• Asia-Pac stocks rebounded from yesterday’s sell-off after the region took impetus from the strong performance on Wall St
• Bank of Korea maintained the 7-Day Repo Rate at 0.50% as expected through a unanimous decision
• A study tracking the use of the Pfizer/BioNTech vaccine in Israel shows that the vaccine is 94% effective in preventing symptomatic cases
• In FX, the DXY lacked firm direction and traded either side of 90.00, EUR/USD extended above 1.2150, GBP/USD sits on a 1.41 handle
• OPEC+ is reportedly weighing boosting oil output by 500k BPD from April and Saudi is expected to end voluntary 1mln BPD cuts from April
• Looking ahead, highlights include German GFK, US durables, GDP (2nd), IJC, PCE Prices (Q4), ECB's Lane, de Guindos, de Cos, Fed's Bostic, Bullard, Quarles, Williams, supply from Italy and the US

CORONAVIRUS UPDATE

US CDC stated total COVID-19 cases rose to 28.07mln from 27.99mln the day before and deaths rose to 501.2k from 499.0k the day before. (Newswires)

Pfizer's (PFE) COVID-19 vaccine was 92% effective against severe cases of the virus following two doses and was 94% effective in preventing symptomatic cases following two doses in Israel's nationwide vaccination campaign, according to a study published in the NEJM. (Newswires)

Moderna (MRNA) said it completed the manufacturing of clinical trial material for variant-specific vaccine candidate MRNA-1273.351 targeting the South Africa variant and has shipped doses to NIH for a clinical study. Furthermore, it added that it is evaluating booster doses of the MRNA-1273 vaccine to increase immunity against variants, while both vaccine candidates will be evaluated in 2-dose series. (Newswires)

ASIA

Asia-Pac stocks rebounded from yesterday’s sell-off after the region took impetus from the strong performance on Wall St where sentiment was underpinned by dovish Fed rhetoric and with gains led by energy and financials after oil prices and yields edged higher. ASX 200 (+0.8%) was positive in which energy stocks spearheaded the advances across the commodity-related sectors and with participants occupied by a heavy stream of earnings results including Qantas which surged despite posting a H1 net loss, as it also announced it was on track to deliver billions of cost savings over the next 3 years and is working on the assumption for international travel to resume in October. Nikkei 225 (+1.6%) coat-tailed on favourable currency flows and reclaimed the 30k status, while KOSPI (+2.1%) outperformed post-BoK meeting in which the central bank maintained its 7-day repo rate at 0.50% as expected and suggested the economy is to recover gradually led by solid growth in exports. Hang Seng (+2.1%) and Shanghai Comp. (+1.2%) were also positive in light of the global optimism and with MOFCOM planning to reinforce policy support for foreign trade, although tensions continued to linger after a US Navy warship transited through the Taiwan Strait and with USTR nominee Tai suggesting the US needs a plan for holding China accountable and to compete with its state-run economy. Finally, 10yr JGBs were lower amid gains in stocks which saw prices slip beneath the 151.00 level and as JGB yields extended to multi-year highs with 30yr and 40yr yields reaching the highest since December 2018 and January 2019, respectively, while the presence of the BoJ in the market for nearly JPY 1.3tln of JGBs with up to 10yr maturities failed to support prices.

PBoC injected CNY 20bln through 7-day reverse repos with the rate maintained at 2.20% which resulted to a net neutral daily position, while it was reported that the PBoC will conduct a CNY 5bln central bank bill swap operation. (Newswires) PBoC set USD/CNY mid-point at 6.4522 vs exp. 6.4542 (prev. 6.4615)

US Navy stated that 7th Fleet destroyer USS Curtis Wilbur conducted a routine transit through the Taiwan Strait, while a Chinese military spokesperson confirmed a US Navy warship sailed through the Taiwan Strait on Wednesday which China firmly opposes. (Newswires)

