• Asian equity markets traded mostly positive and US equity futures also began the week on the front-foot amid a slowdown in COVID-19-related deaths in some areas
• Italy showed its smallest daily increase in deaths since March 19th and slowest pace of increase in cases in 5 days
• UK PM Johnson was taken to hospital for tests due to the coronavirus which Downing Street stated was a precautionary step
• In FX markets, the DXY was relatively stable north of the 100.50 level after last week’s momentum stalled
• OPEC+ meeting was delayed a few days and will now be conducted on Thursday instead of the initially planned Monday
• Looking ahead, highlights include German Industrial Orders, BoC Business Outlook Survey

CORONAVIRUS UPDATE

Italy’s coronavirus death toll rose by 525 to 15,887 which was its smallest daily increase since March 19th and the number of confirmed cases rose by 4316 to 128,948 which was the slowest pace of increase in 5 days. (Newswires)

As of Sunday, UK COVID-19 cases rose to 47,806 (prev. 41,903), death toll rose to 4,932 (prev. 4,313); deaths 14.35% rise vs. prior 19.64% increase. (DHSC)

UK PM Johnson was taken to hospital for tests due to the coronavirus which Downing Street stated was a precautionary step as the PM had persistent symptoms 10 days after having tested positive for coronavirus. (Newswires)

UK Ministers have begun talks on how and when lockdown rules can be eased amid concerns in the Treasury over the long-term implications of the measures. One option could involve easing by region, industrial sector or expanding the release of “key workers”. (Times) A separate report notes that whilst the lockdown is in force, it will cost the UK economy GBP 2.4bln per day. (Times) However, over the weekend, Health Secretary Hancock warned that lockdown measures could be tightened if they are required to halt the spread of COVID-19. (Newswires)

US President Trump said there is going to be a lot of deaths in the next 2 weeks but also stated we hope we're seeing a levelling off for coronavirus in the hottest spots and that the drop in number of New York deaths could be a good sign. Trump added the US is very far down the line on developing vaccines for coronavirus and we'll see what happens, while he suggested we're starting to see light at the end of the tunnel and that he likes the concept of sending additional economic relief checks to Americans. (Newswires)

US VP Pence said he spoke to a number of state governors on Sunday and all of those states are seeing a trend of some levelling in coronavirus cases. In related news, US CDC was advising wearing face coverings on a voluntary basis and the White House confirmed US President Trump signed a DPA order aimed at preventing hoarding and exports of personal protective equipment. (Newswires)

WHO said it is possible some element of airborne transmission could be seen in the spread of the coronavirus although the main driver is still symptomatic people coughing, sneezing or contaminating others and surfaces. (Newswires)

ASIA

Asian equity markets traded mostly positive and US equity futures also began the week on the front-foot as participants saw a glimmer of hope from a slowdown in the pace of coronavirus deaths for several hotspots including New York, Spain and Italy in which the latter had its lowest daily death toll since March 19th. ASX 200 (+4.3%) was underpinned amid broad gains across its sectors and with notable outperformance in healthcare following reports that Australian scientists found that Ivermectin which is produced by Merck for treatment of parasites and head lice was successful in killing coronavirus within 48 hours and that the next phase will be for human trials. Nikkei 225 (+2.3%) coat tailed on the favourable currency moves and ahead of this week’s expected roll out of the stimulus package which is said to include increased subsidies, tax deferrals and cash payments to households. Hang Seng (+1.3%) was also positive following the recent monetary policy efforts in the region including the PBoC’s 100bps RRR cut announcement and with the HKMA halving the amount of reserves banks are required to set aside against bad loans, although gains were somewhat limited amid a lack of mainland participants due to the Ching Ming holiday in China. Finally, 10yr JGBs were lower with prices pressured amid gains in stocks and anticipation for increased supply with the Japanese government set to announce a stimulus package and state of emergency declaration which could occur as early as tomorrow.    

Japanese economic stimulus package will reportedly be in two phases to support jobs and help a V-shape recovery, in which it will increase subsidies for firms impacted by the coronavirus and extend tax payments for 1 year, while it will cut property tax to zero for smaller firms and households impacted are to receive JPY 300k. In related news, reports noted that Japan is to declare a state of emergency as early as Tuesday and which could be valid until May 6th. (Newswires/Yomiuri)

UK/EU

S&P affirmed France at AA; Outlook Stable and Germany at AAA; Outlook Stable, while Fitch affirmed Belgium at AA-; Outlook revised to Negative. (Newswires)

UK GfK Consumer Confidence (Mar) -34 (Prev. -9); weakest reading since Feb. 2009. (Newswires)

