• European bourses opened marginally lower but have since been bolstered as US participants enter the fray; US futures firmer as such
• US President Trump stated he is not happy with China and that he is not interested in reopening the US-China trade deal
• China's Finance Ministry have released a second list of tariff waivers for some US goods; exemptions will last 1-year from May 19th
• NY Fed said the Secondary Market Corporate Credit Facility will begin purchases of ETFs today which may purchase US-listed ETFs
• Looking ahead, highlights include US CPI, EIA STEO, Fed's Bullard, Harker, Mester, supply from the US. NIH’s Fauci speaking.

CORONAVIRUS UPDATE

NIH’s Fauci is to warn the Senate there are risks of reopening too soon which can lead to needless suffering and death. (NYT)

US Treasury released details on USD 150bln state aid from coronavirus relief fund in which it is to make direct payments to state governments and territories, while the funds may only be used to cover expenses related to the coronavirus. (Newswires)

US CDC reported total coronavirus cases as of previous day increased to 1,324,488 (Prev. 1,300,696) and total death toll was at 79,756 (Prev. 78,711), while AFP noted the total number of US deaths have surpassed 80,000 citing the Johns Hopkins tracker. (Newswires) An emergency hospital set up in New York's Central Park started to be dismantled on Monday with the city past the worst of the pandemic, while a temporary hospital was set up in Washington DC in the event there is a jump in infections. (Newswires/AFP)

Philippines extended the lockdown in biggest cities of Manila and Cebu until May 31st. (Newswires)

China's Health Commission says the resurfacing of cluster cases in China suggests prevention and control measures cannot be relaxed. (Newswires)

Japan's Finance Minister does not think that tax cuts are an option at present, not amongst the package of steps to combat the economic fallout from COVID-19; fiscal situation is severe. (Newswires)

ASIA

Asian equity markets traded cautiously following the indecisive performance of their Wall St peers as US-China trade concerns resurfaced with President Trump later noting he was not interested in renegotiating the phase on deal after earlier reports suggested that China could opt for a renegotiation. ASX 200 (-1.1%) suffered broad losses amid weak business confidence and as escalating tensions with China added to the glum after Australia’s largest trading partner imposed an import ban on 4 Australian abattoirs which some viewed to be retaliation for PM Morrison’s calls for an independent inquiry to the coronavirus outbreak. Nikkei 225 (-0.1%) was subdued by unfavourable currency flows and with focus on earnings releases including Toyota which was pressured after it failed to provide net guidance due to the virus and saw a slump in its FY operating profits. Hang Seng (-1.5%) and Shanghai Comp. (-0.1%) were also lacklustre due to the increased trade concerns surrounding China but with downside in the mainland cushioned by recent stronger than expected lending data. Finally, 10yr JGBs were marginally higher after prices found support around 152.15 and amid the cautious tone in stocks, while the gains also coincided with a rebound in T-notes from the losses in the prior session that were partly triggered by heavy supply and following mostly better received 10yr JGB auction.

PBoC skipped open market operations and are net neutral on the day. (Newswires) PBoC set USD/CNY mid-point at 7.0919 vs. Exp. 7.0892 (Prev. 7.0769)

Chinese CPI YY (Apr) 3.3% vs. Exp. 3.7% (Prev. 4.3%). Chinese PPI YY (Apr) -3.1% vs. Exp. -2.6% (Prev. -1.5%)

US President Trump stated he is not happy with China and that he is not interested in reopening the US-China trade deal. This followed reports that Chinese officials may consider invalidating the Phase One trade deal or negotiating a new one to “tilt the scales more to the Chinese side,” after US President Trump’s hyped anti-China conspiracy. (Newswires/Global Times)

China's Finance Ministry have released a second list of tariff waivers for some US goods; exemptions will last 1-year from May 19th; 79 products on the exemption list, which includes rare earth ore. (Newswires) China's Foreign Ministry reiterates that US and China should implement the trade deal. (Newswires)

China's Foreign Ministry says China's suspension of beef imports from Australia are not linked to the investigations into the pandemic's origin. (Newswires)

US Senate approved bill regarding Taiwan Observer Status in the World Health Organization. (Newswires)

