• Asian equity markets traded mostly higher as the region took impetus from the strong finish on Wall St where all major indices finished higher by at least 7%
• A subdued greenback provided some respite for its major counterparts including EUR/USD which reclaimed the 1.0800 handle
• OPEC+ is likely to agree to oil production cuts on Thursday, subject to US involvement, according to sources
• UK PM Johnson was taken to intensive care after his condition was said to have worsened
• US President Trump said that the administration wants to try to be able to lift restrictions on April 30th
• US House Speaker Pelosi told Democrats she wants the next virus bill to be at least USD 1tln
• RBA kept rates on hold at 0.25% as expected and the board reaffirmed the 3yr yield target at 0.25%
• Looking ahead, highlights include German Industrial Output, US JOLTS, EIA STEO, APIs, Eurogroup Meeting, supply from Germany, UK and US

CORONAVIRUS UPDATE

UK PM Johnson was taken to intensive care after his condition was said to have worsened and was therefore moved to the ICU in the event that a ventilator is required, while has he asked Foreign Secretary Raab to deputise. Furthermore, a government official confirmed PM Johnson was receiving oxygen in hospital but was not on a ventilator. (Newswires)

US President Trump said we have made tremendous progress on therapeutics and have contacted UK PM Johnson's doctors, while he added that the administration wants to try to be able to lift restrictions on April 30th. President Trump said businesses applied for more than USD 40bln in relief loans, that USD 30bln in hospital aid is going out this week and that they could very well do a 2nd round of direct payments to Americans. (Newswires)

US House Speaker Pelosi told Democrats she wants the next virus bill to be at least USD 1tln, while she is said to be seeking more directs payments and small business loans in the next bill. (Newswires)

New Jersey Governor said he is seeing a fall in the growth rate of new coronavirus cases in the state and that the curve is beginning to flatten. (Newswires)

US CDC said COVID-19 cases rise 8.5% to 330,891 (prev. +10% to 304,826), death toll rises 17% to 8,910 (prev. +15.5% at 7,616), while AFP tweeted that the US record 1150 coronavirus deaths citing the Johns Hopkins tracker. (Newswires/AFP)

Mainland China reported 32 additional coronavirus cases and 0 new deaths on April 6th vs. 39 new cases and 1 death on April 5th, to bring the total number of cases in the mainland to 81470 and death toll remained at 3331. (Newswires)

ASIA

Asian equity markets traded mostly higher as the region took impetus from the considerable pick up on Wall St where all major indices finished higher by at least 7.0% and the DJIA notched a more than 1600-point gain amid hopes of a slowdown in the coronavirus outbreak after encouraging numbers from various hot spots, although some economists warned caution given that the economy was far from out of the woods and the latest reports suggested the daily death toll in the US remained at an alarming level of 1150 according to the Johns Hopkins tracker. ASX 200 (-1.4%) and Nikkei 225 (+0.8%) were both boosted and surged over 2% shortly after the open although gains in Australia then waned amid losses in the healthcare sector and cautiousness heading into the RBA decision, while the Japanese benchmark briefly broke above the 19000 level supported by better than expected Housing Spending data and plans for a JPY 108tln package but later gave back a majority of gains heading into the state of emergency declaration. Hang Seng (+0.5%) and Shanghai Comp. (+1.7%) were also positive with outperformance seen in the mainland as it plays catch up on return from the extended weekend and took its first opportunity to react to the PBoC’s 100bps targeted RRR cut announcement. Finally, 10yr JGBs were higher as prices bounced back from support around the 152.00 level and with the BoJ offering to buy JPY 150bln of corporate bonds, although upside was also capped due to the mostly upbeat risk tone and following weaker results at the 30yr JGB auction.

