• Asian equity markets were negative across the board following the weak handover from Wall St where sentiment was subdued
• In crude markets, the soon-to-expire May WTI contract hit lows of USD -40/bbl, whilst the active June contract remained above USD 20/bbl
• The DXY was firmer and rose above 100.00 amid the broad risk-averse tone
• US President Trump hopes to have an agreement on the small business program soon with maybe a vote in the Senate on Tuesday
• Reports suggested that North Korean leader Kim was said to be in grave danger following surgery; South Korea later played down these reports
• Looking ahead, highlights include UK Labour Market Report, German ZEW, Canadian Retail Sales, APIs, supply from Germany and the UK, earnings from SAP, Lockheed Martin, Coca-Cola and Phillip Morris

CORONAVIRUS UPDATE

US President Trump said Americans must continue practising social distancing and that we hope to have an agreement on small business program soon with maybe a vote in the Senate for Tuesday, while he added that discussions on phase 4 stimulus will begin shortly. (Newswires)

US House Speaker Pelosi said negotiators have agreed to terms on the principles for next virus relief package although talks still continue on final language and noted they have about USD 120bln for small businesses in the package. (Newswires) US Senate Majority Leader McConnell stated that the Senate has scheduled a Tuesday session as lawmakers are continuing work on the coronavirus relief for small businesses. (CNN/Newswires) More recently, the Politico Bureau Chief tweeted “No deal yet on latest coronavirus relief package, both sides still going over text. Senate vote still possible tomorrow (maybe), earliest House will vote is now Thursday”.

Georgia will permit some shuttered businesses to reopen this week including salons, gym, bowling alleys and some other indoor facilities, while South Carolina is also to permit several types of stores to reopen. (Newswires)

China's Global Times tweeted the China Research team research team released first animal experiment data on a COVID-19 vaccine, which showed the vaccine is effective and safe on rats and non-human primates. (Newswires)

UK COVID-19 cases rise to 124,743 (prev. 120,067), death toll rose by 449 (+2.8%) to 16,509 (prev. 16,060) vs. yesterday's increase of 596 (+3.85%). (Newswires)

ASIA

Asian equity markets were negative across the board following the weak handover from Wall St where sentiment was subdued. Oil markets drew a lot of attention after WTI crude futures plunged and the May contract turned negative for the first time in history, briefly resulting to losses of over 300% and lows of around USD -40/bbl. This was due to the ongoing supply glut and filling storage culminating to a lack of buying interest on a contract which is due for settlement today. Note, the more widely-trade June contract remained above USD 20/bbl throughout the chaos and the May contract gradually returned to positive territory. ASX 200 (-1.6%) weakened with focus on corporate updates including mixed quarterly production numbers from BHP which subsequently weighed on the mining giant and with Virgin Australia going into voluntary administration in an effort to recapitalize amid the government’s refusal for a bailout. Nikkei 225 (-2.0%) was pressured by the flows into the currency and the KOSPI (-1.5%) was initially among the worst hit amid uncertainty regarding the geopolitical climate for the Korean peninsula after reports that North Korea leader Kim was in grave danger following cardiovascular surgery which boosted defence stocks, although South Korea have denied the reports of Kim’s condition. Elsewhere, Hang Seng (-2.1%) and Shanghai Comp. (-1.4%) also traded lower with underperformance in Hong Kong after social distancing restrictions were extended for 14 days and after the recent sovereign rating downgrade by Fitch. Finally, 10yr JGBs were choppy with initial gains seen amid the risk averse tone and similar upside in T-notes but with price action only mild as participants also digested mixed results from the 20yr JGB auction which saw a lower b/c and wider tail in price.

PBoC skipped open market operations and were net neutral on the day. (Newswires) PBoC conducted CNY 5bln central bank bill swap operation today. (Newswires) PBoC set USD/CNY mid-point at 7.0752 vs. Exp. 7.0750 (Prev. 7.0657)

Hong Kong Chief Executive Lam said the government extended coronavirus-related restrictions for 14 days. (Newswires)

UK/EU

Italy's Treasury sees GDP falling around 8% in 2020 and growing between 4-4.5% in 2021 in which the forecast doesn't include the positive impact from new stimulus measures that are to be approved later in April, according to sources. (Newswires)

German Finance Ministry Monthly Report noted Industrial Output will plunge for March and that pandemic is increasing job uncertainty and which is impacting consumers' propensity to buy and income expectations. (Newswires)

FX

The DXY was firmer and rose above the 100.00 level as it benefitted from its safe-haven status amid the broad risk-averse tone which was also not helped by US President Trump’s announcement to sign an executive order to suspend immigration into the US citing the coronavirus outbreak and a need to protect jobs. The greenback’s major counterparts were subdued with EUR/USD falling below 1.0850 but with downside stemmed after the recent initial steps to reopen EU economies, while GBP/USD tested 1.2400 to the downside as the currency remained dampened by the ongoing woeful outlook for the economy. USD/JPY and JPY-crosses were subdued by the risk-tone which also weighed on antipodeans due to their high-beta statuses to push AUD/USD and NZD/USD below the 0.6300 and 0.6000 handles respectively. Furthermore, a 6% decline in Australia jobs for March 14th-April 4th and dovish comments from RBNZ Governor Orr provided no favours for currencies on both sides of the Tasman, while KRW underperformed on the geopolitical uncertainty following conflicting reports of North Korea leader Kim’s condition.