USTR nominee Tai said the US must pursue trade policies which promote equitable growth and enhance its competitive edge, while she vowed to strengthen supply chains and suggested that US needs a plan for holding China accountable and competing with its state-run economy. (Newswires)

Chinese Ambassador to the UN said western countries should stop abusing the UN Human Rights Council platform or using Xinjiang to meddle in China's internal affairs but should instead focus on their own issues like police violence, racism and overseas military misconduct. (Global Times)

Bank of Korea maintained the 7-Day Repo Rate at 0.50% as expected through a unanimous decision and Governor Lee stated that it will take a while for demand side inflationary pressure to catch up and that uncertainties for the growth path are too high to begin considering tightening policy. BoK also noted that South Korea inflation expectations are increasing and exports growth is solid with the economy to recover gradually led by exports. Furthermore, the BoK maintained 2021 and 2022 growth forecast at 3.0% and 2.5%, respectively, while it raises 2021 CPI forecast to 1.3% from 1.0% but lowered 2022 CPI forecast to 1.4% from 1.5%. (Newswires)

UK/EU

UK Chancellor Sunak is preparing a 6-month extension to universal credit increase. It was separately reported that Chancellor Sunak is to use a giveaway budget next week to set the path for a boom when the country exits the lockdown, while he is also set to shelve plans for tax increases and a 5p hike in fuel duty. (Telegraph/Daily Mail) Reports also note that Chancellor Sunak could unveil plans to take the corporate tax rate from 19% to as high as 25%; something which could ultimately be voted down by Conservative rebels and Labour opposition. (Times)

ECB's Schnabel said the pandemic poses a risk to short-term outlook and we will ensure there is no unwarranted tightening of financial conditions. (Newswires)

FX

In FX markets, the DXY lacked firm direction and traded both sides of the 90.00 level after yesterday’s price swings in which a continued rise in yields provided early tailwinds for the greenback, although the gains were later faded and yields began to narrow following a slew of rhetoric from Fed officials including Fed Chair Powell who suggested it could take over three years to attain the Fed's inflation goal. EUR/USD marginally extended above the 1.2150 level with price action largely at the whim of the USD fluctuations, while GBP/USD was choppy after the latest comments from BoE officials. USD/JPY briefly reclaimed the 106.00 handle amid the positive risk tone and antipodeans marginally pulled back although AUD/USD remained near 3-year highs and NZD/USD near its best levels since mid-2017 after finding an initial boost from New Zealand Finance Minister Robertson's announcement to amend the RBNZ’s remit which will require the central bank to consider the impact on housing when deciding policy.

RBNZ Governor Orr said the outlook remains uncertain and that uncertainty will constrain investment. Orr also stated that they must ensure that actual inflation is sustainable at the mid-point before moving to tighten conditions and ensure New Zealand does not get into a deflationary spiral, while he added that continued monetary stimulus is necessary until global conditions improve. Furthermore, there were later comments from New Zealand Finance Minister Robertson that they issued a direction to require the RBNZ to take into account government policy on housing and changes to the MPC's remit which requires it to consider government policy related to more sustainable housing prices. (Newswires)

• Australian Private Capital Expenditure (Q4) Q/Q 3.0% vs. Exp. 0.0% (Prev. -3.0%)
• Australian Private Capital Expenditure 2020-2021 (AUD)(Est. 5) 121.4B (Prev. 105.0B)
• Australian Private Capital Expenditure 2021-2022 (AUD)(Est. 1) 105.5B
• New Zealand NBNZ Business Confidence (Feb) 7.0% (Prev. 9.4%)
• New Zealand NBNZ Activity Outlook (Feb) 21.3% (Prev. 21.7%)

COMMODITIES

WTI crude futures slightly eased off their fresh cycle highs but remained above the USD 63.00/bbl level amid the ongoing narrative of vaccine and reopening optimism, tighter US supply and with the Fed reaffirming its accommodative approach. Furthermore, participants had brushed aside this week's EIA inventory data which showed a surprise build in headline crude inventories, while there were source reports that OPEC+ is mulling a 500k bpd output increase for April and that Saudi is also likely to end its voluntary cuts leading to some within the group to prefer a hold depending on the kingdom's actions. Gold prices were lacklustre and retreated below the USD 1800/oz, while copper outperformed with prices buoyed by the broad constructive risk tone.

