• A tentative tone was observed in Asia-Pac bourses following the lacklustre performance stateside
• DXY was relatively steady although managed to recoup some of the recent losses to reclaim the 100.00 level
• US President Trump said the US is looking at reopening the economy very thoroughly which will be open again much sooner rather than later
• Work towards an ambitious EU economic policy response to COVID-19 is “well on track but not there yet”, according to a spokesman for Eurogroup President Centeno
• An OPEC delegate said the current options being considered for the upcoming meeting range from a 10mln BPD cut to no cut
• Looking ahead, highlights include Norwegian CPI, DoEs, FOMC & Banxico Minutes, supply from UK, Germany and US 

CORONAVIRUS UPDATE

US President Trump said the US is being hit hard now and it will be a painful week but also noted we see glimmers of hope and that the US may be on track for far fewer deaths than projected, as well as may be getting to the top of the coronavirus curve. President Trump added they are starting to look at reopening the economy very thoroughly which will be open again much sooner rather than later, while he initially stated the US is going to put a hold on contribution to the WHO and noted they were China centric and disagreed with his travel ban, but later stated we will look at holding off funding. (Newswires)

US President Trump said he will ask Congress for an additional USD 250bln in small businesses relief and there were earlier reports that the US Treasury is preparing to ask Congress for an additional USD 200bln for the small business lending programme according to sources. (Newswires/Washington Post)

US VP Pence said we continue to see evidence of stabilization in coronavirus hot spots and that the CDC will have new guidance on Wednesday regarding quarantining and how someone can return to work. (Newswires)

China’s Wuhan lifted the outbound travel restrictions. However, Hong Kong extended social distancing measures to April 23rd from April 11th, while it ordered the closure of beauty parlours and massage facilities. (Newswires/Xinhua)

ASIA

A tentative tone was observed in Asia-Pac bourses following the lacklustre performance stateside where all major indices finished with marginal losses after the initial risk on tone eventually lost steam ahead of looming key risk events including the conclusion of the Eurogroup deliberations and tomorrow’s OPEC+ meeting. ASX 200 (+0.7%) traded choppy with the early heavy losses in Australia triggered by weakness across the top-weighted financials sector after the regulator issued guidance on banks and insurers in an effort to restrict dividends and with sentiment also dampened after S&P cut the outlook on the country’s AAA sovereign rating to negative from stable, although the index later shrugged off the losses as the sentiment improved in late trade, while the Nikkei 225 (+1.7%) was also indecisive for most the session after the cabinet approved a record JPY 108tln stimulus package and declared a month-long state of emergency as expected. Hang Seng (-0.8%) and Shanghai Comp. (-0.3%) conformed to the early cautious tone in the region amid PBoC liquidity inaction but with downside stemmed after the State Council continued to outline supportive measures and after outbound travel restrictions were lifted from Wuhan which was the former epicentre of the coronavirus outbreak. Finally, 10yr JGBs traded back above the 152.00 level but with price action rangebound amid the indecision in Japan and following a tepid Rinban announcement in which the BoJ are present in the market for a total of JPY 670bln of JGBs in 1-3yr and 5-10yr maturities with the amounts unchanged from prior operations.      

PBoC skipped open market operations for a met neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 7.0483 vs. Exp. 7.0483 (Prev. 7.0939)

UK/EU

ECB announced a package of temporary collateral easing measures and adopted an unprecedented set of collateral measures to mitigate the tightening of financial conditions across the euro area, while it decided to accept Greek government bonds as collateral. ECB stated the temporary increase in the Eurosystem’s risk tolerance is in order to support credit to the economy and it eased the conditions for the use of credit claims as collateral, as well as adopted a general reduction of collateral valuation haircuts. Furthermore, the ECB will assess additional measures to temporarily mitigate the effect on counterparties’ collateral availability from rating downgrades. (Newswires)

ECB's Makhlouf said the coronavirus crisis requires unprecedented, forceful, coordinated and ambitious actions by all EU governments but noted that helicopter money is not the solution to the coronavirus crises. (Newswires)

Spokesman for Eurogroup President Centeno tweets that "Work towards an ambitious EU economic policy response to #COVID19 is well on track but not there yet. Press conference moved to 10am (Brussels time)". (Twitter) EU Commission is discussing proposals to overhaul the EU budget to bolster post-pandemic recovery which could result in an extra EUR 1.5tln for spending and investment over 3 years. (FT)

FX

DXY was relatively steady ahead although managed to recoup some of the recent losses to reclaim the 100.00 level, while its major counterparts were lacklustre with EUR/USD pulling back below the 1.0900 handle ahead of the delayed Eurogroup post-meeting press conference which has been pushed back to 0900BST and where ministers were said to discuss a coordinated funding response to address the COVID-19 fall out that could see measures worth 4.5-5.0% of GDP. GBP/USD was rangebound with price action remaining above near-term support at 1.2300 as reports suggested PM Johnson’s condition was stable in ICU. Elsewhere, USD/JPY was choppy amid the early indecision in Japan with the pair back below 109.00 after the optimism petered out during US hours, while AUD/USD and NZD/USD extended the pullback from resistance at the 0.6200 and 0.6000 handles respectively following the downward revision on Australia’s sovereign outlook by and comments from RBNZ’s Hawkesby that the central bank was open to expanding QE and were considering other assets including linkers.

