• Asia-Pac bourses traded lacklustre following on from the mixed performance stateside where the major US indices spent most of the session clawing back early tech-led declines
• Hong Kong announced it will increase stamp duty for stock trading to 0.13% from 0.10%
• RBNZ kept the OCR at 0.25% and LSAP at NZD 100bln as expected
• In FX, the DXY maintained 90.00 status, EUR/USD oscillated around 1.2150, GBP/USD pulled back from its advance above 1.4200
• Looking ahead, highlights include US new home sales, DoEs, BoE's Haldane, Bailey, Vlieghe, Haskel, Broadbent, Fed's Powell, Brainard, Clarida, supply from Germany & the US

CORONAVIRUS UPDATE

US COVID-19 cases increased by at least 67,948 to 28.33mln and deaths increased by at least 2,195 to 503.0k, according to a major newswire tally. US CDC said it delivered 82.11mln vaccine doses (prev. 75.21mln), administered 65.03mln doses (prev. 64.18mln), while 44.54mln have received one or more doses (prev. 44.14mln) and 6.63mln have received both doses (prev. 6.58mln). (Newswires)

AstraZeneca (AZN LN) expects April US FDA authorization for its COVID-19 vaccine. In other news, an EU official said AstraZeneca is to deliver less than 90mln COVID-19 shots to the EU in Q2 which is at least 50% below contract commitments, while AstraZeneca said its hopeful it can bring EU deliveries closer in line with the EU contract. (Newswires)

UK lockdown easing could be accelerated if real world data on the effect of vaccines is better than expected, according to a senior government source. (Telegraph)

ASIA

Asia-Pac bourses traded lacklustre following on from the mixed performance stateside where the major US indices spent most of the session clawing back the early tech-led declines, amid dip buying and which saw the Nasdaq 100 almost fully recover from an initial 3.5% slump. ASX 200 (-0.9%) was pressured as tech and telecoms suffered a similar fate to their Wall St counterparts and with participants digesting an influx of earnings results, as well as mixed data in which Construction Work Done surprisingly contracted but wage growth topped estimates. Nikkei 225 (-1.3%) ignored a weaker currency on return from its holiday closure and retreated beneath the 30k level, while KOSPI (-1.7%) was kept afloat in early trade amid reports the government is to submit an extra budget to parliament on March 4th but then faltered in tandem with its regional peers. Hang Seng (-2.6%) and Shanghai Comp. (-1.5%) were both negative with Hong Kong dragged by speculation of a stamp duty tax increase on stock trading which the government later confirmed and resulted to double digit declines to HKEX shares despite posting a record FY net. There were lingering US-China tensions after reports suggested US senators are eyeing legislation to curb Beijing's unfair practices and tackle Chinese censorship of US companies and individuals, while Treasury Deputy nominee Adeyemo also indicated the US is open to using a Trump-era investment ban to punish China for trade violations. Finally, 10yr JGBs were subdued despite the weakness in stocks with prices stuck near the 151.00 support level but later saw mild support following stronger results at the enhanced liquidity auction for 10yr, 20yr and 30yr JGBs.

PBoC injected CNY 10bln through 7-day reverse repos at rate of 2.20% for a net daily injection of CNY 10bln. (Newswires) PBoC set USD/CNY at 6.4615 vs exp. 6.4612 (prev. 6.4516)

US President Biden said he concluded a very successful meeting with Canadian PM Trudeau and said the US will work with Canada on supply chain security and resilience, while they will work together to seek the release of two Canadians detained by China. Furthermore, twitter sources noted speculation that China could release the 2 detained Canadians as a goodwill gesture on humanitarian grounds. (Newswires/Twitter)

Bipartisan group of US Senators to revive bill to tackle Chinese censorship of US companies and individuals, according to Democrat Senator Merkley. It was also reported that US Treasury Deputy nominee Adeyemo indicated that US is open to using a Trump-era investment ban to punish China for trade violations. (Newswires/Twitter)

