• European bourses have been choppy for much of the session, with similar performance seen in US futures; currently relatively unchaged on the day
• US President Trump announced that he is to extend federal guidelines on coronavirus to April 30th and that he sees deaths peaking in 2 weeks
• NIH’s Fauci projected the possibility of millions of coronavirus cases in the US and 100k-200k deaths
• Japan's ruling party has reportedly proposed a JPY 60tln stimulus package, which would include direct government spending of around JPY 20tln
• FX sees the USD bid with desks touting month-end demand for the currency, to the detriment of EUR & GBP amongst others
• Looking ahead, highlights include German CPI & US Pending Home Sales

CORONAVIRUS UPDATE

Congress is already working on a fourth stimulus bill, one which could be even larger than the USD 2trl bill signed into law on Friday. (WSJ)

US President Trump announced to extend federal guidelines on coronavirus to April 30th and that he sees deaths peaking in 2 weeks, while he hopes April 30th guidelines do not have to be extended again noted he is prepared to do everything necessary when asked about supporting a 4th relief bill. (Newswires)

US President Trump tweeted that he was giving consideration to quarantine developing hot spots including New York, New Jersey and Connecticut and that a decision will be made one way or another shortly. However, Trump later stated a quarantine will not be necessary and instead instructed the CDC to issue a strong travel warning in which it urged people in New York, New Jersey and Connecticut to refrain from non-essential travel for 2 weeks, while US President Trump also approved the District of Columbia disaster declaration, (Newswires)

US Treasury Secretary Mnuchin said the new bank lending programme will be ready by Friday and encouraged every business to apply because if you hire workers back/keep them, these are forgivable loans. (Newswires/Politico)

NIH’s Fauci projected the possibility of millions of coronavirus cases in the US and 100k-200k deaths. (Newswires)

Italy death toll rose by 756 to a total of 10779 and Spain’s death toll increased by 821 to 6803 on Sunday. UK COVID-19 cases rose on Sunday to 19,522 (prev. 17,089), death toll rises to 1,228 (prev. 1,019).

Spain's coronavirus cases stand at (Monday) 85,191 (Prev. 78,797) according to the Health Ministry; death toll 7340 (Prev. 6528). (Newswires)

Mainland China reported 31 additional cases and 4 additional deaths on March 29th vs. 45 additional cases and 5 deaths on March 28th, to bring the total number of cases in mainland China to 81470 and total death toll to 3304. (Newswires) Additionally, China's Wuhan has confirmed that they have reported 7-consecutuve days of no new confirmed virus cases, with the lockdown to be lifted one-week. (Global Times)

England Deputy Chief Medical Officer Harries said it could be 6 months before life in the UK returns to normal but added that this is not to say we would be in complete lockdown for 6 months. (BBC)

ASIA

Asian equity markets resumed their selling, and US equity futures also began the week on the backfoot (before gradually recouping losses) as coronavirus woes continued to weigh on risk appetite and following last Friday’s declines on Wall St after the US overtook China with the greatest number of coronavirus cases. In addition, President Trump recently announced to extend federal guidelines on coronavirus until April 30th and NIH’s Fauci projected a possible 100k-200k deaths. The risk appetite was dampened across most the regional bourses with losses in Nikkei 225 (-1.6%) exacerbated by the flows into the JPY and with notable weakness seen in Softbank shares after a Co.-backed satellite start-up filed for bankruptcy, while ASX 200 (+7%) bucked the trend on stimulus measures with the government to announce support for employers and employees today. Furthermore, the Australian Banking Association said banks are to permit businesses with up to AUD 10mln in loan facilities to defer repayments up to 6 months which will apply to AUD 100bln of business loans, and regulator APRA announced the deferral of capital reform implementation by 1 year. Hang Seng (-1.3%) and Shanghai Comp. (-0.9%) were downbeat despite PBoC efforts in which it injected liquidity through repos for the first time since mid-Feb and lowered the 7-Day Reverse Repo rate by 20bps. Improved earnings including China’s largest banks did little to spur risk appetite amid the broad cautiousness and with press reports suggesting 100mln jobs could be at risk from the coronavirus fallout, while participants also await this week’s upcoming key data including the latest Chinese PMI numbers. Finally, 10yr JGBs were higher and briefly approached the 153.00 level amid the subdued risk appetite and after recent comments by PM Abe who vowed an unprecedented economic package which will include fiscal and monetary stimulus, while prices also tracked T-notes which gapped higher at the open to briefly test resistance at 139.00.