S&P cut Australia sovereign Outlook to Negative from Stable; affirmed AAA rating. (Newswires)

RBNZ Assistant Governor Hawkesby said the central bank was open to expanding QE in a rapidly evolving situation and noted there is a limit to how much of the bond market the RBNZ can buy but they are considerong other assets for QE including linkers. (Newswires)

COMMODITIES

Commodities were mostly uneventful overnight amid the indecisive risk tone although WTI crude futures nursed some of the prior day’s losses before being contained by resistance at USD 25/bbl level as markets await the OPEC+ meeting on Thursday in which a delegate suggested that options under consideration range form no cuts to a reduction of 10mln bpd. There were also comments from the Iranian Oil Minister who was pessimistic of the outcome amid the vague circumstances heading into the meeting which he suggested was already a failure signal. Additionally, EIA Short-Term Energy Outlook cut its 2020 world oil demand growth forecast by 5.6mln BPD to 5.23mln BPD and raised 2021 forecast by 4.68mln BPD to 6.41mln BPD. Elsewhere, gold prices were flat with price action stuck around USD 1650/oz level, while copper was also contained by the non-committal overnight risk tone.

US Private Inventory Crude Stocks (Apr 3) +11.9mln vs. Exp. +9.3mln (Prev. +10.5mln). (Newswires)

Iran Oil Minister Zanganeh stated in a letter to OPEC that Iran doesn't agree with holding any OPEC+ meeting without having a clear and consensual outcome, while he added that vague circumstances around OPEC+ meeting is of grave concern to him and that the absence of any clear outcome is a failure message even before the meeting starts which may aggravate current low oil prices further. Furthermore, he stated that volume of output cut, duration, baseline level and distribution of cuts, as well as cuts by US and Canada should be addressed prior to the meeting. (Newswires)

OPEC delegate said the current options being considered range from a 10mln BPD cut to no cut. (Newswires)

EIA Short-Term Energy Outlook cut 2020 world oil demand growth forecast by 5.6mln BPD to 5.23mln BPD and raised 2021 forecast by 4.68mln BPD to 6.41mln BPD. (Newswires)

A bipartisan group of US lawmakers have introduced a bill providing USD 3bln to purchase oil to fill the SPR. (Newswires)

Two Republican senators who have introduced a bill into the Senate, which is aimed at withdrawing troops and defense systems from Saudi Arabia, in the event the nation does not reduce oil output, are set to host a call with kingdom officials on Saturday, according to sources. (Newswires)

Goldman Sachs said OPEC is no longer a price-setter in the shale age but has a key role in managing inventories and setting shape of the oil forward curve, while it added that OPEC+ short-term market share maximization strategy is counterproductive but OPEC's long-term market share gains are inevitable. (Newswires)

GEOPOLITICS

US plans to block Iran's request for USD 5bln loan from the IMF to deal with the coronavirus. (WSJ)

US

The Treasury curve continued to bear-steepen on Tuesday, as the cocktail of an extended risk rally, further issuance (both government and corporates) and scaled-back Fed bond buying weighed. The selling began at the tail-end of the APAC session, as stock futures gained traction heading into the European day. The steepener was further supported by comments from NEC Director Kudlow, who said the Treasury was aiming to reopen the 20-year bond amid the virus outbreak – Treasury Sec. Mnuchin has made similar comments in the past. Germany announcing plans for a new 15-year bond syndication, which pressured EGBs, lending an offer across the Atlantic. Meanwhile, the Fed continues to remove the stabilisers, purchasing a reduced clip of USD 50bln for a second day this week, although bid/ask spreads remain tight with decent volume in the futures, indicative of healthy market depth, as opposed to the lack of such back in March when the Fed stepped in. Duration was hit further by concession ahead of the 10-year auction reopening, where the Treasury sold USD 25bln, tailing by 0.7bps, marking the lowest ever high rate on a 10-year auction; the auction otherwise printed results similar to the six-auction averages, covered 2.43x and dealers taking 27.6%. Bidders in the Treasury complex were also dissuaded as the corporate issuance bonanza continued, with nine investment grade issuers on Tuesday (versus eleven on Monday), and even a few high-yield deals coming to the market; Qatar was out with a three-part USD 10bln issue, only widened the supply for participants to digest. US T-note futures (m0) settle 16 ticks lower at 137-29.

Fed’s Kaplan (Voter, Dove) said the US economy is likely to go through a significant adjustment after the COVID-19 pandemic recedes as businesses evaluate how demand has been reshaped. (Newswires)