• European equity indices (ex-FTSE 100) and US futures are firmer on the session with RTY the outperformer, +0.7%
• US 10yr yields are flat on the session at 1.3680%; DXY has seen slight upside after initial downside where it lost the 90.0000 handle
• WTI and Brent are positive and in proximity to best levels ahead of the EIA report
• US FDA is planning to unveil its detailed analysis on Johnson & Johnson's COVID-19 vaccine later today
• Looking ahead, highlights include BoE’s Bailey, Broadbent, Vlieghe & Haskel, US EIA weekly crude production, Fed’s Brainard & Clarida

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. (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)

Sinopharm Wuhan Institute of Biological Products says its COVID-19 vaccine has a 72.51% efficacy rate in its Phase 3 trial, according to interim analysis. (Newswires)

US FDA is reportedly planning to today unveil its detailed analysis on Johnson & Johnson's (JNJ) COVID-19 vaccine. (WSJ)

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 (-1.6%) ignored a weaker currency on return from its holiday closure and retreated beneath the 30k level, while KOSPI (-2.4%) 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 (-3.0%) and Shanghai Comp. (-2.0%) 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)

China's Commerce Ministry says they are ready to enhance exchange on trade and economic front, looking forward to working with the US on this with a focus on cooperation and managing differences. (Newswires)

China's Commerce Ministry say they hope Australia can do more that results in mutual trust/cooperation. (Newswires)

BoJ Governor Kuroda says that bond purchases have slowed significantly as markets remain calm. (Newswires)

Japanese PM Suga says the country will start vaccination of the elderly from April 12th. (Newswires)

US

It was reported that the House Rules Committee is to consider President Biden's stimulus plan on Friday. (Newswires)

US President Biden is to sign an executive order to address supply shortage of semiconductor chips, according to officials; the order will not call out China. (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)

Spain PM Sanchez says EUR 11bln help package for companies will be approved within weeks. (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)

EQUITIES

European stocks kicked off the mid-week session in a relatively mixed fashion, but sentiment has been erring higher since the cash open (Euro Stoxx 50 +0.4%) after futures trimmed overnight losses as European players entered the fray, and with fresh fundamental news-flow on the lighter side after Fed Chair Powell stuck to his dovish script. US equity futures also drifted off overnight lows with the NQ (+0.1%) nursing earlier losses of some 1% and the RTY (+0.7%) modestly outperforming perhaps on the inflation narrative. UK’s FTSE 100 (-0.6%) is narrowly underperforming its peers as the weight of the firmer Sterling weighs on large exporters in the index, whilst heavyweight AstraZeneca (-1.5%) acts as further headwind after 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 its contract commitments. Meanwhile, UK housing names including Taylor Whimpey (+1.5%) and Barratt Developments (+2%) reap rewards from reports that UK Chancellor Sunak is preparing a 3-month extension to the stamp duty holiday to end-June. Conversely, the SMI (+0.9%) is pushed ahead by its financial sector alongside luxury names. That being said, the broader financial sector is pressured by HSBC (-2.6%) and Standard Charted (-1.5%) as the banks catch-up sell-off seen in their Hong Kong listings after HK announced stamp duty tax increase on stock trading - which subsequently led to Chinese traders selling a record USD 2.6bln in Hong Kong stocks. Overall, sectors in Europe are predominantly mixed and portray a reflationary bias - with Travel and Leisure again topping the charts as the global COVID situation improves. The Oil & Gas sector meanwhile remains buoyed as crude prices remain steady with WTI and Brent futures holding composure comfortably above USD 60/bbl apiece. The sectorial laggards consists of some COVID-winners, with IT still bearing the brunt of the rotation out of “stay at home” stocks. In terms of individual movers, Telecom Italia (+6.7%) resides as the clear outperformer post-earnings after it proposed a dividend whilst highlighting a sharp acceleration in ultrabroadband net addition, which rose some 171% Y/Y. Finally, Puma (-2.6%) sees itself near the foot of the Stoxx 600 after missing on net income estimates.

Lowe's Companies Inc (LOW) Q4 20 (USD): Adj. EPS 1.33 (exp. 1.20), Revenue 20.3bln (exp. 19.33bln); planning USD 9bln in share repurchases and USD 2bln in 2021 Capex; SSS 28.6% vs exp. 21.2%. Co. notes of continued sales momentum in Feb. (PR Newswire)

FX

NZD/GBP - The Kiwi is outperforming in wake of February’s RBNZ policy meeting, albeit after some initial hesitation when dovish guidance was retained, and the Bank stated that operational work for a negative OCR has been done should the need arise. However, the RBNZ raised its CPI and NZD TWI forecasts for end Q1 next year appreciably, while noting more resilience in the labour market than anticipated, and the domestic economy as a whole implying no significant extra stimulus is required at present. In response, Nzd/Usd has rebounded from the low 0.7300 area to within single digits of the round number above and Aud/Nzd is around 1 full big figure lower circa 1.0720. Meanwhile, Sterling continues to ride on the wave of optimism surrounding the impending relaxation of COVID-19 restrictions before lockdown is lifted completely that was compounded by UK press reports suggesting that the return to normal could come sooner than June 21. Cable breached 1.4200 overnight in thinner trading conditions that exacerbated price action, while Eur/Gbp briefly ducked under 0.8550 before bouncing.

