• Asian equity markets traded mixed after a weak handover from Wall St where stocks finished the day with losses of more than 4%
• DXY relatively steady overnight with the greenback’s major counterparts contained ahead of weekly jobs figures from the US
• US President Trump is to meet with the CEOs of US oil companies on Friday to talk about helping the industry
• Fed exempted US Treasury debt and Federal Reserve deposits from supplementary leverage ratio for one year as it seeks to ease strains in Treasury market
• US CDC said COVID-19 cases rose +14% to 186,101 (prev. +16% to 163,539) and the death toll rose 26% to 3,603 (prev. +19% to 2,860)
• Looking ahead, highlights include Swiss CPI, US Initial Jobless Claims. ISM New York Index & Business Conditions, Canadian Trade Balance, SNB’s Maechler & Moser, supply from Spain, France, & UK

CORONAVIRUS UPDATE

US CDC said COVID-19 cases rose +14% to 186,101 (prev. +16% to 163,539) and the death toll rose 26% to 3,603 (prev. +19% to 2,860). (Newswires)

US President Trump said during the coronavirus task force daily press briefing that we are going to have a couple weeks that will be rough, while Trump responded that we are looking at the whole thing when asked about curtailing domestic flights. (Newswires)

US Treasury Department said US Social Security recipients will automatically receive coronavirus economic impact payments, while there were separate reports that the US Treasury Department is planning to hire Wall St advisers to advise on providing aid to the airline sector from the recently approved USD 2tln stimulus bill. (Newswires/WSJ)

US House Speaker Pelosi said the House should be able to move on to the infrastructure bill shortly after the planned return to session on April 20th, while she added the plan is similar to the USD 760bln over five years announced in January but there could be changes. (Newswires)

UK Defence Ministry said UK reservists are to be mobilised for an initial 6 months to provide medical and logistical support for the health service, according to a statement. (Newswires)

Australian PM Morrison said we are slowing the spread of coronavirus and that Parliament will return next Wednesday. PM Morrison added it is not known when social restrictions can be relaxed and there were also separate reports that lockdown laws will be in place for 90 days in New South Wales which is Australia's largest state by population. (Newswires)

ASIA

Asian equity markets traded mixed after a weak handover from Wall St where stocks extended on the prior quarter’s historical rout to finish the day with losses of more than 4% and the DJIA suffered a near 1000-point drop amid ongoing coronavirus fears. ASX 200 (-1.3%) was dragged lower by its top-weighted financials sector after the RBNZ ordered all banks in New Zealand to suspend dividends which pressured Australia’s big 4 that have operations across the Tasman and amid concerns there could be similar restrictions domestically, with airline shares also in a tailspin after the government denied Virgin Australia’s request for a loan and indicated it would not provide the Co. with a bailout. Nikkei 225 (-0.8%) was also downbeat but off lows as the JPY-risk dynamic remained the main driver for Tokyo sentiment and with automakers lacklustre following abysmal monthly sales updates. Hang Seng (-0.1%) and Shanghai Comp. (+0.3%) struggled for direction amid the broad cautiousness and after PBoC liquidity inaction, while tensions with the US also risk flaring up as the latter is to tighten rules to prevent China from obtaining US tech for commercial purposes that could also be applied for military use and following US intelligence reports that alleged China concealed the coronavirus outbreak and underreported the number of cases and deaths. Finally, 10yr JGBs initially continued its pullback to below 152.50 with demand sapped heading into the 10yr JGB auction, although prices the rebounded on return from the lunch break and following mixed results in the 10yr auction which was mixed but still showed a jump in the b/c and minimal tail in price.

PBoC skipped open market operations and are net neutral on the day. (Newswires) PBoC set USD/CNY mid-point at 7.0995 vs. Exp. 7.0949 (Prev. 7.0771)

US is to tighten rules to prevent China from obtaining US tech for commercial purposes that could also be applied for military use. (Newswires)

UK/EU

UK Chancellor Sunak is to announce an overhaul of the Business Interruption Loans Scheme to remove a key obstacle for SMEs that struggle to access it. In related news, UK Business Minister Sharma said the Chancellor will announce more related to business support schemes in the coming days. (Sky News/Newswires)

FX

In FX markets, this week’s safe-haven bid that had spurred the DXY back above the 99.00 level has petered out although the pullback is limited with overnight price action stuck around the 99.50 level as participants await the latest US jobless claims data later today ahead of Friday’s NFP figures. The greenback’s major counterparts were also uneventful overnight with EUR/USD contained below 1.0950 and in proximity to several hourly moving average levels including its 200-Hour MA at 1.0927, while GDP/USD languished beneath resistance at 1.2400 where there is a small option expiry of GBP 210mln at 1.2390 set to roll off at today’s New York cut. Elsewhere, USD/JPY attempted to nurse some of the recent losses after support held at 107.00 and antipodeans were lacklustre due to the subdued risk tone, weaker PBoC reference rate and poor Quarterly NAB Business Confidence data for Australia.

