• Sentiment is divergent: bourses subdued in Europe after EU leaders meeting while US futures firm up
• US House voted to pass the USD 484bln coronavirus package bill as expected; Trump to sign in a noon ceremony
• EUR weakness initially boosted the USD, but the DXY has yet to eclipse early April highs at 100.94 as weakness in peers has diminished with the DXY recently turning negative on the day
• US Treasury Secretary Mnuchin said they are mulling a lending facility for struggling oil firms
• Looking ahead, highlights include US Durables, Uni. of Michigan (F), Baker Hughes, earnings from Verizon, S&P on Italy and the UK

CORONAVIRUS UPDATE

US CDC said coronavirus cases rose to 828411 (Prev. 802,583) and the death toll rose to 46,379 (Prev. 44,575), while other reports noted there were 3176 coronavirus deaths in US during last 24 hours citing the Johns Hopkins tracker. (Newswires/AFP)

US President Trump said to keep momentum against coronavirus, every American needs to maintain social distancing and voluntary use of face coverings, while he added we are very close to a vaccine but also stated the US may need to extend social distancing guidelines to early summer. (Newswires) US VP Pence said there are promising signs of progress in a number of states including New York which appear beyond peak and noted that 16 states have formally released plans to reopen. (Newswires)

US House voted to pass the USD 484bln coronavirus package bill as expected with the final vote count at 388-5 and voted to create a special panel to investigate the federal response to the pandemic, while President Trump said he will sign coronavirus stimulus bill in a noon ceremony on Friday. (Newswires)

Tokyo confirms 161 new cases of the COVID-19 on Friday, according to Nippon TV.

ASIA

Asian equity markets traded mostly negative following the lacklustre handover from US where the major indices retraced their initial oil-inspired gains as sentiment soured following weak data and with anti-viral hopes dashed by disappointing results for Gilead's Remdesivir drug in a clinical trial. ASX 200 (+0.5%) and Nikkei 225 (-0.9%) were mixed with energy front-running the gains in Australia after similar outperformance of the sector stateside due to the continued rebound in oil and as state governments are set to begin releasing a list of projects next week to spur the rebound in the domestic economy, while sentiment in Tokyo was subdued as exporters suffered from recent adverse currency flows and ongoing COVID-19 disruptions. Hang Seng (-0.6%) and Shanghai Comp. (-1.0%) conformed to the regional glum amid weak financial earnings from the likes of China Life Insurance and Ping An Insurance, while the PBoC’s CNY 56.1bln 1-Year Targeted Medium-term Lending Facility and respective 20bps rate cut failed to spur upside given that the injection was less than the CNY 267.4bln maturing and with the rate cut inline with the recent similar reductions in the 1-year MLF and PBoC Loan Prime Rate. The biggest losses in the region were seen in the Philippines PSEi (-2.2%) after President Duterte extended the lockdown for the national capital region to May 15th and warned the country was running out of funds which the Finance Secretary suggested was not the case, while India’s NIFTY Index (-1.2%) also slumped with financials pressured following the decision by Franklin Templeton Mutual Fund to wind up six of its credit funds in India. Finally, 10yr JGBs were higher amid the downbeat overnight risk tone and following recent source reports that suggested the BoJ could consider unlimited bond buying at next week’s policy meeting. Furthermore, the BoJ were present in the market today for a total of JPY 180bln of JGBs concentrated in the long to super-long end, while the Chinese 10yr yield also dropped to its lowest in 10yrs as markets had widely anticipated the PBoC’s TMLF actions.

PBoC conducted CNY 56.1bln through 1-Year Targeted MLF at rate of 2.95% vs. Prev. 3.15%. (Newswires) PBoC set USD/CNY mid-point at 7.0803 vs. Exp. 7.0823 (Prev. 7.0887)

Japanese National CPI (Mar) Y/Y 0.4% vs. Exp. 0.4% (Prev. 0.4%). (Newswires) Japanese National CPI Ex. Fresh Food (Mar) Y/Y 0.4% vs. Exp. 0.4% (Prev. 0.6%) Japanese National CPI Ex. Fresh Food & Energy (Mar) Y/Y 0.6% vs. Exp. 0.6% (Prev. 0.6%)

US

Fed announced temporary easing of rules around bank access to intraday Fed credit in which it is suspending uncollateralised intraday credit limits and overdraft fees for primary credit banks. Fed also streamlined the process for seeking collateralized credit for secondary credit institutions and noted that the moves should encourage regular use of intraday credit by healthy institutions and not meaningfully increase credit risk to reserve banks. (Newswires)

