• Asian equity markets were mostly higher (before trimming some gains) as the region took its cue from the gains on Wall St and Chinese PMI figures
• Chinese Manufacturing and Non-Manufacturing PMI topped estimates and the Composite PMI also printed in expansion territory
• Some downplayed the data given that it was a recovery from the prior month’s record low base and with China’s stats bureau warning the rebound does not mean the economy has returned to normal
• DXY remained firmer after having reclaimed the 99.00 level to the upside, benefitting from weakness in major counterparts
• WHO official said coronavirus epidemic is far from over in Asia and the focus of the epidemic is now in Europe but will likely shift to other regions
• US Congress was looking at additional measures it could take with House Democrats discussing increasing payments to low and middle-income earners
• Looking ahead, highlights include UK GDP, German Unemployment, EZ CPI, Canadian GDP, US Chicago PMI, US Consumer Confidence, APIs, supply from Italy

CORONAVIRUS UPDATE

WHO official said coronavirus epidemic is far from over in Asia and the focus of the epidemic is now in Europe but will likely shift to other regions. The official also stated that measures to reduce transmission will not remove risks as long as the pandemic continues and that steps to reduce transmission can buy time to prepare for large-scale community transmission, while the official added that there are more than 50 candidate vaccines for coronavirus and several trials are ongoing. (Newswires)

US President Trump said we can save more than 1mln lives by following social distancing guidelines vigorously. President Trump also stated that there are challenging times ahead for the next 30 days and that 1mln Americans have now been tested, while he suggested that a national stay at home order was pretty unlikely. (Newswires)

US Congress was looking at additional measures it could take with House Democrats discussing increasing payments to low and middle-income earners, while there were also comments from House Speaker Pelosi that a fourth coronavirus relief bill will include infrastructure, like broadband and water safety. (Newswires)

US CDC said COVID-19 cases rose to 140,904 (prev. 122,653, +15%) and the death toll increased to 2,405 (prev. 2,112).

Italy COVID-19 cases rose to 101,739 (prev. 97,689) and death toll increased to 11,591 (prev. 10,779). There were also reports the Italian government will be extending lockdown measures until "Easter April 12th" according to the Health Minister. (Newswires)

UK COVID-19 cases rose to 22,141 (prev. 19,522) and death toll rose to 1,408 (prev. 1,228), while UK Chief Scientific Advisor believes UK is tracking along the same path as France and believes hospital admissions will worsen, but have no accelerated, rising by 1,000 per day. (Newswires)

Mainland China reported 48 additional cases and 1 additional death on March 30th vs. 31 additional cases and 4 deaths on March 29th, to bring the total number of confirmed cases in mainland China to 81518 and death toll at 3305. (Newswires)

G20 trade minister statement called for international community to step up efforts and will guard against profiteering, as well as unjustified price increases, while it also noted they will continue to work to create stable trade and investment. (Newswires)

World Bank sees 2020 Developing East Asia and Pacific Region growth to slow to 2.1% in baseline scenario due to coronavirus and deteriorate to -0.5% in lower case scenario, while it sees China growth to slow to 2.3% in baseline scenario and to 0.1% in lower case scenario. (Newswires)

ASIA

Asia equity markets were mostly higher (before trimming some gains) as the region took its cue from the gains on Wall St following recent global stimulus efforts and with sentiment also underpinned by an improvement in the latest Chinese PMI figures. ASX 200 (-2.9%) and Nikkei 225 (-1.2%) were lifted from the open with early outperformance in Australia led by the largest weighted financials sector and with sentiment also boosted after yesterday’s record AUD 130bln stimulus announcement, while Japanese exporters initially benefitted from a weaker currency, although both indices then gave up the gains amid Q1-end rebalancing and amid some doubts regarding the Chinese data. Hang Seng (+0.5%) and Shanghai Comp. (+0.4%) conformed to the early constructive tone following encouraging Chinese PMI data in which headline Manufacturing and Non-Manufacturing PMI topped estimates and the Composite PMI also printed in expansion territory. However, gains in the mainland were somewhat limited as some downplayed the data given that it was a recovery from the prior month’s record low base and with China’s stats bureau warning the rebound does not mean the economy has returned to normal and that this month’s data alone cannot determine an improving trend. Finally, 10yr JGBs were pressured in a continuation of the pullback from the 153.00 level, with demand subdued by the early upbeat tone in risky assets and following weaker results at the 2yr JGB auction.

