• European equity indices were firmer across the board but are now a touch mixed in-fitting with US equity futures where the NQ is underperforming, -0.9%
• DXY has seen downside and resides at its lowest level just maintaining 89.70 to the benefit of its broader peers though JPY remains hindered given rate-differentials
• US yields remain elevated and the curve continues to steepen as the 10yr eclipsed y-day's peak with global yields seeing upside though ECB's Lane has stemmed the upside in Bund-yields
• A study tracking the use of the Pfizer/BioNTech vaccine in Israel shows that the vaccine is 94% effective in preventing symptomatic cases
• Looking ahead, highlights include US Durables, US Initial Jobless Claims, Fed’s Bostic, Bullard, Quarles, Williams, ECB’s de Cos & de Guindos

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 (+1.7%) coat-tailed on favourable currency flows and reclaimed the 30k status, while KOSPI (+3.5%) 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 (+1.2%) and Shanghai Comp. (+0.6%) 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)

The Director of American Institute in Taiwan has met with dozens of Taiwanese chip and supply chain executives in order to strike a closer partnership with the US. (The Nikkei)

Japanese Gov't is to end the state of emergency in Osaka, Kyoto, Hyogo, Aichi and Gifu at month-end, via Kyodo. (Newswires)

US

Fed Vice Chair Clarida said 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)

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)

UK Trade Minister Truss said the UK will be seeking an early meeting with the US regarding tariffs. (Newswires)

EU Money-M3 Annual Growth (Jan) 12.5% vs. Exp. 12.5% (Prev. 12.3%)

• EU Consumer Confidence Final (Feb) -14.8 vs. Exp. -14.8 (Prev. -14.8, Rev. -15.5)

ECB's Lane says the ECB is closely monitoring the evolution of longer-term nominal bond yields; will need to continue to provide ample monetary accommodation for an extended period. (Newswires)

GEOPOLITICAL

At least 10 Chinese bombers took part in maritime strike exercises in the South China Sea, immediately after an escalation of US military presence in the disputed waterway. (SCMP)

EQUITIES

European stocks trade mostly firmer (Euro Stoxx 50 U/C) with price action somewhat contained and perhaps more mixed overall in early hours as the region picked up a similarly mixed APAC lead heading into month-end. US equity futures also see a mixed session early-doors, but have waned off best levels seen overnight with the growth-led NQ (-0.9%) once again the laggard in European hours whilst the value-driven RTY (+0.3%) remains propped. The lukewarm tone in the equities markets comes as Fed officials downplayed the sustainability of the expected rise in inflation, whilst yields continue to remain elevated – with French 10yr yield turning positive for the first time since mid-2020. On the topic of rising yields, it’s worth recapping the sectorial correlation relative to a high-yield environment. The top beneficiaries from rising yields (by order) includes Banks, Cyclicals, Value, Insurance, Autos, Basic Resources. The top hit sectors meanwhile (by order) goes as such: Food & Beverage, Defensives, Growth, Healthcare, Real Estate. Meanwhile Technology and Retail see little correlation with rising rates in the context of weekly relative returns, as suggested by Goldman Sachs. This higher-yield playbook is currently portrayed within European sectors, with Banks, Oil & Gas, Basic Resources and Auto’s residing as the winners, whilst Healthcare, Food & Beverage and Chemicals reside on the other end of the spectrum. In terms of individual movers, heavyweight Bayer (-3.5%) pressures the DAX (-0.3%) lower following dismal earnings whereby revenue and Adj. EBIT deteriorated Y/Y whilst a large number of segments reported sales contractions. Other earnings-related movers include Axa (+3%), Telefonica (+2%), AB Foods (+1%), AB InBev (-5%) and Standard Chartered (-5%). Looking at M&A, FTSE-listed DS Smith (+7%) is lifted on reports Mondi (-0.7%) is reportedly considering a bid for DS Smith and has been speaking with advisors on the matter. Finally, heading into the US session, it’s worth mentioning the Reddit darling stocks - GME (+50% pre-mkt) and AMC (+16% pre-mkt) - are seeing another bout of upside after a late-door buying frenzy heading into the close.