PBoC injected CNY 50bln via 7-Day Reverse Repos and cut the associated rate by 20bps to 2.20%.

PBoC set USD/CNY mid-point at 7.0447 vs. Exp. 7.0448 (Prev. 7.0427)

PBoC Adviser Ma Jun said timing of reverse repo cut was in consideration of domestic work resumption, global virus situation and deterioration of external economic environment, while he added that China has plenty of room to adjust monetary policy. (Newswires)

Chinese press reports suggested that 100mln jobs could be at risk in the coronavirus-slowed economy. (Caixin)

Japan is to ramp up government bond issuance by USD 149bln to fund virus stimulus, sources state, all maturity issuance will be increase excluding 40yr bonds, I/L and liquidity supplying bonds; 6-mth Treasury Discount Bills could be issued, sources added. (Newswires) Thereafter, it was reported that Japan's ruling party has proposed a JPY 60tln stimulus package, which would include direct government spending of around JPY 20tln. (Newswires) Japan's Ruling Party Policy Chief says the council are to formalise proposals for economic package which will be submitted to PM Abe on Tuesday - package expected to total 16-17% of GDP. (Newswires)

Monetary Authority of Singapore reduced the slope of its currency band to zero but kept the width and mid-point of the band unchanged. MAS stated that it stands ready to curb SGD NEER volatility, while it noted that activity is likely to remain subdued in the travel-related and consumer-facing sectors until the pandemic is contained. Furthermore, it sees 2020 GDP to decline by 1%-4% vs. Prev. forecast of a modest improvement and it lowered its 2020 inflation forecasts range for MAS core inflation and CPI-all items to 0.0%-1.0%. (Newswires)

UK/EU

ECB's de Guindos says that the joint issuance of Euro bonds is an instrument to combat COVID-19, however, it is not the only one and not the most effective

European People's Party has called for an extension of EU-UK trade negotiations due to the coronavirus, Telegraph's Crisp; UK's Gove is to speak to the EU today on the joint implementation of the WA; diplomatic source suggests this could be the time to open some back channel 'feelers' on an extension. (Twitter)

German Saxony State CPI MM (Mar) 0.1% (Prev. 0.5%)

German Saxony State CPI YY (Mar) 1.6% (Prev. 2.0%)

GEOPOLITICS

North Korea launched 2 short-range ballistic missiles from its east coast which landed in waters between North Korea and Japan, while North Korea confirmed the launch which it stated were super-large multiple rocket launchers. (Newswires) North Korean official says that US has not dropped its hostile policy despite the good relationship between leaders, according to KCNA. (Newswires)

EQUITIES

A choppy session in the equity space with European futures fully paring its pre-market gains and then some, whilst cash markets move in tandem (Eurostoxx 50 -0.5%). APAC bouses closed the trading day mostly lower, whilst US equity futures reversed earlier upside of almost 1.5% having opened lower by some 1.8%. Stocks in general lack conviction as coronavirus uncertainty feels counterforce (in the short-term at least) from month and quarter-end rebalancing – which models thus far see outflows from Treasuries and inflows into stocks. Back to Europe, major bourses see broad-based losses, whilst in the periphery – Spain’s IBEX (-1.5%) modestly underperforms the region after the county suffered its worst day yet in terms of coronavirus deaths. Subsequently, sectors remain in the red across Europe with defensives faring slightly better than cyclicals at the time of writing. Looking at the breakdown, Travel and Leisure see another session of steep losses, Oil and Gas is also weighed on by price action in respective complexes. However, Banks underperform having been dealt with the prospect of prolonged share buyback and dividend suspensions alongside a lower yield environment. As such, ING (-6.7%) sees itself towards the bottom of the Stoxx 600 after it announced a dividend suspension until at least 1st October, whilst rebuffing FY20 interim payments. Meanwhile, ABN AMRO (-7.4%) is pressured by anticipated Q1 losses, FY and interim dividend postponements. In terms of other movers – Airbus (-7.5%) tackles subdued aircraft demand as airlines ground their fleets, with easyJet (-6.9%) announcing its entire fleet will be non-operational with no timeframe for the resumption of commercial flights. Elsewhere, Hammerson (-18%) rests at the foot of the pan-European index after noting material impacts on 2020 results and withdrawing dividend and guidance. On the flip side, ASML (+2.8%) sees some reprieve after announcing that its supply chain issues have been resolved, albeit the Co. decided to refrain from Q2 share buybacks.