PBoC injected CNY 20bln via 7-Day Reverse Repos at a rate of 2.20% vs. Prev. 2.20% (Newswires) PBoC set USD/CNY mid-point at 7.0851 vs. Exp. 7.0860 (Prev. 7.0447)

Chinese NBS Manufacturing PMI (Mar) 52.0 vs. Exp. 45.0 (Prev. 35.7). Chinese Non-Manufacturing PMI (Mar) 52.3 vs. Exp. 42.0 (Prev. 29.6) Chinese Composite PMI (Mar) 53.0 (Prev. 28.9)

China Stats Bureau said the rebound does not mean the economy has returned to normal and March data alone cannot tell improving trend. (Newswires)

PBoC adviser Ma Jun advised China to not set a 2020 GDP target given the large uncertainties, while Ma added setting a target may force China to resort to flood-like stimulus and noted that GDP growth of 4%-5% will be difficult to reach. (Newswires)

China tax bureau official said China is monitoring the trade situation and studying tax reduction, as well as other policies to stabilize situation, while the official added China is studying permitting more foreign firms to benefit from preferential policies such as tax cuts. (Newswires)

Japanese Industrial Production (Feb P) M/M 0.4% vs. Exp. 0.1% (Prev. 1.0%). (Newswires) Japanese Industrial Production (Feb P) Y/Y -4.7% vs. Exp. -4.9% (Prev. -2.3%) Japanese Industrial Production Forecast for March at -5.3% and April at 7.5%. Japanese Retail Sales (Feb) M/M 0.6% vs. Exp. -1.5% (Prev. 0.6%) Japanese Retail Sales (Feb) Y/Y 1.7% vs. Exp. -1.2% (Prev. -0.4%)

Japanese government official said manufacturers' output forecasts for March and April do not fully reflect developments of coronavirus outbreak, while the official added that the outlook for industrial production is to remain severe for the time being. (Newswires)

UK/EU

UK GfK Consumer Confidence (Mar) -9 vs. Exp. -15.0 (Prev. -7.0). (Newswires) UK Lloyds Business Barometer (Mar) 6 (Prev. 23)

FX

In FX markets, the DXY remained firmer after having reclaimed the 99.00 level to the upside and with the greenback also benefiting from weakness in its transatlantic counterparts as a bout of volatility was seen across the FX majors heading into the key Chinese PMI data, in which EUR/USD fell about 50 pips and GBP/USD slipped around 140 pips in a matter of minutes through the 1.1000 and 1.2300 levels respectively, before paring the majority of the slump shortly after. Elsewhere, USD/JPY reclaimed the 108.00 handle and JPY-crosses were also lifted on the early safe-haven outflows, while antipodeans were marginally higher after having reversed the intraday mini flash crash and following better than expected Australian Private Sector Credit, as well as the encouraging Chinese PMI releases.

Australian Private Sector Credit (Feb) M/M 0.4% vs. Exp. 0.2% (Prev. 0.4%). (Newswires) Australian Private Sector Credit (Feb) Y/Y 2.8% vs. Exp. 2.6% (Prev. 2.5%) New Zealand ANZ Business Confidence (Mar) -63.5 vs. Exp. -24.1 (Prev. -19.4) New Zealand ANZ Activity Outlook (Mar) -26.7 (Prev. 12)

COMMODITIES

Commodities were mostly higher amid the mostly constructive risk tone and following the better than expected Chinese activity data, which provided much needed reprieve for WTI crude prices after having recently slipped to its lowest in 18 years. Nonetheless, prices climbed back above the USD 21/bbl level in Asia trade amid the encouraging data and signs of US and Russia willingness to come to the table, but with upside restricted as Saudi Arabia remains steadfast and plans to boost exports by 600k bpd in May. Elsewhere, gold prices were subdued with the precious metal dampened by a firmer greenback, while copper prices were lifted from the rebound in Chinese PMI data.

GEOPOLITICS

Libyan National Army said a Turkish plane was shot down south of Tripoli after taking off from Maitika Airport. (Newswires)

US

The TPLEX bull-steepened despite firmer risk appetite and corporate supply. The T-Note reached its highs not long after the US cash equity open as the Fed continued its ramped-up asset purchases, completing its belly purchases earlier on. However, another deluge of corporate supply to start the week, including Oracle (ORCL) with a USD 20bln 6-parter from the 5-year up to the 40-year maturity, weighed somewhat on duration in the latter part of the session; IFR noted there are at least 12 High Grade primary issuers on Monday for a week that looks set to break records again. Furthermore, the repo operations continue to see minimal demand with the GC rate still trading close to zero, while the reverse repo operation sees continued blockbuster demand, supporting the lack of collateral supply thesis and thus the bull-steepener on Monday. By settlement, 2s -3bps at 0.22%, 10s -6.5bps at 0.68%, 30s -3.5bps 1.30%; front-end bills have risen back into positive territory after moving into negative for the first time ever last week; 3-month USD Libor-OIS remains wide at 136bps. T-note (M0) futures settled 18 ticks higher at 138-26+.

Fed's Bostic (non-voter) said the Fed is looking to see in the coming weeks whether its existing programmes will prove adequate. (Newswires)