PBoC skipped open market operations for a net daily drain of CNY 70bln. (Newswires) PBoC set USD/CNY mid-point at 7.0939 vs. Exp. 7.0915 (Prev. 7.1104)

Japanese All Household Spending (Feb) M/M 0.8% vs. Exp. -0.2% (Prev. -1.6%). (Newswires) Japanese All Household Spending (Feb) Y/Y -0.3% vs. Exp. -3.9% (Prev. -3.9%)

UK/EU

European Commission is mulling proposals that would allow EU member states to help companies through injection of equity, according to sources. (FT)

FX

DXY was slightly softer overnight as the upbeat risk appetite dampened demand for safe-haven currencies including USD which had more than benefitted from the recent coronavirus turmoil and its reserve currency status. The subdued greenback provided some respite for its major counterparts including EUR/USD which reclaimed the 1.0800 handle but with gains capped amid a cluster of nearby hourly moving average levels ranging up to the 50-hour MA at 1.0805. GBP/USD initially extended on the prior day’s underperformance on news that PM Johnson was moved to the intensive care unit after his conditions worsened where he was said to receive oxygen but was not on a ventilator, while selling was exacerbated on a brief break below the 1.2200 level before eventually recovering on the USD weakness. Elsewhere, USD/JPY saw a mild pullback from the recent risk-driven flows to slip back below the 109.00 handle and antipodeans traded higher due to their high beta properties and after a firmer PBoC fixing, while the RBA announcement to keep rates unchanged at 0.25% as expected eventually spurred some upside considering that money market rates were pricing in a near coin-flip between a cut and a hold, and as the central bank suggested it could reduce its QE operations if conditions improve.

RBA kept rates on hold at 0.25% as expected and the board reaffirmed the 3yr yield target at 0.25% which is expected to remain in place until progress is being made towards goals of full employment and inflation. RBA added the board is committed to doing what it can to support jobs, incomes and businesses as Australia deals with the coronavirus but noted that once the virus is contained, a recovery in the global economy is expected. Furthermore, it stated that if conditions continue to improve, it is likely that smaller less frequent purchases of government bonds will be needed. (Newswires)

Australian Trade Balance (AUD)(Feb) 4361mln vs. Exp. 3650mln (Prev. 5210mln). (Newswires) Australian Exports (Feb) M/M -5% (Prev. -3.0%) Australian Imports (Feb) M/M -4% (Prev. -3.0%)

COMMODITIES

Commodities were mixed overnight in which WTI crude futures nursed some of the prior day’s 7% losses which were due to the ongoing uncertainty regarding an output cut agreement. Nonetheless, prices have recovered off lows after finding support at the USD 26.00/bbl and amid the positive risk appetite, while there were also encouraging source reports that suggested Russia was ready to discuss very substantial oil output cuts. Elsewhere, gold was flat but held on to most the prior day’s gains above the USD 1650/oz level and copper rallied amid the constructive risk tone.

OPEC+ group is likely to agree to oil production cuts on Thursday which would be contingent upon the US joining in with the production cuts, according to three OPEC+ sources. (Newswires)

US President Trump commented that nobody has asked him to cut US oil output and that he will decide if OPEC asks US to cut production, while he added US producers have cut automatically as a reaction to the market. (Newswires)

Russia is ready to discuss very substantial oil output cuts due to the global demand collapse, according to two sources which added that the 10mln BPD cut might not be enough to balance the oil market. (Newswires)

Saudi Arabia and other producers are reportedly looking to convince others oil storage is running out, noting traders are looking for oil storage space in Morocco, Malta and the Caribbean, according to sources. (Newswires)

CME raised crude oil NYMEX margins by 5.5% to USD 6700/contract from USD 6350/contract. (Newswires)

US

The TPLEX bear-steepened alongside a strong equity rally and heavy issuance. The T-Note had been firming off of lows in early European trade amid tentative equity gains, although pared strength as the US session commenced and the equity rally gained momentum, on both sides of the pond. However, the curve steepening was tamed somewhat as investors anticipated the upsized USD 40bln 3-year Treasury issuance, which tailed by a chunky 1.2bps, covered  2.27x (less than the six-auction average of 2.47x), and saw dealers take 40.54% (more than the average 35.3%).  Furthermore, the Fed’s support for Treasuries has pared further on Monday, and for the rest of the week, as it trimmed its daily purchases amount to USD 50bln per week, which also saw participants sell into the operations. All the while, corporate issuance started the week again on a strong note, seeing eleven IG issuers come to the dollar market and a small handful of SSAs (particularly Canadians), likely adding to the selling pressures. By settlement, 2s +5bps at 0.266%, 10s +8bps at 0.671%. T-note (M0) futures settled 23+ ticks lower at 138-13.

Federal Reserve and US Treasury Dept. are reportedly preparing to launch a new programme to buy loans that firms make throughout its small business lending programme. (WSJ)