• Asian equity markets traded mixed amid the ongoing fallout from the coronavirus pandemic and extended rout in oil prices
• The DXY is relatively flat with upside capped ahead of the 100.00 level. EUR/USD and GBP/USD remain below 1.0900 and 1.2500 respectively
• The PBoC cut the 1-year and 5-year Loan Prime Rates by 20bps and 10bps respectively as expected
• US President Trump’s administration and Democrats in Congress were said to be near a USD 450bln economic relief package for small businesses
• The Times’ reported that PM Johnson has told colleagues that he wants to be very cautious in lifting lockdown measures in order to avoid a second wave
• NY Fed cut Treasuries/TIPS purchases to USD 15bln per day for next week (Prev. USD 30bln).
• Looking ahead, highlights include German PPI, ECB purchases, BoE's Haldane and Broadbent

CORONAVIRUS UPDATE

US President Trump’s administration and Democrats in Congress were said to be near a USD 450bln economic relief package for small businesses including billions for the paycheck protection programme, hospitals and expansion of testing, while other sources also noted that US Treasury Secretary Mnuchin and House Speaker Pelosi were very close to a deal for 2nd round of small business loans. (Newswires/Twitter) US President Trump said they are getting closer to a deal with Democrats regarding stimulus and could have an answer on Monday and that he is in favour of aid to state and local governments although that would be for a future package to negotiated with Congress, while President Trump also stated that VP Pence will lead call with Governors on Monday to discuss what can be done to further coronavirus response. (Newswires)

In the UK, Saturday’s DHSC statistics revealed an additional 888 deaths, with Sunday showing a further 596, bringing the total to 16,060. The Times’ reported that PM Johnson has told colleagues that he wants to be very cautious in lifting lockdown measures in order to avoid a second wave (note, this follows a report in The Sunday Times suggesting that Johnson had been slow to react to the outbreak of COVID-19. In terms of potential lockdown dates, The Telegraph has reported that two leading UCL economists have submitted a proposal to the government suggesting that measures could be eased as early as May 4th with small shops to reopen under the same social distancing measures as supermarkets. Elsewhere, the Telegraph also reported that a senior UK government adviser has suggested that the nation needs to start easing lockdown measures in 3-4 weeks. In terms of the economic fallout, The Times reports that the Treasury’s internal assessment of the impact of COVID-19 paints an even more pessimistic picture than the report released by the OBR earlier in the week (suggested GDP could fall by 35% in Q2).

In Europe, Spain reported that smallest single day of deaths on Sunday (410) since March 22nd. Italy revealed 433 additional deaths on Sunday; the smallest increase in a week. Germany are set to begin opening smaller shops as of today; ahead of the open the RKI Health Institute notes that coronavirus cases rose by 1775 to 141672 and death toll rose by 110 to 4404. French PM Philippe has said that the government will unveil plans to progressively lift current restrictions on business and travel within two weeks. (Newswires)

ASIA

Asian equity markets traded mixed amid the ongoing fallout from the coronavirus pandemic and extended rout in oil prices which briefly saw the WTI May contract drop below USD 15/bbl for the first time since 1999 and the June contract briefly slip below USD 23/bbl with the sell-off due to a collapse in demand, concerns of declining storage capacity and ahead of Tuesday’s contract settlement. ASX 200 (-1.2%) and Nikkei 225 (-1.0%) were negative with the energy sector front-running the broad declines in Australia alongside the oil market woes and as Caltex also suffered from Couche-Tard abandoning its pursuit of the Co., while Tokyo risk appetite was sapped after mostly weaker than expected trade data including the largest decline in exports since 2016. Hang Seng (Unch.) and Shanghai Comp. (+0.3%) were somewhat indecisive although outperformed their regional peers after the PBoC cut the 1-year and 5-year Loan Prime Rates by 20bps and 10bps respectively as expected, while the state planning agency noted that China will roll out more forceful and targeted fiscal, financial and employment policies. Finally, 10yr JGBs lacked demand following recent comments from the Japan Securities Dealers Association that global funds sold record levels of 10yr JGBs last month and with Japan’s government planning to issue more than JPY 25.69tln to fund supplementary budget, although losses were stemmed by support at 152.00 and amid weakness in Japanese stocks.

PBoC 1-Year Loan Prime Rate 3.85% vs. Exp. 3.85% (Prev. 4.05%). (Newswires) PBoC 5-Year Loan Prime Rate 4.65% vs. Exp. 4.65% (Prev. 4.75%)

PBoC skipped open market operations and were net neutral on the day. (Newswires) PBoC set USD/CNY mid-point at 7.0657 vs. Exp. 7.0667 (Prev. 7.0718)

China NDRC said the nation will roll out more forceful, targeted fiscal, financial and employment policies with relevant departments, while it added there is still very large room for macro hedging policy to work with. (Newswires)