FX

USD - It’s debatable whether the Dollar is benefiting from supportive rebalancing flows for the final trading day of March, the current quarter and the 2019/2020 financial year, or improving chart impulses alongside weakness in rival currencies on specific bearish factors, but suffice to say that the Greenback has pared more of its recent losses. Indeed, the DXY has bounced further from Friday’s low (98.284) towards 99.000 and is currently close to a potentially pivotal technical marker around 98.810 that roughly coincides with a Fib retracement and the 21 DMA. However, jittery risk sentiment and arguably greater demand for the Yen over month/Q1/Japanese half fy end appears to be capping the index.

JPY - Bucking the overall G10 trend as noted above, with Usd/Jpy meeting heavy offers above 108.00 from Japanese exporters and various domestic names repatriating funds for tomorrow. The headline pair is now hovering around 107.50 after a knee-jerk spike above the big figure on reports that JGB issuance will be ramped up to fund the fiscal fight against COVID-19, while taking a 4th record equalling amount of BoJ ETF buying in stride.

CAD/GBP/CHF/EUR/NZD/AUD - All overwhelmed if not completely consumed by the Buck’s partial recovery, as the Loonie also digests the latest BoC rate cut and venture into the realms of QE, including commercial paper, on top of another downturn in crude prices. Usd/Cad is towards the top of a 1.4097-1.3993 range, while Cable is sub-1.2400 within 1.2467-1.2319 parameters and Eur/Gbp meandering between 0.8988-21 following Fitch’s 1 run UK ratings downgrade and seemingly 2-way flows into March 31. Nevertheless, the Euro is nearer the base of 1.1143-1.1062 extremes against the Dollar as the coronavirus case and fatality totals continue to pile up in Spain and Italy, and the single currency is also lagging vs the Franc (Eur/Chf sub-1.0600) even though Usd/Chf is hugging 0.9550 from just over 0.9500 at one stage in wake of latest Swiss sight deposits implying increased intervention. Elsewhere, the Kiwi is underperforming down under, or in fact the Aussie is outperforming on the back of bigger financial support efforts from the Government overnight that boosted the ASX. Nzd/Usd is only just keeping afloat of 0.6000 in contrast to Aud/Usd pivoting 0.6150 and the Aud/Nzd cross looking more comfortable on the 1.0200 handle after a brief dip below.

EM - Broad losses vs the Usd against the backdrop fluctuating/fickle risk asset moves, but with the Rouble undermined by Brent’s retracement as well, while the Rand hit fresh record lows circa 18.0750 following Moody’s SA cut to junk, albeit widely anticipated. Conversely, the Singapore Dollar was not unduly ruffled by limited MAS tweaks to the currency peg as it kept the midpoint and corridor unchanged after trimming the band to zero, and the offshore Yuan is off lows post-PBoC 20 bp repo rate cut.

FIXED

Core debt futures are still defying purported asset rebalancing or risk parity positioning for Tuesday that are tipped to be skewed in favour of stocks, or perhaps simply rallying on broader risk sentiment grounds and noting that equities are not maintaining bullish momentum with the inference that the bulk of the buying for March 31, Q1 and fy end has been completed already. However, Bunds, Gilts and USTs are all off best levels (173.79, 137.31 and 139-06+ respectively) awaiting the US open, German CPI, Wall Street and the latest ECB bond buying breakdown to see if flexibility around the issuer limits and individual member state keys have been utilised.

COMMODITIES

Another detrimental session for the crude markets thus far amid further crystallisation of the demand impact from the virus outbreak as global economies come to a standstill, whilst supply-side woes refuse to subside. Over the weekend, Saudi Arabia opposed an emergency meeting that the OPEC President was urging as oil markets continue to tumble. This rejection would mean that the market will have to wait until the scheduled meeting in June for any revision of output policy. Analysts at ING believe that this will be too late to counter the surplus expected over Q2, and as such the Dutch bank has cut its ICE Brent forecasts to USD 20/bbl vs. Pre. USD 33/bbl for Q2 2020. Meanwhile, Goldman Sachs stated that oil demand this week is seen lower by 26mln BPD and suggested it is impossible to shut down that level of demand with the absence of large and persistent ramifications to supply. In terms of today’s trade, WTI front-month prices briefly dipped below USD 20/bbl to fresh 17yr lows but meander around the level at the time of writing, meanwhile, its Brent counterpart modestly underperforms with added pressure from OPEC – prices breached USD 23/bbl to the downside. Elsewhere, spot gold remains relatively uneventful on either side of USD 1615/oz ahead of this week’s key risk data releases, and with the macro themes also in the fray. Copper prices meanwhile mimic the choppy action in stock markets – with the red metal having given up its APAC gains during early European trade.