• Asian equity markets were mostly lower as the region failed to sustain the energy-led euphoria from Wall St
• In FX markets, price action was uneventful ahead of the key US jobs data with the DXY plateauing above the 100.00 level
• Oil prices continued to pullback after several reports pushed back on an imminent deal between global oil producers
• Saudi Arabia reportedly wants other producers such as the US, Canada, Mexico and others in G20 to take part in any cuts
• Looking ahead, highlights include EZ, UK & US Composite and Services PMI (Final), US Labour Market Report & ISM Non-Manufacturing PMI

CORONAVIRUS UPDATE

US Treasury Mnuchin said they will raise the interest rate on new small business loans to 1.0% from 0.5% to make the loans economic for banks and noted they were working around the clock to get the SBA payment protection program up and running for today. Mnuchin added that this doesn't mean businesses will get the loan today, but the program will be up and running, while he stated the first stimulus checks will be directly deposited in 2 weeks which is a week ahead of schedule. (Newswires)

US VP Pence said updated CDC guidance on wearing of face masks will follow in the next several days although there were separate reports that New York Mayor De Blasio urged residents to wear face coverings in public to prevent the spread of coronavirus. (Newswires)

Washington State extended the stay at home order through to May 4th and Louisiana will also extend the stay at home order through to April 30th. (Newswires)

China Wuhan Communist Party Secretary said the risk of coronavirus resurgence in the city is still high and must guide residents to strengthen self-protection, while the official added that residents should avoid going out if not necessary. (Newswires)

ASIA

Asian equity markets were mostly lower as the region failed to sustain the energy-led euphoria from Wall St where risk appetite was driven by the record surge in oil prices after comments from President Trump spurred hopes of a potential Saudi Arabia and Russia oil price truce, in which he noted that he spoke to the Saudi Crown Prince who spoke with Russian President Putin and expects them to announce an oil production cut of 10mln-15mln BPD. Nonetheless, the momentum lost steam overnight given Russia’s denial of any talks occurring between President Putin and the Saudi Crown Prince, with key data releases including Chinese Caixin PMIs and looming US NFPs adding to the cautiousness. ASX 200 (-2.2%) gave up early gains as the initial surge in the energy sector reversed course and amid continued weakness in financials, while Nikkei 225 (-0.7%) also deteriorated after failing to hold above the 18000 level. Hang Seng (-1.0%) and Shanghai Comp. (-0.3%) conformed to the overnight indecision as participants digested the latest PMI releases from China in which Caixin Services PMI topped estimates and Composite PMI improved, although both remained in contraction territory with the former at its 2nd weakest reading on record. Finally, 10yr JGBs were pressured as Japanese stocks initially traded positive and following the BoJ’s Rinban announcement in which it lowered purchases in the short-end, although this wasn’t much of a surprise given the increased frequency of purchases for this month and JGBs later rebounded off lows as the risk appetite waned.

PBoC skipped open market operations for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 7.1104 vs. Exp. 7.1115 (Prev. 7.0995), weakest fix since March 2008

Chinese Caixin Services PMI (Mar) 43.0 vs. Exp. 39.5 (Prev. 26.5); 2nd weakest reading on record. Chinese Caixin Composite PMI (Mar) 46.7 (Prev. 27.5)

PBoC's Vice Governor Liu said the benchmark deposit rate is the bedrock of the PBoC toolbox and further consideration is needed before adjusting the deposit rate, while PBoC also stated it will not allow a credit crunch nor will it allow a flood of credit and that China has ample policy tools to cope with the impact from coronavirus. (Newswires)

China MOFCOM said China supports foreign companies returning to work and will stabilize foreign investment amid coronavirus pandemic, while it will further reduce the negative list for foreign investment. There were also comments from the China Banking and Insurance Regulatory Commission vice head that they will support local governments to inject capital into small banks and that they welcome foreign, as well as private firms to participate in restructuring of small banks. (Newswires)

Japanese Economic Minister Nishimura said they are working on deciding stimulus measures during first half of next week and want to provide support to those who are facing hardship or directly impacted from the coronavirus. (Newswires)

Asia Development Bank lowered Developing Asia 2020 growth forecast to 2.2% from 5.2% and sees 2021 growth at 6.2%, lowered China 2020 growth forecast to 2.3% from 5.8% and sees 2021 growth at 7.3%, while it lowered India 2020 growth forecast to 4.0% from 6.5% and sees India growth at 6.2% for 2021. (Newswires)

UK/EU

UK Finance Ministry expanded the business loan scheme to medium-sized companies in which those with a turnover of GBP 45mln-500mln can apply for government-guaranteed loans of up to GBP 25mln from banks, while it also eased the criteria for small companies under the current program. (Newswires)

FX

In FX markets, price action was uneventful ahead of the key US jobs data with the DXY plateauing above the 100.00 level to hold on to most the prior day’s strength. The greenback’s major counterparts were lacklustre in which EUR/USD consolidated around 1.0850 and with GBP/USD contained again by resistance at 1.2400, as well as the cluster of moving average levels ranging from its 5- to 100-Hourly MAs. Elsewhere, USD/JPY was slightly higher but struggled to gain a solid footing on the 108.00 handle, while antipodeans were flat with firmer than expected Australian Retail Sales data and the weakest PBoC reference rate setting since the global financial crisis doing little to spur a reaction in the currencies.

