• Sentiment started strong but has waned on the approach to today’s plethora of risk events
• Kuwait Oil Minister says intention is moving towards reaching an agreement to lower output by a large amount between 10mln-15mln bpd.
• Kremlin declined to comment on reports their maximum cut would be 2mln BPD
• Russia and Saudi Arabia still need to settle differences regarding plans for a global oil production cut according to sources, regarding baseline and quantity
• President Trump suggested the government could reopen the country in phases and maybe ahead of schedule
• FX sees the USD softer, below 100.00, to the particular benefit of GBP; debt continues to climb with Gilts taking the lead
• Looking ahead, highlights include ECB Minutes, US Initial Jobless Claims, PPI, Uni. of Michigan Sentiment, Canadian Labour Market Report, Eurogroup Press Conference, OPEC+ meeting, Fed Chair Powell

CORONAVIRUS UPDATE

US President Trump said we are much closer to getting the country back to where it was prior to the coronavirus and he sees signs that efforts to slow the spread of the virus are working, while he called on Congress to pass loan program funding this week and stated that a phase 4 stimulus bill can be done later. Furthermore, President Trump suggested the government could reopen the country in phases and maybe ahead of schedule. (Newswires)

US House Speaker Pelosi said Republican's proposals to add money for small business loans will not win unanimous approval in the House, while there were also comments from US Senate Majority Leader McConnell that there is no realistic chance a USD 500bln coronavirus bill could pass the Senate or House by unanimous consent this week. (Newswires)

German Health Minister says infection numbers indicate a positive trend, if this continues then the gov't can talk about a gradual easing of lockdown measures. (Newswires)

Senior UK Ministers are to review the UK’s lockdown in today’s COBRA meeting, some ministers reportedly believe a decision to ease restrictions will not be taken until PM Johnson returns. Additionally, expectations are for an extension into May. Foreign Secretary Raab is expected to warn of an extension to the lockdown in today’s press update, but no formal announcement after the COBRA meeting is expected. (Sky News) Note, the current Parliamentary legislation mandates a review of the lockdown before next Thursday.

Italy could see an extension to their lockdown of another 15-days, with Italian PM Conte reportedly to announce a new decree tomorrow confirming an additional 15 days of lockdown, according to La Stampa. (La Stampa)

Spanish coronavirus cases 152,446 (Prev. 146,690) and deaths stand at 15,238 (Prev. 14,555); deaths increase by 683 (Prev. increase 757). (Newswires)

World Bank sees GDP of developing countries and EM in Europe and Central Asia contracting by 2.8%-4.4% this year due to the coronavirus pandemic. (Newswires)

BoE and Treasury have announced a temporary extension of the Ways & Means facility. As a temporary measure, this will provide a short-term source of additional liquidity to the government if needed to smooth its cashflows and support the orderly functioning of markets, through the period of disruption from Covid-19. (BoE)

Beijing is to maintain its level 1 emergency response level in order to prevent and control COVID-19, according to the Chinese Global Times citing local authorities.

ASIA

Asian equity markets were mostly higher as the region marginally benefitted from the tailwinds from Wall St where major indices were underpinned by hopes of a coronavirus peak nearing and amid a surge in energy prices on optimism for a potential output cut deal at today’s OPEC+ meeting. ASX 200 (+3.4%) was buoyed after parliament approved the record AUD 130bln stimulus bill to support jobs and with upside led by notable strength in financials and tech, while energy names were lifted by the surge in oil prices after reports suggested potential cuts of 10mln-15mln bpd were being touted and that Russia was ready to join in on an OPEC+ deal. Nikkei 225 (U/C) lagged amid a choppy currency and after source reports noted the BoJ is to project an economic contraction but added there was no consensus yet within the central bank whether this would warrant additional easing. Hang Seng (+1.4%) and Shanghai Comp. (+0.4%) also traded positive but with gains capped as the former heads into the extended Easter weekend, while upside in the mainland was also limited after the PBoC refrained from liquidity injections and the Politburo reiterated the view that China was facing increasing difficulties for economic development. Finally, 10yr JGBs nursed the prior day’s losses and reclaimed the 152.00 level amid the underperformance in Japanese stocks and following stronger demand at the 5yr JGB auction.