US

NY Fed said the Secondary Market Corporate Credit Facility will begin purchases of ETFs today which may purchase US-listed ETFs whose investment objective is to provide broad exposure to the market for US corporate bonds, Furthermore, it added the majority of ETF holdings will be on those focused on exposure to US investment grade corporate bonds and remaining will be those with primary exposure to US high-yield corporate bonds. (Newswires)

UK/EU

UK PM Johnson stated it will be a difficult task to reopen the hospitality industry in July and stated we would have to think about how to adapt the economy if we cannot get a vaccine quickly. (Newswires)

BoE's Broadbent, when questioned about negative interest rates, says the MPC is prepared to do what is needed, according to a CNBC interview

-        The Bank keeps all policy tools under review

-        Must consider if more harm than good would be done with negative rates

Germany’s BDI, France’s Medef and Italy’s Confindustria business organisations have reportedly jointly called for further ‘fiscal solidarity by common resources for those countries most strongly affected’. (FT)

ECB's Kazimir says he is not opposed to increasing PEPP - but should be based on data and must first examine the impact on the economy from lockdown easing. (Newswires)

EQUITIES

Mixed trade across the European equity sphere thus far [Euro Stoxx 50 +0.1%] as the downbeat sentiment from the APAC session somewhat waned as European trade went underway. Italy’s FTSE MIB (+0.7%) outperforms the region as banks continue to feel tailwinds from yesterday’s reports that Italy’s Gov’t is said to be mulling state guarantees for up to EUR 15bln of bonds issued by banks. Sectors are mixed, but defensives broadly outperform cyclicals; with the breakdown painting a similar picture. Telecom names stand as the marked outperformer as earnings from giant Vodafone (+8.1%) bolster the sector. Vodafone’s stellar FY prelim results see a YY rise across group revenue, adj. EBITDA, and operating profit, whilst Q4 organic services revenue topped forecasts and FY guidance for Adj. EBIT and Capex were raised on account of its UK assets merger with Liberty Global. Peers Orange (+1.2%) and Telecom Italia (+2.2%) rise in tandem, albeit gains are less pronounced in BT (+0.2%) shares amid its direct competitor's solid results. The sector also sees tailwinds from ProseibenSat (+11.5%) whose shares were propelled to the top of the Stoxx 600 after KKR acquired ~5.2% stake in the Co, with 3.21% in shares and 2.0% through financial instruments. KKR believes that the Co. is undervalued. Turning to other movers; Thyssenkrupp (-9.0%) holds onto post-earning losses on the back of deteriorating Q2 net, deeper negative EPS, and debt almost doubling YY. The Co. also said it cannot rule out Q3 loss of up to EUR 1bln. Similarly – Land Securities (-14.5%), Engie (-3.8%), and Allianz (-2.8%) trade firmly into negative territory post-earnings.

Duke Energy Corp (DUK) Q1 20 (USD): EPS 1.14 (exp. 1.19), Revenue 5.95bln (exp. 6.34bln)

Ingersoll Rand Inc (IR) Q1 20 (USD): EPS -0.13 (exp. 0.28), Revenue 0.8bln (exp. 1.18bln)

FX

AUD/NZD - Already strained relations between Australia and China over the cause of COVID-19 have been compounded further by Beijing extending its ban on barley to meat from 4 of the former’s major exporters, with Aud/Usd extending its reversal from recent highs to sub-0.6450 at one stage overnight and Aud/Nzd pivoting 1.0650, as Nzd/Usd meanders between 0.6093-43 ahead of tomorrow’s RBNZ policy meeting. Note also, mixed survey news for the Aussie to digest via NAB’s April business survey as sentiment improved, but conditions deteriorated further awaiting Thursday’s labour data.

GBP/EUR/CHF - The Pound is looking precarious again across the board, and perhaps the mere mention of negative UK rates from BoE’s Broadbent may have rattled a few longs with Cable just maintaining 1.2300+ status and Eur/Gbp hovering a few pips below 0.8800 even though the single currency has retreated against the Dollar around the 1.0800 handle where more decent option expiries reside (1.4 bn from the round number to 1.0805). Moreover, the Euro continues to unwind recovery gains vs the Franc towards 1.0500, while Usd/Chf drifts back from 0.9750 to eye 0.9700 again as the Greenback loses momentum in general. Indeed, the DXY has topped out within a 100.440-020 range despite more Fed push backs on NIRP before FOMC chair Powell speaks on Wednesday and CPI in the iterim.