Australian Retail Sales MM (Feb) 0.5% vs. Exp. 0.4% (Prev. -0.3%). (Newswires)

COMMODITIES

Commodities were mixed as oil prices continued to pullback from the prior day’s record surged which has been triggered after comments from US President Trump spurred hopes of a Saudi-Russia oil price truce with a possible 10mln-15mln bpd cut which saw WTI briefly test the USD 27.00/bbl level before retracing some of the advances to settle above USD 25/bbl with gains of around 25%. However, prices continued to pullback after several reports pushed back on an imminent deal including comments from the Kremlin which denied discussions occurred between Saudi and Russian leadership. Elsewhere, gold prices were steady after its recent reclaim of the USD 1600/oz level and amid an uneventful greenback, while copper prices were marginally pressured as the risk appetite soured overnight.

US President Trump said he did not make concessions during talks with Saudi and Russia on oil, while he added that he did not agree to a US domestic production cut. (Newswires)

US Department of Energy announced it is offering oil producers the option to lease space to store oil in the SPR, in fitting with source reports earlier in the week and is to lease space for 30mln bbls of oil. (Newswires)

US administration official said the US doesn't know formal details of Saudi and Russian plans to cut oil supply and that US President Trump doesn't plan to ask domestic producers to agree on a specific cut. The official also commented that the US cannot orchestrate a mandated domestic oil supply cut and that US companies are already cutting production as they run out of storage space, while the US government is considering suspending royalty payments on oil production to support domestic suppliers. (Newswires)

Saudi Arabia reportedly wants other producers such as the US, Canada, Mexico and others in G20 to take part in any cuts according to sources, while a Saudi official reportedly stated a best case scenario would be, maybe a 6mln BPD cut and added that they were not sure how he President Trump reached those figures or which countries he has in mind. (WSJ)

Texas Railroad Commissioner Sitton tweeted that he had a great conversation with Russia's Energy Minister Novak in which they both agreed COVID-19 requires an unprecedented level of international cooperation and that they "Discussed 10mbpd out of global supply". (Newswires)

Iraq is confident that OPEC+ will reach a positive agreement at its next meeting. (Newswires)

Goldman Sachs said even if a Saudi and Russia output deal is reached, the coordination required would result to a delayed and gradual implementation, while it added that considering size of current demand hit of 26mln bpd, an output cut is necessary rather than voluntary. (Newswires)

US

The TPLEX was little changed amid a choppy session, albeit tight ranges. Futures spiked higher overnight on the announcement the Fed would be suspending USTs and Federal Deposits from the supplementary leverage ratio, supporting banks in maintaining onto Treasuries, although faded the move during APAC trade. Furthermore, similar to Wednesday’s tape action, the complex was sold into the afternoon where the Fed resumed its Treasury purchases, albeit at a smaller clip of USD 60bln per day (down from USD 75bln), which was likely an influencing factor behind the higher offer-to-cover ratios; a crude spike induced rally in equities likely supported the offer in Treasuries too. Note the curve sold off in a steepener fashion after the Fed carried out its long-end purchases first, as it has been doing in prior sessions, before moving up the curve. The corporate issuance bonanza continued with around ten IG issuers coming to the dollar market, including a USD 19bln 5-parter (5s, 7s, 10s, 20s, 30s) for its Sprint (S) merger. Signs of a healthier corporate debt market have been felt at the front-end too, where the NY Fed noted AA-rated CP spreads continue to decline; the USD 3-month FRA-OIS spread narrowed by 8bps to 113bps on the session. Looking at the T-Curve at settlement, yields were little changed, with yields within 2bps higher/lower. T-note (M0) futures settled 3 ticks lower at 138-28+.

US Fed total balance sheet size increased to USD 5.86tln on Wednesday from USD 5.30tln the prior week, while Fed holdings of Treasuries rose to USD 3.34tln from USD 2.98tln W/W and its holdings of MBS rose to USD 1.46tln from USD 1.38tln W/W. (Newswires)

S&P affirmed US at AA+; Outlook Remains Stable. (Newswires)