OPEC+ reportedly weighs boosting oil output 500k BPD from April and Saudi is expected to end voluntary 1mln BPD cuts from April, perhaps gradually although some in OPEC+ urge the group to hold output if Saudi cut returns in entirety from April, according to sources. (Newswires)

CITGO Corpus Christi, Texas Refinery (165k bpd) plans to restart as soon as today, while Exxon (XOM) Beaumont, Texas refinery (366k BPD) plans to restart its crude unit and coker by early next week, according to sources. (Newswires)

US

Treasuries from the belly out continued to sell-off on Wednesday as Fed officials aren't (yet?) willing to get in the way of higher nominal yields, while strength in cyclicals and commodities, and the dismal 5-year auction also supported the move; yields are well below their earlier highs, however. By settlement, 2s +0.5bps at 0.127%, 5s +3.1bps at 0.610%, 10s +2.2bps at 1.386%, 30s +4.1bps at 2.240%; TYH1 and M1 volumes were very strong amid roll factors; 5yr TIPS -8bps and 30yr TIPS +8.5bps, BEI curve continued to invert. The majority of the selling commenced out of Europe, after Japanese investors were said to be on the bid overnight to seize the higher yield environment on return from their market holiday. The crescendo arrived into the US cash equity open, with 10s rising above 1.40% for the first time; tech/growth stocks saw some wobbles. A lot of the selling was seemingly a continuation from Powell's remarks on Tuesday about him not being concerned by the rise in yields. Note, the lows in USTs was set just as Powell began his testimony in the House, and some bidders emerged on comments from Powell, who said that it could be three years for the Fed to hit its inflation target, pushing back on the early liftoff/tapering narrative. Meanwhile, those who were looking to Fed Vice Chair Clarida's comments for a bullish bond impetus were disappointed. Clarida's (lack of) comments coincided with the disappointing USD 61bln 5-year note auction - high yield of 0.621% tailed the WI by 0.6bps, covered less than average, and low turnout from the non-dealer community - seeing yields edge higher again, although not to the heights seen earlier in the session. T-note futures (H1) settled 8+ ticks lower at 135-05; t-note futures (m1) settled 8 ticks lower at 134-02+.

Fed Chair Powell said big parts of the economy have largely or even fully recovered and what COVID-hit sectors need is an end to the pandemic, while he also stated the economy went sideways through January and not all jobs lost will come back post-pandemic. Furthermore, Powell stated the FOMC has not made any decision on IOER or on RRP rates but added the Fed could use them to control the Federal Funds Rate and later added the base case is for a strong bounce back later this year. (Newswires)

Fed Vice Chair Clarida said prospects for US economy have brightened, downside risks have diminished and that the Fed is committed to using full range of tools to support the economy and make the recovery more rapid. Clarida also stated that he sees asset market pricing as consistent with expectations for robust growth and does not expect sustained upward inflation measures. Furthermore, Clarida said the Fed has tools to achieve and keep inflation consistent with price stability mandate, that inflation and employment are well below Fed's goals, while he also suggested focus is on providing support for as long as it takes and that talk of taper is premature with the policy setting appropriate for the rest of the year. (Newswires)

Australia's parliament passed media bargaining code law which requires tech firms to pay for news, while it was also reported that the Irish data regulator could announce a potential fine for WhatsApp in April and is near to issuing a decision regarding probes on Facebook (FB), Instagram, WhatsApp, Google (GOOG) and Verizon (VZ). (Newswires)

Deutsche Bank strategists suggested that US stimulus checks could spur an influx of USD 170bln of retail funds into the stock market. (Newswires)