BoE Governor Bailey has stated he opposes the use of monetary financing to aid the economy given the virus shock; stating he would oppose any calls for the Bank to print money to enable the UK deficit to increase. As it would damage the credibility of the BoE’s inflation controls. Adds that they ‘will not hesitate to take all necessary actions’. (FT)

FX

In FX markets, the DXY was relatively stable north of the 100.50 level after last week’s momentum stalled post-NFP. EUR/USD was flat around the 1.0800 level as the ongoing fallout and disruption from the pandemic was offset by the decline in the Italy’s COVID-19 curve and after Spain also reported a 3rd consecutive decline in its daily death toll, while GBP/USD was subdued below 1.2250 after UK PM Johnson was taken to hospital, although this was said to be for tests and was just a precautionary step amid persistent symptoms after having tested positive for the virus 10 days prior. Elsewhere, USD/JPY prodded resistance at 109.00 and JPY-crosses were also underpinned amid the positive risk sentiment, while AUD/USD marginally benefitted due to its high beta status but with gains capped heading into tomorrow’s RBA meeting where analysts anticipate no change in rates but money markets are pricing in a near coin-flip between a 25bps cut and a hold.

Bank of Canada announced the activation of its Contingent Term Repo Facility (CTRF) from 6th April and will remain open for 12 months. (Newswires)

COMMODITIES

Commodities traded mixed with significant seen in oil prices as WTI crude futures slumped around 10% at the open after reports over the weekend that the OPEC+ meeting that had been scheduled for today, was pushed back to Thursday amid flaring tensions between Saudi Arabia and Russia following the recent finger pointing from both sides regarding the oil price collapse. However, prices then steadily clawed back the majority of losses amid the constructive risk tone and heads into the European open down less than 3% around the USD 27.50/bbl level. Gold prices were steady overnight as it reflected the rangebound price action for the greenback, while copper saw mild gains due to the overnight risk appetite but with upside capped by the absence of its largest consumer China.

OPEC+ meeting was delayed a few days and will now be conducted on Thursday instead of the initially planned Monday. (Newswires)

US President Trump initially stated on Friday that we will work this out and get our energy business back in which he noted the Saudi Crown Prince and Russia’s President want something to happen. However, he then commented over the weekend that he couldn’t care less about OPEC and they are destroying themselves, while separately stated he would have to do substantial tariffs if oil prices stay the way they are but doesn't think it will be needed. (Newswires)

Russian President Putin said the situation on the global energy markets remains difficult and demand is falling, while he is comfortable with oil at USD 42/bbl. Russian President Putin also spoke to US President Trump in which he stated "we are all worried about the situation" and are ready to act with the US on oil markets, while he added that Russia wants joint actions on oil markets and that cuts should be made from the Q1 levels. Furthermore, he alleged that Saudi plans to get rid of shale oil producers and suggested the reason for oil price collapse is the coronavirus, lack of oil demand and Saudi Arabia withdrawal from the OPEC+ deal. (Newswires)

Texas Railroad Commissioner Sitton said he doesn't see the US having a long relationship with OPEC at all and that Texas would agree to oil production curbs if President Trump reaches an international agreement. (Newswires)

Baker Hughes US Rig Count (w/e April 3rd): Oil -62 at 562, Nat Gas -2 at 100, Total -64 at 664. (Newswires)

India gold imports declined 73% Y/Y to 25 tonnes in March which was the lowest in over 6 years. (Newswires)

US

The TPLEX bull flattened, catching upward momentum in the US session as equities drifted lower and a cooling in corporate issuance – the -700k NFP report had little immediate market impact. One desk noted that the bid was mostly a function of leveraged fund types, although real money did “nibble”. Furthermore, corporate issuance took a breather on Friday, with just a couple of IG issuers, likely supporting the bid out the curve. FedEx (FDX) was one of the issuers, raising capital further out the curve in order to pay off credit facilities it had drawn down on. This method has become more frequent recently, and is supporting the bounce back in issuance, as corporates raise capital in longer maturities to address their large credit facility drawdowns and commercial paper issuance. Meanwhile, the Fed continued its Treasury purchases (at the reduced clip of USD 60bln per day), also supporting the flattener, and in contrast to recent sessions, Treasuries maintained their bid after the Fed completed its purchases, whereas recent sessions have seen participants selling into the operations. By settlement, 2s -1bps at 0.21%, 10s -4bps at 0.59%, 30s -5bps at 1.22%. T-note (M0) futures settled 8 ticks higher at 139-04+.

NY Fed plans to purchase USD 200bln worth of treasury securities this week ay USD 50bln per day on average through April 6th-9th (Prev. USD 60bln a day). (Newswires)

Wisconsin State is to conduct in person voting on Tuesday after the state legislature declined to delay the vote despite the coronavirus outbreak. (Newswires)