PBoC skipped open market operations and were net neutral on the day. (Newswires) PBoC set USD/CNY mid-point at 7.0536 vs. Exp. 7.0488 (Prev. 7.0483)

BoK kept the 7-day Repo Rate unchanged at 0.75% as expected through a split decision as board members Cho Dong-Chul and Shin In-Seok dissented in which they advocated a 25bps cut. BoK stated it has policy room to respond to slowing growth and will increase outright purchases of government bonds if required, while Governor Lee commented they are seeing an impact of the previous rate cut and will announce plans to buy government bonds this afternoon. (Newswires)

Japan's coalition head wants to consider additional economic steps for the coronavirus as well as the Olympic delay, according to Kyodo. (Newswires)

US

Fed's Kaplan (voter, dove) said US GDP may shrink 25%-35% in Q2 then expand in H2 and sees GDP shrinking 4%-5% in 2020, while unemployment rate may rise as high as mid-teens before declining to 7%-8% by year-end. Kaplan added that even after economy reopens, consumers may be more cautious and that he expects a phased return to work as economy reopens. (Newswires)

UK/EU

UK RICS Housing Survey (Mar) 11 vs. Exp. 14.0 (Prev. 29.0). Furthermore, UK RICS near-term house sales expectations printed at -92 in March which was the lowest reading since the series began in 1998. (Newswires)

ECB President Lagarde says we should not get fixated on coronabonds, as things take time in Europe; can be other forms of European solidarity mutalised spending via a shared budget or a reconstruction fund. (Newswires) Furthermore, Lagarde says budgetary and monetary policies need to be aligned and equal conditions for all are needed, if not all countries are taken care of then others will suffer as a result (Il Sole 24). Lagarde also noted that she believes the Euro’s value is stable and the level is “fine”, adding that she would like more inflation. (Newswires)

GEOPOLITICS

Saudi Vice Defence Minister that the kingdom fully supports UN calls for de-escalation and confidence building measures, as well as resumption of political talks between political parties in Yemen. (Newswires)

EQUITIES

European stocks initially followed suit from the mostly positive APAC handover but drifted off highs as the session got underway (Euro Stoxx 50 -0.3%). Sentiment was originally supported as hopes lingered of a coronavirus peak nearing and amid firmer energy prices heading into the “make or break” OPEC+ and G20 energy meetings. However, tail risks remain that the Eurogroup may reencounter a roadblock in talks later today. Bourses overall see a mixed performance, Switzerland’s SMI (-0.6%) underperformance as heavyweights Nestle (-2.0%), Roche (-1.6%) and Novartis (-0.9%), which together account for over 50% of the index’s weight, extend on losses. Germany’s DAX (+0.4%) remains somewhat resilient, potentially aided by cautiously upbeat comments from the German Health Minister, who stated that recent infection numbers indicate a positive trend and lockdown measures could soon start to be eased gradually if the trend continues. UK’s FTSE (+1.7%) outperforms as energy names see large-cap tailwinds from the energy complex. Sectors have also lost steam after opening firmer across the board – now mixed, albeit no clear risk tone can be derived. The breakdown also offers no real signal of the sentiment, although hopes of a slowing virus outbreak see Travel & Leisure outperforming. In terms of individual movers, Credit Suisse (+0.4%) and UBS (-0.4%) waned off opening highs – the Swiss banks decided to split their dividends in half, as advised by the Swiss Regulator FINMA. SAP (+2.0%) rises despite guidance cuts for total revenue and operating profit – the Co. raised its predictable revenue guidance.

Visa (V) and Mastercard (MA) had plans to lift swipe fees on many merchants in 2020, something that in some cases would be felt most by small businesses, according to WSJ sources. (WSJ)

FX

USD - The Greenback is relatively mixed and rangebound vs G10 counterparts awaiting the latest weekly US jobless claims release for further evidence of COVID-19 collateral damage to the labour market. However, the next big directional and sentiment drivers could well come from external sources such as the OPEC+ meeting and Eurogroup response to the coronavirus if global oil producers and Finance Ministers can overcome differences to set a deeper output cut pact and deliver coordinated fiscal stimulus. In the meantime, little motivation for the DXY to deviate outside recent ranges that have been tethered to the 100.000 anchor as the index rotates from 100.300 to 99.899.

GBP/NZD/EUR/CHF/AUD - Major outperformers to varying degrees as the Pound rebounds firmly from post-UK (trade in the main) data lows after another update on PM Johnson indicating further improvement, with Cable finally breaching multiple tops around 1.2420 and Eur/Gbp retesting the 0.8750 mark that sits just above key chart support in the form of the 200 DMA (0.8748) and a Fib retracement (0.8747). Meanwhile, the Kiwi is consolidating above 0.6000 and Euro remains capped circa 1.0900 awaiting news from the delayed Eurogroup and any extra insight from ECB minutes in the interim – preview of the release available in the Research Suite. Elsewhere, the Franc is still straddling 0.9700, but rooted to 1.0550 against the single currency and Aussie has lost some altitude from a 0.6250 peak.

JPY/CAD - Even tighter confines for the Yen either side of 1.0900 and some decent option expiry interest also keeping the headline pair in check (1.2 bn at 108.40 and 1.3 bn from 108.95 to 109.00). However, the Loonie continues to unwind gains and may even extend its retreat towards a 1 bn expiry at the 1.4100 strike depending on how bad looming Canadian jobs are – Usd/Cad currently nudging 1.4050 for reference.