JPY/CAD - Both rangy and narrowly mixed against the Buck, with the Yen paring some losses either side of 107.50 and Loonie bouncing to within a whisker of 1.4000 from 1.4060+ against the backdrop of mildly firm crude prices in the run up to Canada’s leading index for April due at the same time as US NFIB.

SCANDI/EM - In contrast to yesterday’s inflation beats, Norwegian GDP was weak and accompanied by significant upward revisions to 2020 deficit and spending forecasts, but the Nok has reversed initial or knee-jerk declines to around 11.1850 alongside the Sek to resume uptrends vs the Eur. Similarly, no sign of a turnaround Tuesday for the Try as it stages an encouraging effort to sustain retracement from record lows vs the Usd and almost revisited the 7.0000 mark.

Notable FX Expiries, NY Cut:

-        EUR/USD: 1.0790 (500M), 1.0800-05 (1.4BLN), 1.0835 (250M), 1.0870-75 (1BLN)

China imposed an import ban on 4 Australian abattoirs. There were later comments from the Australia Trade Minister Birmingham that he believes Australian meat exports are having minor technical breaches with China and should be able to resolve the issues, while he sees the suspension as unrelated to coronavirus inquiry and added that there should be a thorough investigation regarding the coronavirus. (ABC News/Newswires)

Australian NAB Business Confidence (Apr) -46 (Prev. -66). (Newswires) Australian NAB Business Conditions (Apr) -34 (Prev. -21)

FIXED

No major change in direction or sentiment for core debt, but the 10 year UK benchmark did cross parity briefly after a healthy update from bookrunners handling the syndicated offering and BoE’s Broadbent not ruling out more easing or NIRP in terms of an option, albeit not the likeliest or most palatable. However, bears remain poised into upticks and the debt future is back in negative territory from a fresh 137.45 Liffe high (+9 ticks vs -32 ticks at the trough) alongside Bunds that remain just a few ticks above 173.00 and a bit more divergent from the periphery in wake of another ECB member talking about the possibility of increasing the PEPP. Elsewhere, US Treasuries are still outperforming EU equivalents with the curve flipping back to marginal flattening ahead of CPI, 10 year supply and Fed chair Powell tomorrow, and with little rection to a fall in NFIB business confidence on the basis that it was on the cards.

COMMODITIES

WTI and Brent futures eked mild gains early doors and extended on gains after a relatively contained APAC session after participants digested over-compliance from Saudi, Kuwait, and UAE. News-flow has once again been light for the complex throughout the first half of European trade, although participants will be eyeing the US-Sino trade saga after China released a second list of tariff waivers for US goods. Traders will also be eyeing airlines’ revised schedules to gauge the demand on that front, with Ryanair today stating that it plans to restore some 40% of scheduled flights from July 1st. Elsewhere, Saudi Aramco reported its earnings – although more stock-specific and backward-looking, the group expects demand decline and oil prices to weigh on FY20 earnings. WTI June towards the top of today’s USD 24.22-25.35/bbl band whilst Brent July sees itself between a USD 29.62-30.40/bbl intraday parameter. Spot gold meanwhile derives its price action from the Dollar index – the yellow metal fluctuates on either side of USD 1700/oz. Copper prices track stocks and sentiment lower, although the red metal resides firmly north of USD 2.30/lb

Saudi Aramco (2222 SR) - Q1 net income USD 16.7bln, FCF USD 15bln. Q1 dividend USD 18.75bln to be paid; Co. expects demand decline and oil prices to weigh on earnings in FY20; Aramco maintained its pre-eminence in oil and gas production. Q1 crude oil production 9.8mln BPD. (Newswires)

Saudi Arabia said the additional cuts in output are designed to support rebalancing the market and encourages other producers to make further voluntary cuts, while they would be more than surprised if by the next OPEC+ meeting in June the picture is not brighter. (Newswires)

Iran have set its June Iranian light crude price to Asia at Oman/Dubai USD -4.90 USD 2.30 increase from the prior month), according to a source. (Newswires)

Russian oil & gas condensate output has fallen to 9.45mln bpd on May 1st-11th (Prev. 9.5mln bpd in early May), according to sources. (Newswires)