• Sentiment is negative this morning following the downbeat APAC lead as Wall St. optimism dissipated
• US President Trump said plans to reopen the country are nearing completion and he will speak to all Governors shortly; additionally, he instructed administration to halt funding to the WHO as a review is conducted
• IEA Monthly Oil Market Report: Global oil demand is set to fall by a record 9.3mln BPD in 2020, SPR purchases can reach 200mln BPD in the next three months
• DXY is firmer thus far to the detriment of antipodeans and GBP particularly; note, today sees the resumption of Brexit talks
• Looking ahead, highlights include US Retail Sales, Industrial Production, Business Inventories, NAHB Housing Market Index, BoC Rate Decision, DoEs, BoC's Governor Poloz & Deputy Wilkins, earnings from Citi and Goldman Sachs

CORONAVIRUS UPDATE

US President Trump said plans to reopen the country are nearing completion and he will speak to all Governors shortly as well as authorize them to open states in appropriate time and manner, which could happen for some before May 1st. Furthermore, President Trump stated that he instructed administration to halt funding to the WHO as a review is conducted. (Newswires)

US House Democrats said US President Trump has no authority to halt WHO funds and there were also comments from UN Secretary General Guterres that now is not the time to reduce resources for WHO operations. (Newswires)

New York City revised its coronavirus death toll to 10367 which now includes 3700 probable deaths. (Newswires)

European Commission President Von der Leyen says EU countries should use a "gradual tailor-made approach" to lifting lockdown restrictions, adding that recommendations focus on three main preconditions

-        Significant decrease in the spread of the coronavirus

-        Sufficient health system capacity

-        Adequate surveillance and monitoring capacity

German government is set to extend COVID-19 restrictions until May 3rd, according to Handelsblatt. (Handelsblatt)

Spain’s coronavirus cases stand at 177,633 (Prev. 172,541) & death toll at 18,579 (Prev. 18,056) according to the Health Ministry. (Newswires)

ASIA

Asian equity markets traded cautiously as the region failed to follow through on the optimism seen on Wall St where all major indices posted firm gains as liquidity conditions normalized from the Easter break and after comments from President Trump stoked optimism for the US to re-open its economy soon. Nonetheless, the momentum petered out in Asia trade with ASX 200 (-0.4%) dragged lower by heavy losses in the energy sector after WTI crude prices dipped another 7% and briefly tested the USD 20.00/bbl level on demand concerns and with financials subdued after poor earnings results from their stateside peers. Nikkei 225 (-0.5%) exporters were hampered by the ill-effects of a firmer currency and amid the global production shutdown extensions, while KOSPI remained closed for National Assembly elections which is seen as a referendum for President Moon and the government’s handling of the coronavirus outbreak. Elsewhere, Hang Seng (-1.2%) and Shanghai Comp. (-0.6%) traded rangebound and conformed to the indecisive regional tone despite PBoC’s efforts in which it conducted a CNY 100bln 1-year Medium-term Lending Facility at a reduced rate of 2.95% (Prev. 3.15%), while the first phase of its previously announced 100bps targeted RRR cut took effect today but this was also unsuccessful in spurring momentum. Finally, 10yr JGBs were pressured from the open and proceeded lower before finding support near the 152.00 level, while the BoJ Rinban announcement provided little inspiration with the central bank only in the market for JPY 400bln in up to 3yr maturities.

PBoC conducted CNY 100bln 1-year Medium-term Lending Facility at 2.95% vs. Prev. 3.15%. (Newswires) PBoC set USD/CNY mid-point at 7.0402 vs. Exp. 7.0389 (Prev. 7.0406)

US

Fed's Barkin (non-voter, hawk) said the economy has a tough path ahead of it but added the Fed is willing to be creative and innovative with support efforts. (Newswires)

US Treasury Secretary Mnuchin said several US airlines will participate in the payroll support program including American Airlines (AAL) Delta (DAL) and United (UAL), while discussions continue with other airlines about potential aid, while other reports noted that Delta (DAL) said it it will receive USD 5.4bln in Treasury grants. (Newswires)

US Small Business Administration said more than 1mln loans have been approved through the payroll protection program as of April 13th with approvals totalling USD 247.5bln from over 4600 lenders. (Newswires)

UK/EU

Brexit negotiators are to conduct a video call today to finalize next week's large-scale trade negotiations, as well as discuss a potential extension to the transition period amid coronavirus. (Telegraph) However, it was also reported that the UK is holding out on providing EU with detailed fishing rights proposals which could derail approaching talks. (FT)

