• Asian equity markets remained subdued amid the headwinds from Wall St which saw the S&P 500 close lower by 2.2%
• DXY remains firmer in the FX space as the index sits just below the 100.00 threshold, weighing on major counterparts
• President Trump said the administration will be announcing new guidelines on reopening the economy on Thursday
• WTI crude futures fluctuated around the USD 20/bbl level as prices remained subdued by the ongoing demand concerns
• Looking ahead, highlights include Eurozone Industrial Production, US Initial Jobless Claims, Building Permits, Housing Starts, Philadelphia Fed Business Index, OPEC Monthly Oil Report, earnings from Blackrock, Morgan Stanley, L'Oreal, LVMH

CORONAVIRUS UPDATE

US President Trump said our aggressive strategy is working and data suggests the nation has passed the peak on new coronavirus cases. Furthermore, President Trump added they will be announcing new guidelines on reopening the economy on Thursday and urged the Senate to confirm his nominees to vacancies across the administration or formally adjourn and threatened to use executive powers to try and force both chambers of Congress to adjourn, while Senate Majority Leader McConnell later spoke with President Trump and pledged to find ways to confirm Trump nominees critical to fighting coronavirus although noted it will require consent from Democratic leader. (Newswires)

US COVID-19 cases rose 4.6% to 605,390 (Prev. +4.4% at 579,005), death toll rose 10.5% to 24,582 (Prev. +1.4% at 22,252). (Newswires)

UK Health Minister said it is clear that it is too early to make changes to lockdown measures and suggested that high deaths will continue for at least a short while. The UK’s Chief Medical Officer noted that the virus was “probably reaching the peak overall” in the UK and there has been a “flattening” in the number of deaths. (Telegraph) Under plans being considered by government advisers, the nation could be “segmented” into different risks groups which would allow young and healthy adults to return to work, with more vulnerable people set to remain shielded from the virus. (Times)

Milan, Italy is reportedly asking the government to restart activities on May 4th. (Newswires)

ASIA

Asian equity markets remained subdued amid the headwinds from Wall St where risk sentiment was dampened by the ongoing oil market rout, weak earnings from the large banks and poor data releases, with comments from President Trump not helping to brighten the mood as he threatened to adjourn Congress if administration nominations are not confirmed. ASX 200 (-1.3%) was dragged by broad weakness across its sectors aside from some resilient patches among defensives and with corporate updates also providing a catalyst for individual stock moves, while Nikkei 225 (-1.3%) was dampened as coronavirus-related disruptions and shutdown extensions hampered Tokyo blue-chip manufacturers. Hang Seng (-0.6%) and Shanghai Comp. (-0.2%) traded subdued as sentiment in Hong Kong was dampened amid the weakening economic climate with Hong Kong Financial Secretary Chan suggesting the government will likely downgrade its outlook, although losses in the mainland were limited as markets await tomorrow’s slew of tier 1 Chinese data including Q1 GDP which People’s Daily noted will remain positive despite the current expectations for a contraction of 6.5% Y/Y. Finally, 10yr JGBs were higher amid the weakness seen across stocks and with prices underpinned following firmer demand at the enhanced liquidity auction in the long to super-long end.

PBoC skipped open market operations and were net neutral on the day. (Newswires) PBoC set USD/CNY mid-point at 7.0714 vs. Exp. 7.0596 (Prev. 7.0402)

Chinese House Prices (Mar) Y/Y 5.3% (Prev. 5.8%). (Newswires)

UK/EU

UK Treasury is reportedly set to unveil a sweeping rescue package for start-up businesses within the next few days, according to press reports. (The Telegraph)

UK BRC Retail Sales (Mar) Y/Y -3.5% (Prev. -0.4%). (Newswires)

Barclaycard said UK consumer spending fell 6% Y/Y in March which was the largest decline since the survey began in 2015, while it added that consumer confidence was also at the lowest on record for the survey. (Newswires)

FX

In FX markets, the DXY remained firmer as focus shifts to today’s US jobless claims data and the announcement of new guidelines on reopening the economy. EUR/USD and GBP/USD were subdued by the resurgence of the greenback and slipped below the 1.0900 and 1.2500 handles respectively, with the latter also hampered as First Secretary of State Raab is expected to formally announce a lockdown extension following today’s Cobra meeting. USD/JPY breached through a cluster of hourly moving average levels  including the 100-Hour MA of 107.76 fuelled by the USD-strength, although JPY-crosses lagged due to the risk-averse tone, while antipodeans were pressured with NZD/USD retreating from the 0.6000 handle after RBNZ Governor Orr stated the Bank has not ruled out negative rates. AUD/USD initially gained from the better than expected jobs data, although this was retraced shortly after as the data reference period was for March 1st-14th, while closures of non-essential businesses took effect March 23rd. Elsewhere, MXN continued to weaken overnight in which USD/MXN broke above 24.40 after Fitch downgraded Mexico to BBB-;Outlook Stable which is the lowest level of investment grade and sees a severe recession in Mexico due to the coronavirus pandemic.