Australian NAB Business Confidence (Q1) -11 (Prev. -1). (Newswires)

RBNZ called on banks to freeze dividends, while it is to also unveil a term lending facility which will launch next month and plans a longer-term funding scheme for the banking system. (Newswires)

COMMODITIES

Commodities were mixed overnight with oil prices recouping some recent loss ground to lift WTI crude futures back above the USD 21.00/bbl level following optimistic comments by US President Trump who thinks Saudi and Russia will reach an agreement regarding output and with President Trump to also meet the chiefs of US oil firms tomorrow to discuss potential supportive action. Elsewhere, gold was flat as it mirrored the similar uneventful trade in the greenback, while copper was slightly choppy as early weakness was reversed after finding support at the USD 2.15/lb level.

US President Trump said he thinks Saudi and Russia will make a deal regarding oil production and suggested that he may know how to solve it. There were also comments from the US Energy Department which urged Saudi Arabia, Russia and others to work together to calm oil markets, while it noted it is frustrating that Saudi and Russia are boosting production and do not advance shared interests in stable markets. (Newswires)

US President Trump is to meet with the CEOs of US oil companies (XOM, CVX, OXY) on Friday to talk about helping the industry and will discuss potential for aid such as tariffs on imports from Saudi, according to sources. (WSJ)

Russia's President Putin said Russia and other oil producers and consumers should find solutions that improve the oil market situation. (Interfax)

Senior Gulf source said Saudi Arabia supports cooperation among oil producers to stabilize oil markets and that oil market turmoil was caused by Russia opposition to OPEC+ cuts at the meeting in early March. (Newswires)

GEOPOLITICS

US President Trump stated they are upon information and belief Iran or its proxies are planning a sneak attack on US troops and/or assets in Iraq, while he warned Iran will pay a very heavy price if this happens. In related news, an official noted that US intelligence threads have been building for some time on a potential Iran-backed attack against the US in Iraq and that an Iran-backed attack on US personnel in Iraq would likely be deniable, as opposed to state-on-state, while there were also reports that Iranian Supreme Leader Khamenei advisor warned the US of consequences of "provocative actions" in Iraq. (Newswires)

US Secretary of State Pompeo tweeted that reports Iranian diplomats were involved in an assassination of a dissident in Turkey are disturbing but consistent with their assignments, while he added that Iran's "diplomats" are agents of terror and have conducted multiple assassinations and bomb plots in Europe in the past decade. (Twitter)

US

The TPLEX flattened amid a stock sell-off and issuance weighted towards the front. The T-Note caught its bid overnight and faded off its highs as Europeans left for the session. Desks noted that real money remained an aggressive seller into the Fed’s buy-back operations, where the T-Note rolled lower in the later part of the session alongside a high offer-to-cover ratio in the Fed’s 7- to 20-year maturity operation, perhaps a signal participants are happier to sell their UST holdings at these rates. It also may be ahead of Thursday, where the Fed will taper back its UST purchases from USD 75bln to 60bln a day, where there could be some front-running any perceived sell-off as the Fed begins to step back. Furthermore, corporates continue to swamp the issuance channels, including some European’s coming to the Dollar market on Wednesday – USD 6bln from AB InBev (10s, 20s, 30s, 40s) and USD 5bln from Equinor (5s, 7s, 10s, 20s, 30s). Elsewhere, note that the Fed’s RRP saw a fall in demand to USD 207.83bln across less counterparties, coinciding with slightly firmer GC rates, while the regular O/N repo operation in the morning saw zero bids, and a marginal amount in the afternoon. By settlement the curve was flatter, 2s unch. at 0.23%, 10s -6.5bps at 0.63%, 30s -6.5bps at 1.29%. T-note (M0) futures settled 9+ ticks higher at 138-31+.

Fed exempted US Treasury debt and Federal Reserve deposits from supplementary leverage ratio for one year as it seeks to ease strains in Treasury market and boost banks' ability to provide credit. (Newswires)

Fed's Rosengren (non-voter, hawk) said he expects the unemployment rate to rise dramatically and that the virus will impact home and commercial real estate prices, while he added that if restrictions continue for too long, it will increase the distress among highly leveraged companies. (Newswires)