Fed said it is working to widen access to paycheck protection program liquidity facility to include non-depository institutions such as community development financial institutions and will announce changes shortly on widened access to PPP facility. (Newswires)

US Treasury Secretary Mnuchin said they are mulling a lending facility for struggling oil firms and that investment grade drillers should look to the Fed, while it was also reported that Mnuchin will require companies critical to national security to offer equity to the government if they seek some of the USD 17bln of virus relief. (Newswires)

White House Economic Adviser Kudlow said it is critical that aid be put to work ASAP and that China will be held accountable for coronavirus at some point, while he reiterated that May will be a transition month in the fight against the virus. Furthermore, Kudlow said he expects a big rebound for the US economy if it reopens during next few weeks and that he supports the need for an infrastructure bill. (Newswires)

UK/EU

BoE will continue to carry out 1- and 3-mth Contingent Term Repo operations each week in May, will continue to monitor market conditions and take further actions if necessary. (Newswires)

UK PM Johnson is planning to return to Downing Street as early as Monday to take back control of the coronavirus crisis. (Telegraph)

UK GfK Consumer Confidence (Apr) -34 vs. Exp. -40 (Prev. -9). (Newswires)

German Ifo Expectations New (Apr) 69.4 vs. Exp. 75 (Prev. 79.7, Rev. 79.5)

German Ifo Current Conditions New (Apr) 79.5 vs. Exp. 81 (Prev. 93, Rev. 92.9)

German Ifo Business Climate New (Apr) 74.3 vs. Exp. 80 (Prev. 86.1, Rev. 85.9): 74.3 is a low print for the index; previously, the low was 80.0 around the time of the '08 financial crisis

GEOPOLITICS

US Defence Ministry said a US warship sailed through the Strait of Taiwan. (Newswires)

EQUITIES

The downbeat APAC sentiment intensified as European players entered the fray (Euro Stoxx 50 -0.8%), with the failure of EU leaders to agree on a recovery package coupled with the Gilead Remdesivir pessimistic reports prompting an unwinding of recent gains. That being said, US equity futures outperform Europe after the latest coronavirus bill made smooth passage through the House. European bourses see broad-based losses, but have clambered off lows, albeit Spain’s IBEX (-1.3%) sees more pronounced downside after the country’s hopes for a grant and a joint EU debt issuance were dashed out the window at yesterday’s EU Summit. Sectors are in the red with the exception of Consumer Staples (amid Nestle earnings) and feature Energy as the laggard given the pullback in the complex. The breakdown also paints a downbeat picture as Oil & Gas, Banks, Autos, and Travel & Leisure all post losses of over 2%. Nestle’s (+3.0%) numbers see shares on a firmer footing after organic revenue topped estimates, FY20 was maintained and the Co. is exploring options for its Yinlu Peanut Milk and Canned Rice Porridge businesses in China, including a potential sale. The group expects continued improvement in organic sales growth and underlying trading operating profit margin and sees underlying EPS to increase in constant currency. As Nestle carries a 16.3% weighing in the SMI (+0.3%), the Swiss index fares better than its regional peers. Other movers are largely earnings-oriented: Air Liquide (+0.4%), Casino (-0.4%), Saint Gobain (-3.6%) and Sanofi (-0.6%); the latter conforming to the broad losses across health names induced by Gilead (-0.8% pre-mkt), despite a boost to earnings from COVID-19 stockpiling and an increase in Business EPS. Although Italy’s DiaSorin (+2.5%) bucks the trend on the back of its competitor’s failure in the COVID-19 antibody market. Signify (+14.3%) leads the gains the Stoxx 600 after announcing a strong cash position against the backdrop of the pandemic.

FX

EUR/GBP - The single currency has pared some losses vs the Dollar after falling to fresh mtd lows and through a key Fib retracement level (1.0757), but remains weak overall following no breakthrough on an EU-wide fiscal recovery fund and yet more evidence of the fallout from COVID-19 via the keenly watched Ifo survey, as all metrics missed consensus and the institute described the mood of German businesses as ‘catastrophic’. Moreover, firms are said to be more pessimistic about the outlook for coming months than ever, while Germany’s IAB Labour Market Research group believes that unemployment could rise in excess of 3 mln this year. However, Eur/Usd is clinging to 1.0760, while Eur/Gbp holds above 0.8700 amidst a pull-back in the Pound from Thursday’s recovery peaks in wake of weak UK retail sales data and a broadly firmer Greenback, in part on the demise of others. Indeed, Cable has tested 1.2300 as the DXY rebounds from post-US jobless claims and Markit PMI lows to notch a new recent high at 100.860, closer to April’s best so far (100.931 on April 6).