Australian Employment (Mar) 5.9k vs. Exp. -40.0k (Prev. 26.7k). Australian Unemployment Rate (Mar) 5.2% vs. Exp. 5.5% (Prev. 5.1%) Australian Full Time Employment (Mar) -0.4k (Prev. 6.7k)

RBNZ Governor Orr said have not ruled out negative interest rates, while he added that they are at the end of the beginning regarding monetary stimulus and suggested negative rates remain on the table as well as direct financing. (Newswires)

Fitch downgraded Mexico from BBB to BBB-;Outlook Stable and stated the economic shock from coronavirus will result to a severe recession in Mexico. (Newswires)

COMMODITIES

Commodities were uneventful overnight with WTI crude futures fluctuating around the USD 20/bbl level as prices remained subdued by the ongoing demand concerns from the coronavirus fallout and following the recent IEA Monthly Report and record DoE crude build. Furthermore, this week’s Texas oil regulators meeting failed to result in any proposals being tabled after over 10 hours of hearing testimonies, although they are set to meet next week for further discussions. Elsewhere, gold prices were flat as price action continues to consolidate above the USD 1700/oz level, while copper was kept rangebound by the lacklustre risk tone and as regional participants look ahead to tomorrow’s Chinese GDP data.

US tariffs on crude imports are still being considered, after the global oil deal according to US energy diplomat Fannon, while there were also reports that US is said to consider a plan to reduce production by paying drillers not to produce according to sources. (Newswires)

Texas oil regulators are to meet April 21st to further discuss production limits. (Newswires)

GEOPOLITICS

China could be secretly conducting nuclear tests with very low explosive power, raising concerns that it might be in breach of international law, according to a new arms-control report to be soon made public by the State Department. (WSJ)

11 Iranian Revolutionary Guard boats made dangerous and harassing actions against 6 US naval ships in international waters in the North Arabian Gulf, while US crews took action deemed appropriate to avoid a collision. (Newswires)

US

The Treasury complex bull-flattened markedly on Wednesday as risk appetite soured. The bid gained traction overnight as European trade commenced. In essence, equity futures were reversing the prior day’s strength and a dump in crude futures (a gloomy IEA report and chunky inventory builds) kept the macro narrative defensive. Then as the heavy US data slate got underway, which was dire across all accounts with “worst-ever/since” headlines bombarding screens, Treasury strength continued, although how much of the move was reactionary to the data remains a point for debate as many are looking past near-term prints. One desk noted that real money had been booking profits and selling into the Fed’s Treasury purchases, which were accompanied by hefty offer-to-cover ratios, stalling the move lower in yields in the afternoon; at the same time, the desk noted that specs and CTAs were taking the other side of the trade. USD issuance was afoot on Wednesday, likely keeping a cap on Treasury strength, where participants digested a USD 7bln three-parter from Saudi Arabia (5s, 10s, 40s), as well as lumpy, post-earnings USD 10bln launched from JPMorgan (6s, 11s, 21s, 31s). By settlement, curve spreads had flattened, with 2s -2bps at 0.20%, 10s -11bps at 0.64%, and 30s -14bps at 1.27%. US T-note futures (M0) settled 30 ticks higher at 139-05.

Fed's Beige Book stated economic activity contracted sharply and abruptly across all regions in the US as a result of COVID-19 and that most districts reported declines in manufacturing but cited significant variation across industries. Furthermore, it noted that employment declined in all districts and steeply in many cases as the COVID-19 pandemic affected firms in many sectors, with many districts noting severe job cuts were widespread. (Newswires)

NY Federal Reserve will begin a regular publication of its Weekly Economic Index (WEI) from today to provide timely information on the state of the economy amid the coronavirus pandemic. (Newswires)

US Small Business Administration urged Congress to appropriate additional funds for paycheck protection program, while it added it will not legally be able to issue new loan approvals once there is a lapse in appropriations for programs. (Newswires)