Japan's economic stimulus package will be revised to JPY 117.1tln from JPY 108.2tln with JPY 46.4tln earmarked for fiscal spending and the extra budget will be revised to around JPY 25.6tln from JPY 16.8tln, while the government will issue extra bonds valued more than JPY 25.69tln to fund supplementary budget according to a draft. (Newswires)

Japanese Trade Balance (JPY)(Mar) 4.9B vs. Exp. 420.0B (Prev. 1108.8B). (Newswires) Japanese Exports (Mar) Y/Y -11.7% vs. Exp. -10.1% (Prev. -1.0%) Japanese Imports (Mar) Y/Y -5.0% vs. Exp. -9.8% (Prev. -13.9%)

UK/EU

ECB’s De Guindos and Villeroy commented that ECB is flexible and could act further if required. (Newswires)

ECB high-level officials, including Governing Council member Stournaras, as well as Supervisory Board head Enria, are reportedly pushing for an EZ bad-bank to deal with debts from the ’08 crisis. However, the plan is, as bad-bank plans previously have in the EZ, facing opposition from the European Commission regarding state-aid rule changes and that there are better alternatives; as such, talks have reportedly stopped. (FT)

Fitch revised Portugal's Outlook to Stable; affirmed rating at 'BBB'. (Newswires)

British Retail Consortium said footfall was down 83% Y/Y since the UK lockdown started. (Newswires)

UK Rightmove House Prices (Apr) M/M -0.2% (Prev. 1.0%). UK Rightmove House Prices (Apr) Y/Y 2.1% (Prev. 3.5%). Rightmove said new home sales are almost impossible and it cannot provide meaningful price data.

FX

The DXY is relatively flat with upside capped ahead of the 100.00 level and alongside a humdrum tone in the FX space. On the political front, US President Trump suggested they were getting closer to a deal with Democrats regarding stimulus in which they could have an answer on Monday and it was also reported that US postponed some tariff payments for 90 days although this doesn’t include the anti-dumping and countervailing duties, nor does it apply to the high-profile tariffs on China. EUR/USD and GBP/USD were uneventful with the single currency stuck between its 5- to 50-Hourly MA levels just north of 1.0850 and with GBP/USD pulling back from the 1.2500 handle. USD/JPY traded slightly higher although JPY-crosses were restrained by the cautious risk tone, while antipodeans were initially hampered by the lacklustre sentiment in the region and oil pressure, with firmer than expected New Zealand CPI data only providing brief support for NZD/USD although NZD was later underpinned by the announcement that New Zealand will come out of lockdown next week.

New Zealand PM Ardern said the virus transmission rate is now 0.5% and that New Zealand has one of the lowest mortality rate globally, while she added the country is to move out of lockdown on April 27th and businesses will be allowed to get ready to open this week. (Newswires)

New Zealand CPI QQ (Q1) 0.8% vs. Exp. 0.4% (Prev. 0.5%). New Zealand CPI (Q1) Y/Y 2.5% vs. Exp. 2.1% (Prev. 1.9%) New Zealand RBNZ Sectoral Factor Model Inflation Index (Q1) 1.7% (Prev. 1.8%)

COMMODITIES

Commodities were mixed in which oil prices collapsed throughout the session which saw WTI crude futures May contract fall below USD 15.00/bbl for the first time since 1999 on anticipation of record decline in demand growth from the coronavirus fallout, storage concerns and rollover to the June contract ahead of tomorrow’s settlement; The June contract briefly fell below USD 23/bbl. Elsewhere, gold was flat with price action contained by the mild overnight gains in USD, and mixed risk-tone which also kept copper prices rangebound. (Newswires) 

Baker Hughes US Rig Count: Oil -66 at 438; nat gas -7 at 89. (Newswires)

US

A choppy session for the Treasury curve; by settlement, 2s were unchanged at 0.20%, 10s +3bps at 0.64% and 30s +5bps at 1.26bps. An initial Gilead-induced risk bounce, which sequentially faded, only for Treasuries to be offered after the release of the NY Fed’s new (reduced) scheduled of purchases for next week’s asset buys. After the 10-year yield found solace around the 0.60% figure on Thursday, the risk rally in later trade saw it back up to just beneath 0.70%, with the Fed set to by USD 15bln per day next week, down from USD 30bln. The further tapering of the Fed’s purchases saw the curve bear steepen. However, the cuts will be evenly distributed across maturities, which some analysts suggesting that gives credence to the view that the increasingly Fed-lite market could be expressing its view of increased inflation expectations; one strategist at Janney Montgomery noted that in the wake of the Fed’s QE1 and ZIRP announcement in 2008/09, there was a +75bps back up in long-end yields in the face of a deflationary environment, which saw 2s10s widen to around the 100bps area (2s10s currently sits just below 45bps). T-note futures (M20) settled 11 ticks lower at 138-28+.

US postponed some tariff payments for 90 days but does not include anti-dumping and countervailing duties while reports added it also does not apply to section 201, 232 and 301 trade remedies. (Newswires)

NY Fed cut Treasuries/TIPS purchases to USD 15bln per day for next week (Prev. USD 30bln). (Newswires)