CAD/AUD/NZD/JPY - All softer vs the Buck, but off worst levels as aversion and disappointment over the failure of Gilead’s Remdesivir coronavirus treatment at clinical trial abates. The Loonie is holding the bulk of it’s crude induced momentum on the 1.4000 handle alongside oil, while the Aussie is pivoting 0.6350 after failing to sustain 0.6400+ status yesterday and Kiwi is hovering close to 0.6000. Elsewhere, the Yen has returned to tight confines between 107.75-55 following knee-jerk depreciation on no holds barred BoJ QE with little independent impetus from in line Japanese inflation data overnight.

SCANDI - Somewhat mixed fortunes for the Crowns, as Eur/Sek maintains a downward bias close to 10.8500 ahead of the Riksbank policy meeting on the grounds that the repo rate looks set rigid regardless of more adverse nCoV contagion highlighted by the Swedish Finance Ministry downgrading its already recessionary assessment of Q2 GDP. Conversely, Eur/Nok is back up near 11.5000 as Stats Norway slashed its 2020 growth forecast with the entire economy already in contraction over Q1.

EM - Aside from the ongoing vigil for the Rouble in terms of tracking Brent, the looming CBR rate verdict will be in focus along with the post-meeting press conference amidst expectations that the benchmark will be lowered to 5.5% from 6%. Usd/Rub roughly flat in the run up circa 74.6750.

Mexico Central Bank Governor said will hold usual meeting on May 14th despite this week's off-schedule cut and central bank will continue to evaluate as well as take actions it deems necessary, while he added the challenge is overcoming the short-term crisis and it will be important to provide liquidity and financing to those that need it as economy gradually returns to normal. (Newswires)

FIXED

It’s far too early to presume and the broad risk-off theme remains the same, but a rebound in EU stocks and Eurozone periphery bonds has sapped strength from the core, with Bunds off best levels, Gilts almost erasing all their gains and 10 year T-notes flat. No obvious or new catalysts behind the partial change in sentiment, so pre-US open and weekend positioning is probably at play awaiting US data and final Michigan sentiment before late ratings reviews for Italy and the UK from S&P that could have repercussions for both sovereigns in the current debt and financially sensitive environment.

COMMODITIES

WTI and Brent front month futures have yielded their gains seen in the APAC session, with both benchmarks extending losses as the final session of the week goes underway, but the complex has seen a recent pickup in-line with a improving overall risk tone. WTI posted +40% gains over the last two days as geopolitical risk premium pricing was induced by a ramp-up in US-Iranian tensions, while some argue prices were squeezed higher amid liquidation-only restrictions by some brokers. Again, there is little by way of any fresh fundamental developments to support a sustained move higher, but a relief rally may have been due given the recent detrimental losses across the complex. In terms of OPEC, despite reports of Algeria and Kuwait following the lead from Saudi to cut output early, desks believe this will do very little in the short term to offset the surplus in the market. ING analysts believe that “there is more downside risk to prices in the short term.” WTI futures rose to a whisker away from USD 18.00/bbl before receding to a current intraday low at USD 15.64/bbl, whilst its Brent counterpart printed an intraday roof at USD 22.70/bbl and base at USD 20.50/bbl thus far. Elsewhere, spot gold retraces some of its recent gains, but prices remain comfortably above USD 1700/oz at the time writing. The yellow metal is pressured by the rising Buck and sits within a USD 1721-31 intraday band, with much of the session spent at the lower end of this. Copper prices see similar price action amid the overall risk aversion across the market, alongside Dollar woes. The red metal threatens a break below USD 2.3/lb vs. yesterday’s 2.3505/lb high.

CME raised crude oil NYMEX margins by 17.6% to USD 10000/contract from USD 8500/contract, raised NY Harbor heating oil margins by 15.9% to USD 6200/contract from USD 5350/contract, raised RBOB gasoline futures margins by 11.1% to USD 9000/contract from USD 8100/contract and raised London spot silver margins by 9.4% to USD 8750/contract from USD 8000/contract. (Newswires)

Russia has cut Urals oil exports from sea ports by 43% for May vs. April, ahead of the OPEC+ schedule; Baltic ports -38%, Novorossiisk -55%, according to a schedule. (Newswires)