RBA Minutes from April 7th meeting stated daily operations are likely to be on smaller scale in near-term and that they will do what is necessary to achieve 3yr yield target, while the board remained committed to supporting jobs, incomes and businesses. RBA added that the Australian financial system has stayed resilient and that GDP could decline significantly in June quarter, as well as remain subdued in September quarter. Furthermore, the minutes suggested it is unlikely that support packages will provide strong boost to spending in near-term due to shutdown and restrictions. (Newswires)

Australia Bureau of Statistics said new data showed jobs declined 6% for March 14th-April 4th. (Newswires)

RBNZ Governor Orr said QE is more effective to deal with sharp virus shock rather than negative rates, but added that negative rates are not ruled out and that they are open minded on direct monetization of New Zealand debt. (Newswires)

RBA Governor Lowe says monetary response is keeping funding costs low, adds will continue to adjust bond and repo operations as needed to support liquidity in the system. Lowe added that the Unemployment rate is likely to be around 10% by June but hopes it might be lower than this if businesses are able to retain their employees on lower hours. (Newswires)

COMMODITIES

Mayhem was observed in the oil market in which WTI crude futures plunged heading into the daily settlement and the May contract turned negative for the first time in history, briefly resulting to losses of over 300% and lows of around USD -40/bbl. This was amid the ongoing supply glut and filling storage culminating to a lack of buying interest on a contract which is due for settlement today, although the June futures remained above the USD 20/bbl throughout the chaos and the May contract gradually returned to positive territory. Furthermore, there were comments from President Trump that noted the moves were a financial squeeze and reiterated intentions to purchase oil for the SPR, while Goldman Sachs suggested there could be further turmoil and the June contract could be pressured next. Elsewhere, gold prices were relatively flat after recently being contained by resistance at the USD 1700/oz level and copper extended on declines amid the broad risk averse tone.

US President Trump said we're looking at putting as much as 75mln bbls into SPR which would top it out and that the oil price drop is short-term in which a lot of people got caught out and was largely a financial squeeze. Furthermore, President Trump suggested oil producers need to do more by the market in terms of output cuts and that the administration will either ask permission from Congress to buy oil or we will store it, while he also responded we will look at it when questioned about stopping shipments of oil from Saudi Arabia. (Newswires)

Goldman Sachs suggested there could be more chaos for May WTI crude contract and notes oil collapse is due to unprecedented supply glut, while it warned June WTI contract could be pressured next. (Newswires)

GEOPOLITICS

North Korea leader Kim is said to be in grave danger following surgery and an anonymous US official said the US has information on North Korea leader Kim's critical condition and is studying the line of succession. However, the South Korea government said North Korea Leader Kim is not seriously ill and noted there is no unusual movement in North Korea, while China’s Communist Party International Liaison Department said North Korea Leader Kim is thought to not be critically ill. (Newswires/CNN/Yonhap)

Syria forces reportedly downed Israeli 'hostile targets' near Palmyra. (Newswires)

US

The TPLEX modestly bull-flattened as the crude losses kept risk appetite at bay; by settlement, 2s were unchanged at 0.20%, 10s -3bps at 0.62%, 30s -5bps at -1.23%. The gains came mainly overnight as oil prices made their descent, although heading into the US session yields traded rangebound, with the 10-year yield swimming between 0.61-0.65%. Note, while front-month oil futures made record losses (and prices), the move in other assets, particularly USTs, were muted. Participants were unwilling to let yields fall lower, perhaps indicative of their collective view that near-term oil price fluctuations were temporary, rather than that of the beginning of a sustained disinflationary environment. At the same time, it is worth highlighting that pressure on yields were also likely muted as Fed has now pared its purchases to approximately USD 15bln per day from USD 30bln last week, and as one would expect, offer-to-cove ratios have elevated at the operations on Monday. Furthermore, a handful of corporate issuances to start the week gave participants more supply to digest. In the front-end, FRA-OIS spreads widened on Monday, with Fed data showing commercial paper rates remain elevated while the background of ramped up US CMBs and T-Bill issuance puts upward pressure on the complex. T-notes (M20) settled 7 ticks higher at 139-03+.

US President Trump tweeted he will sign an executive order to temporarily suspend immigration into the US citing virus and need to protect jobs of American citizens. (Newswires)

US Senate Democrat Leader Schumer urged the Fed to make lending progams open to non-profits and local governments, during a call with Fed Chair Powell. In other news, New Jersey Governor Murphy wants the option to borrow from the Fed as well as direct Federal cash aid and commented that our revenues have fallen off a cliff. (Newswires)