Hong Kong Budget stated the government expects 2021 growth at 3.5%-5.5%, headline inflation at 1.6% and underlying inflation at 1.0%. Furthermore, Hong Kong is to reduce salaries tax payable by 100% capped at HKD 10k and the government will offer 1% interest loans to jobless workers capped at HKD 80k, while a HKD 5k electronic consumer voucher will be issued for residents aged 18+ and the government confirmed earlier speculation that it will increase stamp duty for stock trading to 0.13% from 0.10%. (Newswires)

UK/EU

UK Chancellor Sunak is reportedly preparing a 3-month extension to stamp duty holiday to end-June, while it was separately reported that more than two dozen Tory MPs urged UK Chancellor Sunak not to raise fuel tax in Budget. (Times/The Sun)

FX

In FX markets, the DXY was subdued but held on to the 90.00 level after yesterday’s indecisive trade as focus centred on Fed Chair Powell’s semi-annual testimony to Congress where he reiterated the Fed will communicate well in advance of any changes to the bond buying pace and vowed to keep rates near 0% until full employment and inflation rises to 2% and is on track to moderately exceed this for some time. Furthermore, he refrained from pushing back against higher yields and attributed the rise in Treasury yields to expectations of a return to higher inflation and higher growth. EUR/USD continued to oscillate around the 1.2150 level near its 50DMA with the single currency contained amid a tentative greenback, while GBP/USD extended on its upward momentum with gains exacerbated on a brief incursion into 1.4200 territory and amid reports the UK lockdown easing could be accelerated if real world data on the effect of vaccines is better than expected. USD/JPY and JPY-crosses were firmer despite the subdued risk appetite, while antipodeans took advantage of a weaker greenback and following on from the RBNZ policy decision where the central bank kept the OCR at 0.25% and LSAP at NZD 100bln as expected. The RBNZ statement triggered mixed reactions and was initially interpreted as less hawkish than some had anticipated as the central bank kept prospects of a future rate cut on the table and noted that the outlook was uncertain with several factors supporting economic activity likely to be temporary. However, NZD eventually gained given that the central bank upgraded its forecasts for inflation and TWI NZD, while it stated that resilience in the domestic economy implies no significant additional stimulus is currently required and there was also a notable upward shift in the RBNZ unconstrained OCR track compared to the last meeting in November.

BoC Governor Macklem said Canada can expect a solid rebound in immediate months ahead and be more confident in sustained strong growth through H2 and into 2022. Macklem also stated it will be some time before Canada sees a complete economic recovery and it will not return to the same economy as before the pandemic, while he added that monetary policy will need to provide stimulus for a considerable period. (Newswires)

RBNZ kept the OCR unchanged at 0.25% and maintained LSAP at NZD 100bln as expected but stated the outlook ahead remains highly uncertain and prolonged monetary stimulus is necessary. The committee agreed it must remain prepared to provide additional support if required and it will maintain monetary stimulus until it is confident CPI will be sustained around 2% and employment is above the maximum sustainable level in which it expects a prolonged period before these conditions are achieved. RBNZ said operational work to enable a negative OCR is complete and the committee agreed it is prepared to lower the OCR to provide additional stimulus if needed, while it added that the labour market has proved to be more resilient than anticipated but noted several factors supporting economic activity are likely to be temporary. The central bank adjusted its forecast in which it sees annual CPI at 1.5% by March 2022 (prev. 0.9%) and TWI NZD at 74.9% in March 2022 (prev. 71.5%), with the statement noting resilience in the domestic economy implies no significant additional stimulus is currently required and that monetary stimulus is assumed to stay at the current accommodative level for a prolonged period. Furthermore, RBNZ Governor Orr stated at the press conference that they want to retain all options regarding stimulus and that they have always talked about negative rates as an available option, while he added they will alter settings if conditions tighten and reiterated that the OCR can go lower. (Newswires)