The UK is pressing on with sealing a Brexit deal by the end of the year despite reservations from Brussels, according to Express' Barnes; EU member states have agreed that areas where both sides agree should not be allowed to progress too far ahead while talks stall on the more contentious areas – such as fisheries and level playing field. Surprisingly, EU27 diplomats have been told there are a number of areas of convergence where deals can be struck with relative ease, but 'very, very big gaps' still need to be bridged where both sides disagree. (Twitter)

EU's Centeno says he does not rule out using Eurobonds as part of a response to the COVID-19, according to a Paper; expects European Council to give guidance on the proposed recovery fund on April 23rd, part of the fund needs to be available Spring/Summer. (Newswires)

EQUITIES

European equities extend on losses seen at the cash open (Euro Stoxx 50 -2.1%), after a similarly (albeit to a lesser extent) handover from Asia, as the positive sentiment all Wall Street U-turned overnight. US equity futures also succumb to the broad risk aversion, with E-Mini S&P and Dow June futures back below the 2800 and 23500 marks respectively heading into more earnings. Back to Europe, bourses see broad-based losses with FTSE 100 (-2.4%) seeing more pronounced downside among the majors as the index is pressured by its large-cap Energy, Financial and Material names – three sectors which see steep losses in Europe, with the former the laggard amid price action in the energy complex. Similarly, financials suffer amid the lower yield environment and materials fall due to declines across the base metals. The sectors also clearly reflect risk aversion, as defensive fare considerably better than the cyclicals. In terms of the sector breakdown, Oil & Gas reside at the bottom, followed by the Travel & Leisure as lockdowns across some countries are set to be extended. In terms of individual movers. ASML (-1.8%) conformed to the decline in the region after opening higher post-earnings, in which its revenue and net printed relatively in-line with estimates, whilst suspending its Q2 buybacks but keeping its three-year programme intact. The CEO also noted that demand outlook is currently unchanged, and the group has not encountered any pushouts or cancellations this year, the group’s order intake remains strong. Sticking with earnings, TomTom (-7.3%) sees hefty losses amid dismal earnings after missing on all its company compiled estimates, withdrawing guidance and suspending share buybacks indefinitely. Finally, Adidas (-1.9%) received approval for a syndicated EUR 3bln loan from KFW contingent on a suspension of dividends.

UnitedHealth Group Inc (UNH) Q1 20 (USD): Adj. EPS 3.72 (exp. 3.63), Revenue 64.4bln (exp. 64.33bln). FY EPS view maintained; Co. says results reflect minimal impact from the virus outbreak across US; CEO Witty to take a leave of absence. (Newswires)

PNC Financial Services Group Inc (PNC) Q1 20 (USD): Diluted EPS 1.95 (exp. 1.71), Revenue 4.52bln (exp. 4.38bln); NIM 2.84% (-6bps Q/Q), NII 2.5bln (+1% Q/Q); credit loss provisions rise 693mln (Q/Q) to 914mln

U.S. Bancorp (USB) 20 (USD): EPS 0.72 (exp. 0.88), Revenue 5.58bln (exp. 5.56bln); NII 3.747bln (prev. 3.286bln)

FX

USD - The Dollar was already clawing back losses across the board, but in particular relative to high beta and commodity based counterparts as Gold lost its lustre above Usd 1750/oz, but a more pronounced pull-back in crude prices following a bearish IEA monthly report gave the Greenback an extra fillip with the DXY back within striking distance of 99.500 compared to 98.828 lows. However, the index may encounter some technical resistance around recent recovery highs and run in to fundamental hurdles given bleak forecasts for upcoming US retail sales and ip data, not to mention the downside bias vs consensus.

AUD/NZD/CAD/NOK/RUB/MXN - Aside from renewed risk aversion fuelled by the aforementioned about-turn in oil and metals, the Aussie has been undermined independently by a sharp deterioration in consumer sentiment per Westpac’s April survey, while the Kiwi is down in sympathy even though the Aud/Nzd cross has reversed from circa 1.0570 towards 1.0500. Aud/Usd got tantalisingly close to a hefty 1 bn 0.6450 option expiry at one stage, but now appears more inclined to hit 0.6300 and Nzd/Usd is even nearer 0.6000 from 0.6100+ overnight. Elsewhere, the Loonie is back below 1.4000 vs 1.3876 and still nervous ahead of the BoC, Eur/Nok is hovering just shy of 11.5000, Usd/Rub is pivoting 74.0000 and Usd/Mxn is paring back following a marginal breach of 23.9800.