EUR/AUD/CAD/DXY - Hefty option expiry interest may prevent the Euro and Aussie from extending gains vs the Greenback given 1.3 bn in Eur/Usd between 1.2175-80 (bottom end bang in line with the high so far) and 1.2 bn in Aud/Usd at the 0.7910 strike (compared to circa 0.7945 at best). Moreover, the aforementioned cross flows are an impediment along with relative resilience in the Buck following Fed chair Powell’s first semi-annual testimony where he maintained caution over the economic outlook and no inclination to start unwinding accommodation anytime soon, but effectively welcomed the recent ramp in US Treasury yields as a sign of higher growth and inflation expectations. Hence, the index is still holding a tight line around 90.000 (90.152-89.973 to be precise) awaiting part 2 at the House and housing data ahead of other Fed speakers. Nevertheless, the Loonie remains supported by firm oil prices and comparatively upbeat comments from BoC Governor Macklem who expects a solid economic rebound in the short term and expressed more confidence about sustained and strong growth through H2 this year into 2022, with Usd/Cad near the base of a 1.2598- 59 range.

SEK/CHF/JPY - The G10 laggards as dovish Riksbank inferences, more spec long liquidation and the return from market holiday keeps the Swedish Crown, Swiss Franc and Japanese Yen pressured around 10.0900 vs the Euro, sub-0.9050 against the Dollar/under 1.1000 vs the Euro and towards the base of 105.82-17 extremes in Usd/Jpy respectively. A marked improvement in Swiss investor sentiment has not really been reflected in the Franc, but the Yen may glean some traction from option expiries at 105.70-65 (2.2 bn) if not slightly smaller size at the 105.00 strike (1.7 bn).

NOK/EM - Elevated crude is also underpinning the Norwegian Krona, Russian Rouble and Mexican Peso, but the Turkish Lira is still trying to arrest a sharp retreat through 7.0000 on the back of CBRT intervention via a 150 bp hike in the Try reserve remuneration rate and the SA Rand is on the defensive ahead of the Budget.

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%)

FIXED

UK bonds always appeared reluctant to rebound too far in early Liffe trade, and certainly did not look comfortable taking on 130.00 and have subsequently recoiled to a fresh 129.29 cycle low on the re-opening bandwagon, plus an element of pre-Budget precaution. Meanwhile, Bunds have fallen in sympathy, but ‘only’ to 174.17 vs 174.35 at yesterday’s close and 173.82 intraday low and USTs are flat to marginally softer at the long end pre-Powell part 2, US housing data, a host of other Fed speakers and supply comprising Usd 26 bn 2 year FRNs and Usd 61 bn 5 year notes. Talking issuance, a rather tepid 10 year German auction has given Bunds a mild lift on the grounds that it has at least been taken down.

COMMODITIES

WTI and Brent front month futures are slightly firmer but with the global benchmark narrowly outpacing its US counterpart. Considering Texas refineries have started to come back online it is not too surprising to see WTI modestly softer vs Brent. The complex opened with a slight dichotomy and is now only seeing upside amid the more constructive risk tone. Last night saw the release of bearish stockpile data in which the Private Sector Inventory report showed a surprise build for headline crude ahead of the official EIA figure later today – with the headline expected to print a draw of 5.19mln bbls. However, distortion in the data is expected given the Texan deep freeze and participants may not pay close attention to it given the fact the refineries are slowly coming back online and the OPEC+ meeting looms. Moreover, IEA said they are not expecting oil demand to return to pre-COVID levels by end of 2021. Nevertheless, the underlying narrative remains the same with the OPEC+ meeting and vaccination progress the focus, where participants are bullish on recovery and but eyes turn to whether OPEC+ members remain united. WTI resides mid USD 61/bbl (vs high USD 61.85/bbl) and Brent mid USD 65/bbl (vs high USD 65.69/bbl). Elsewhere, precious metals saw upside during early European hours amid the weaker DXY but they have since diverged with spot gold softer at USD 1,803/oz & spot silver firmer at USD 27.75/oz. Turning to base metals, LME copper is trading lower at USD 9,160/t at the time of writing as the red metal sees a mild pullback from its recent rally coupled with a downbeat session in Chinese markets. Lastly, US manufacturers are tackling steel shortages which has seen hot-rolled steel hit USD 1,176/t this month, the highest level in at least 13 years.

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)