• Australian Construction Work Done (Q4) Q/Q -0.9% vs. Exp. 1.0% (Prev. -2.6%)
• Australian Wage Price Index (Q4) Q/Q 0.6% vs. Exp. 0.3% (Prev. 0.1%)
• Australian Wage Price Index (Q4) Y/Y 1.4% vs. Exp. 1.1% (Prev. 1.4%)

COMMODITIES

WTI crude futures were pressured amid the lacklustre risk appetite and following bearish stockpile data in which the private sector inventory report showed a surprise build for headline crude which eventually saw prices test the USD 61.00/bbl level to the downside, while there were also recent comments from the IEA which doesn't expect oil demand to return to pre-COVID levels by year-end. Elsewhere, gold prices were kept afloat above USD 1,800/oz as the greenback languished overnight and copper saw a mild pull-back from its best levels in almost a decade amid the overnight losses across stock markets.

US Private Energy Inventories (bbls): Crude +1.0mln (exp. -5.2mln), Cushing +2.8mln (exp. -0.80mln), Gasoline +0.1mln (exp. -3.1mln), and Distillate -4.5mln (exp. -3.7mln). (Newswires)

ExxonMobil (XOM) Baytown, Texas refinery (584k BPD) is making slow progress restarting wastewater and sulfur units, while Valero (VLO) Memphis, Tennessee refinery (180k BPD) plans to restart its small CDU by early next week, according to sources. (Newswires)

Trafigura said about 500-600k BPD of crude production and 2.5mln BPD of refining capacity will remain offline at the end of the week following the Texas freeze, while it that around 5-10% of shuttered US oil production could never recover post-freeze. (Newswires)

GEOPOLITICAL

UN's quarterly atomic watchdog report stated that Iran continues to exceed many limits set by its nuclear deal with major powers, while it was also reported that Iran is producing around 15kg a month of uranium enriched to 20%, according to a senior diplomat. (Newswires)

US is readying sanctions to punish Russia over Navalny, according to the Washington Post. There were also separate reports that the White House said it would be weeks and not months before the US responds, when asked about possible Russia sanctions over the SolarWinds (SWI) hack. (Newswires/Washington Post)

US

It was quite a lacklustre session regarding movements in USTs, although long bonds were slightly lower after Powell did not express any alarm at higher nominal yields, perhaps as his view for H2 is becoming better than previously expected. By settlement, 2s +0.2bps at 0.117%, 10s -0.7bps at 1.362%, 30s +1.9bps at 2.199%; TYH1 volumes were strong again, likely influenced by roll factors too given around 58% of open interest is now in the TYM1 contract; short TIPS yields were lower again (5yr BEI at 2.30%), while long TIPS rose. Despite little change on the session, the elevated absolute levels of yields continue to be the topic du jour of the wider market and media, while stimulus/vaccinations prod along in the background. There had been some minority expectations that Powell could possibly talk down rising yields at his Senate appearance today, or voice some concerns similar to ECB's Lagarde on Monday, although Powell did not make such efforts, instead echoed other Fed members in the view that the rise has been a reflection of improving fundamentals. His comments coincided with some marginal selling pressure in duration. Clarida is due to speak on Wednesday, but given Powell's remarks today, it seems unlikely (albeit still a non-zero chance) he would contradict Powell; in January, Clarida said he was happy with the 10-year yields above 1% and is more focused on why rates are rising. Meanwhile, the USD 60bln 2-year note auction today was slightly lacklustre: tailed the 0.118% WI by 0.1bps, covered less than average, and a smaller than average participation from Directs, although Indirects turnout was strong. T-note (H1) futures settled 3 ticks higher at 133-13+; m1 settled 3 ticks higher at 134-10+.

Fed Discount Rate Minutes stated all 12 regional Fed bank boards supported keeping the discount rate on hold and many noted "significant stress" in high contact sectors. (Newswires)

US President Biden said the stimulus bill is not going to get passed "by a lot" and it was also reported that the House Rules Committee is to consider President Biden's stimulus plan on Friday. In other news, a bipartisan group of lawmakers plan to meet with President Biden today to discuss supply chain issues including semiconductor chips, according to a source. (Newswires)