest outperformance seen in Italy; FTSE MIB (-1.0%) – potentially on reports that the ECB will not apply issuer limits on its EUR 750bln QE bazooka, meaning that bond purchase cap at 33% of each country’s debt will not apply under the PEPP. Sectors all reside in negative territory with underperformance seen in Energy, whilst Industrials benefit from softer energy and base metal prices, broad-based losses are seen across the sector breakdown (ex-industrial goods and services). In terms of individual movers, Casino (-5.2%) sees downside post-earnings after suspending guidance. ABN AMRO (-3.9%) shares fell after announcing an incidental net loss of EUR 200mln which will be included in its Q1 20 results. Finally, Barclays (-2.2%) experiences headwinds from lower yields and mounting doubts regarding its promised GBP 1.03bln dividend pay-out next week.

Norwegian Sovereign Wealth fund are likely to re-balance via the purchase of stocks; will not comment on when or how fast the increase in share portfolio will take place. (Newswires)

FX

JPY - A marked change of fortunes amidst yet another twist in the risk roller-coaster has propelled the Yen back to the top of the major ranks and dragged Usd/Jpy down from 111.50+ peaks through 111.00 on the way towards 109.80, with Yen crosses also retreating even though other G10 currencies are benefiting from a more pronounced pull-back in the Greenback and DXY in return (index now hovering near the base of a new, lower 101.020-100.330 range).

EUR/CHF - The single currency continues to track broader Buck and overall sentiment movements rather than COVID-19 Eurozone economic contagion evident most recently in a much more pronounced deterioration in Gfk German consumer confidence and the IW institute warning that GDP could contract by 10% at worst. However, Eur/Usd has now breached resistance ahead of 1.0900 to test 1.0950 before the next set of upside chart levels at 1.0964 and 1.0981 that are protecting 1.1000 where 1 bn option expiries roll off. Similarly, the Franc is eyeing higher ground vs the Dollar at 0.9700, while keeping pace with the Euro as the cross meanders between 1.0653-20.

NZD/CAD/AUD/GBP - All firmer against the Usd, albeit less so and more wary about renewed risk aversion, with the Kiwi cresting 0.5850, Loonie testing 1.4150 and Aussie capped into 0.6000. Elsewhere, the Pound has been choppy again as Cable settles down around the 1.1900 handle having been up to circa 1.1960 from sub-1.1800 lows at one stage and now waiting for the BoE after largely shrugging off UK retail sales given that the reported figures pre-dated nCoV. Note, our full preview of the March MPC policy meeting is available via the Research Suite.

SCANDI/EM - Some loss of bullish momentum due to further erosion of risk appetite and a downturn in crude alongside other commodities, but the Swedish Krona has also had to contend with worrying declines in industrial and consumer morale, while the Czech Koruna is conscious that the CNB is widely tipped to lower rates by another 50 bp on top of the emergency ease of the same magnitude, and may even signal QE.

Notable FX Expiries, NY Cut:

-       EUR/USD: 1.0800 (1BLN), 1.0900 (230M), 1.0925 (241M), 1.1000 (1BLN)

-       GBP/USD: 1.2000 (1.4BLN)

-       USD/JPY: 108.75 (1.1BLN), 110.00 (742M), 110.75 (350M), 111.00 (480M), 112.00 (1BLN)

-       EUR/JPY: 120.85 (860M)

FIXED

Core bonds remain bid, albeit off peaks as the Eurozone periphery and French OATs continue to outperform on ECB PEPP factors, as debt markets await words from the FOMC chair before the spotlight switches to the UK for the official March policy confab. However, Gilts did forge a fresh 135.82 Liffe peak prior to easing back and market contacts note a bullish Short Sterling futures trade via options in advance of midday with the Jun20 99.875 middle butterfly netted for 1.25 and 1.5 ticks in 25k lots. Looking a bit further ahead, US weekly claims will be the pm data highlight amidst ramped up COVID-19 expectations, but Usd32 bn 7 year supply also rounds off this week’s Treasury issuance remit.

COMMODITIES

WTI and Brent front-month futures continue to bleed as sentiment ticks back into broad risk aversion and with underlying fundamentals still bearish for both the demand and supply side of the equation. WTI futures lurk under USD 24/bbl while its Brent counterpart eyes 26.50/bbl to the downside, with both benchmarks around session lows at the time of writing. Participants will be closely watching today’s G20 call; sources expect the oil market to be discussed, at least as part of the wider economy, although an outright oil market discussion was rebuffed by Russia’s Kremlin. The Trump Administration also reportedly asked Saudi Arabia to hold off on plans to ramp up production to 12.3mln BPD in April (vs. 9.7mln BPD in March), whilst also asking the Kingdom to bring oil prices back to levels before the crude crash – a sign that US suppliers cannot tolerate prolonged periods of sub-30/bbl prices. The sources added that Saudi has no intention of changing course at the moment as it attempts to force Russia’s hand into production curtailments. Interestingly, in 1986 the US attempted to convince Saudi to abandon the price war at the time, an attempt that proved to be futile and the price war continued for another six months. Elsewhere, spot gold remains subdued and meanders around the USD 1600/oz – with investors favouring govt debt and haven FX in flights to safety given the yellow metal’s recent liquidity-induced selloff. Copper prices move in tandem with the risk aversion and almost reversed yesterday’s gains, albeit the red metal keeps its head above 2/lb.

CME raised COMEX 5000 silver futures maintenance margins by 12.5% to USD 9000/contract and raised palladium futures NYMEX margins by 13.2% to USD 43000/contract from USD 38000/contract. (Newswires)

Goldman Sachs forecasts oil demand to fall by 10.5mln bpd in March and 18.7mln bpd in April, while it suggested that a demand shock of this magnitude will overwhelm any supply response including core-OPEC freeze or cut. However, Goldman Sachs also noted it is seeing increasingly risks of a price rebound to be sharper than its base-case rally back to USD 40/bbl for Brent by Q4 2020. (Newswires)

Russian Kremlin says the G20 summit will not discuss oil markets, discussions will likely focus on the economic impact of COVID-19. (Newswires)