SCANDI/EM - Back to winning ways for the Nok and Sek, as the former forges more momentum on firm pre-OPEC oil prices alongside the Rub and Mxn, while the latter gleans some encouragement from signs of peaks in daily nCoV case and mortality rates elsewhere. Similarly, the Zar is making more headway ahead of an expected briefing from the SA Finance Ministers to outline anti-global pandemic measures.

RBA Financial Stability Review said regulatory authorities have been working together to minimise economic harm from pandemic but noted financial market uncertainty is elevated and that the heightened uncertainty related to pandemic is compounding usual volatility in financial markets. RBA added that capital levels are high and banks' liquidity positions improved over recent times, while banks also entered the downturn with high profitability and very good asset performance. Furthermore, it stated that many households in the period ahead will find finances under strain due to efforts to contain the virus. (Newswires)

FIXED

For now at least it appears that classic asset correlations are back to the fore, with core bonds gathering momentum from stocks losing more of their early fizz ahead of the US open and top tier data plus Michigan survey providing the appetizers ahead of OPEC+ and Eurogroup showdowns. Bunds just hit fresh Eurex highs of 170.82 (+34 ticks vs -45 ticks at one stage), while Gilts extended their gains and outperformance to 66 ticks at 136.56 for a new intraday and wtd Liffe best and 10 year T-notes touched 138-05 awaiting the aforementioned lively pm docket that also comprises an address by Fed Chair Powell that promises to be more timely if not pertinent than Wednesday’s FOMC minutes.

COMMODITIES

WTI and Brent front month futures continue trade firmer amid hopes of a coordinated OPEC+ output cut at today’s historical call among producers, and with scope for further action at tomorrow’s G20 energy webinar. Prices were bolstered late-doors State-side after the Algerian and Kuwaiti Energy Ministers expressed optimism towards a joint cut towards the upper end of the expected range, with the latter floating a cut between 10-15mln BPD. The complex received another boost in EU trade after sources stated that Russia is reportedly willing to curtail output by a maximum of 2mln, more than the 1.6mln BPD (equivalent to 15% of Russian oil output) reported yesterday. That being said, separate sources note that sticking points remain between Saudi and Russia regarding volumes and baselines – with Riyadh opting for current production levels to be used as a benchmark whilst Moscow prefers an average of Q1 output levels. Nonetheless, WTI extends gains above its 21 DMA (USD 24.69/bbl) and remains near session highs. Brent futures meanwhile breached resistance at the psychological USD 34/bbl, whilst the difference between the benchmark widened to above USD 7.50/bbl from around USD 5/bbl this time last week. Elsewhere, spot gold prices remain perky above USD 1650/oz after rebounding from recent support at USD 1640/oz ahead of the Eurogroup meeting later today, whilst a modestly softer Buck offers some tailwind. Copper meanwhile remains on the back foot after failing to convincingly breach resistance just above USD 2.3/lb, with prices hovering around USD 2.275/lb at the time of writing.

Commodities edged mild gains overnight in which WTI crude futures briefly broke above the USD 26.00/bbl level as it extended on the rally seen heading into today’s OPEC+ meeting amid optimism for an agreement after the Algeria Energy Minister suggested the meeting will be fruitful and his Kuwaiti touting a potential 10mln-15mln bpd cut, while Russia was also said to be on board for a deal that would end the current oil price war. Elsewhere, gold traded steady with price action stuck within a tight range near the USD 1650/oz level, while copper prices were higher but with upside only limited amid the similar cautious gains seen across Asia-Pac bourses.

Kuwait Oil Minister said that after talking with countries that will attend OPEC+ meeting, the intention is moving towards reaching an agreement to lower output by a large amount between 10mln-15mln bpd. (Newswires)

Kremlin: on Russia's position for the upcoming OPEC+ meeting says Russia wants joint co-ordinated actions to stabilise oil markets, declined to comment on talks around 2mln BPD domestic cuts; reiterates deal can hardly happen without others involvement. (Newswires)

-        Russia's maximum oil output cut under any global pact would be 2mln BPD, sources state. (Newswires)

Russia and Saudi Arabia still need to settle differences regarding plans for a global oil production cut, according to an OPEC source and a Russian source. (Newswires) Later reports suggested that differences between the two nations are with regards to the baseline and volumes for cuts. (Newswires)

Russia's Rosneft believes a 10mln BPD OPEC+ cut as being enough to re-balance markets, Renaissance Capital citing a call, Co. expects oil output to decline in several non-OPEC countries, expects trough in oil demand to be in April. (Newswires) Goldman Sachs suggested that a 10mln bpd cut would not be enough to improve the global balance and it sees downside risks to near-term WTI price forecast of USD 20/bbl, but added that lasting supply could create upside risks for its USD 40/bbl October estimate for Brent. Furthermore, Goldman Sachs now expects Q2 demand to be down 14mln bpd Y/Y, while it sees demand in Q3 and Q4 falling 3.3mln and 1.4mln bpd Y/Y. (Newswires)