GBP/EUR/CHF/JPY - Also victims of the Buck’s broad revival, but to varying degrees as Cable reverses from 1.2630 to test 1.2500 and the Euro wanes 10 pips or so before 1.1000 to 1.0920, though not far enough to disturb decent expiry interest between 1.0890-1.0900 (1.3 bn). However, Eur/Usd may lose more momentum on a closing basis if the pair cannot reclaim 1.0950 and a Fib level just above, while the Pound will be eyeing the resumption of Brexit trade negotiations with the EU. Turning to the Franc, gains vs the Dollar have been eroded within a 0.9597-0.9648 range, but not against the single currency as prior support around 1.0550 seems to be morphing into a Eur/Chf cap. Similarly, the Yen has retained a solid safe-haven premium in cross terms, but Usd/Jpy failed to extend through 107.00 and subsequently rebounded to 107.50 or so amidst reports of fresh long positions being instigated on trading platforms.

SEK/EM - Firmer than expected Swedish CPI metrics have helped the Swedish Krona evade much of the general risk-off positioning, but no such luck for Lira or Rand with the latter succumbing to further heavy post-SARB rate cut depreciation in wake of the SA Government supposedly reneging on wage deals according to the PSU.

Australian Westpac Consumer Confidence Index (Apr) 75.6 (Prev. 91.9). (Newswires) Australian Westpac Consumer Confidence (Apr) M/M -17.7% (Prev. -3.8%)

Czech Central Bank's Benda said further rate cuts cannot be ruled out and nor can a special board meeting before May 7 although there is no decision to hold one so far. (Newswires)

FIXED

Without enforced interruption or unforeseen delay, the 10 year German benchmark has made more headway today in relatively measured fashion, and just topped out at 172.43 for an 87 tick gain from Tuesday’s 136.52 close. A solid enough 2044 auction must have encouraged buyers while the technical backdrop is becoming increasingly bullish and the core Eurozone bond is also benefiting from more switching from the margins, especially Italian BTPs. Gilts trying to keep their rally going but still stymied by 137.00 and USTs fading ahead of 139-00 pre-top rung data.

COMMODITIES

WTI and Brent futures gave up gains early-doors having had somewhat of a rangebound APAC session. Desks argue that participants are realizing that the OPEC+ cuts are not going to balance the markets over Q2, whilst cuts outside the group are more likely to be market-driven, thus the curtailments are to be gradual as opposed to immediate. Elsewhere, the oil and gas regulator in Texas – the Texas Railroad Commission – voiced disagreement on whether mandated cuts should be implemented. Bigger producers largely opted for market-driven declines whilst the smaller players supported cuts. Whilst the situation in Texas will be followed, Oklahoma are to conduct a meeting on 11th May to discuss mandated output curbs. Prices saw renewed pressure upon the release of the IEA Monthly Oil Market Report which stated that global oil demand is set to fall by a record 9.3mln BPD in 2020. Both the EIA and IEA unsurprisingly cut world oil demand outlook, although the latter by a considerably larger amount than the former, which forecasts a fall of 5.6mln BPD this year. The Agency also stated that it can reach SPR purchases of 200mln BPD over the next three months – a longer timeframe than the touted 2 months by the Saudi Energy Minister. The report also echoed some recent comments from IEA Chief Birol, stating that no feasible agreement could cut supply by enough to offset the near-term decline in demand. The OPEC Monthly report is set to be released on April 16th; participants will be on the lookout for synchrony among the three reports. Meanwhile, the weekly Private Inventories added further fuel to the bearish bias after printing a larger-than-expected build of 13.1mln vs. Exp. +11.7mln. WTI and Brent prices saw a fresh bout of weakness which coincided with the IEA report, with the former hitting levels last seen in 2002. WTI resides below USD 20/bbl and printed a current base at around USD 19.15/bbl. Brent front-month dipped below USD 28/bbl amid the concoction of bearish factors. Over in the metals complex, spot gold succumbs to a firmer Dollar alongside potential retracement of its recent rally, with prices closer to USD 1700/oz, having risen to a whisker away from USD 1750/oz (USD 1747/oz at best) in the prior session. Separately, Copper prices are under pressure from USD action alongside the risk aversion seen across the market. The red metal still resides above USD 2.25/lb having waned off overnight highs of USD 2.34/lb.

US Private Inventory Crude Stocks (w/e 10th Apr) +13.1mln vs. Exp. +11.7mln (Prev. +15.2mln). (Newswires)

IEA Monthly Oil Market Report: Global oil demand is set to fall by a record 9.3mln BPD in 2020, SPR purchases can reach 200mln BPD in the next three months - still awaiting details on stock purchases

-        No feasible agreement could cut supply by enough to offset near-term demand losses - "however, the past week's achievements are a solid start."

-        Predicts output falls by other countries such as US and Canada could be around 3.5mln amid lower prices

Saudi Aramco has offered Asian and European refineries a payment deferral for crude cargoes by up to 90 days, sources state; at least three refiners rejected the terms due to higher financing costs. (Newswires)