Tesla (TSLA) - Co. has temporarily halted production at its Model 3 line in California. (Newswires)

Boeing (BA) - Co. was reportedly planning to strengthen its protective engine covers for its 777 aircraft months before the recent engine failure. (WSJ)

Google (GOOG) has reportedly committed to research changes regarding oversight following an internal revolt, according to internal documents. (Newswires)

FX

EUR/AUD/NZD - The Euro marginally pipped the Aussie to the post in round number terms, but it was much more even between the single currency and both Antipodean Dollars when it came to percentage gains vs the Greenback before the former accelerated beyond 1.2225. All 3 are gleaning leverage from yield differentials, while Eur/Usd is also benefiting from supportive month end rebalancing flows and what looks like a more concerted technical correction in Eur/Gbp after the midweek bounce from just under 0.8550. Hence, the headline pair has breached recent highs ahead of 1.2200 on the way to circa 1.2235 and applied further pressure on the DXY that is losing touch with 90.000 between 90.144-89.720 parameters following Wednesday’s false break through the 50 DMA. Meanwhile, Aud/Usd has peered over 0.8000 where big barriers reside with impetus from an unexpected rise in Q4 Capex that reversed the prior quarter’s fall precisely, and Nzd/Usd is hovering around 0.7450 having spiked above 0.7460 in wake of NZ Finance Minister Robertson formally announcing changes to the RBNZ’s remit to include house prices. Note, modest declines in NBNZ business sentiment and the activity outlook were largely shrugged off, but looming trade data will likely draw more attention.

GBP/CAD - Notwithstanding the aforementioned retracement against the Euro, Sterling has taken advantage of general Dollar weakness to reclaim 1.4150+ status, and the Loonie has notched another milestone with the aid of strong oil prices with Usd/Cad down through 1.2500.

CHF/JPY- The Franc and Yen are still lagging due to less attractive costs of carry even though JGBs were flogged overnight in catch-up trade as widely anticipated, as the former languishes below 0.9050 and latter under 106.00 ahead of Tokyo CPI, Japanese ip and retail sales.

SCANDI/EM - The Sek is back on a more even keel vs the Nok and Eur amidst bullish rebalancing requirements given an above average standard deviation for the end of February, while Swedish sentiment indices for the current month were firmer across the board. Elsewhere, most EM currencies are reeling on the high yield eroding risk appetite and threatening capital flight scenario.

• 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%)

FIXED

Eurozone debt futures are off worst levels, but have not responded to the latest ECB interjection on nominal yields from the chief Economist in the manner that they did when the President utter similar words on Monday. Indeed, Bunds remain deep in negative territory after extending losses to 59 ticks at 173.45, while Gilts are slipping to new sub-129.00 Liffe low at 128.94 and closer to yesterday’s 128.82 trough and US Treasuries likewise ahead of a busy pm docket including erratic durable goods, GDP, IJC, a slew of Fed speakers and the last of this week’s/month’s supply in the form of Usd 62 bn 7 year notes. For the record, following a reasonable 2 year auction, 5s were not that well received so it will be interesting to see if there is enough concession to entice buyers later today.

COMMODITIES

WTI and Brent front-month futures are firmer on the session but well off best levels as the complex tracks the broader dip in sentiment most recently. The complex overnight benefited from a mostly upbeat APAC session, whilst sources yesterday highlighted a rift building among OPEC+ members ahead of the meeting next week. One source suggested prices are “definitely high” and more oil is needed to cool the markets – adding that a 500k BPD increase looks to be a good option. Conversely, another source suggested no more relaxations until June given the risk of new variants and setbacks in the battle against COVID. Saudi will have to avoid a rift widening as the Kingdom itself is currently poised to reintroduced the 1mln BPD of oil which was taken offline as a goodwill gesture in January. ING previously suggested “It is unlikely that the group would bring a little over 2.2mln BPD of supply back onto the market, aware that the market would baulk at such a decision”, but the bank highlights that there is room for some sort of easing, contingent on how much output volume Saudi decides to bring back from its own additional cuts. Barclays meanwhile, forecasts 2021 Brent at USD 62/bbl & WTI at USD 58/bbl reflecting their projection of OPEC+ to increase aggregate supply by 1.5mln BPD over Q2 and for Saudi Arabia to reverse the unilateral cut in April. Furthermore, as production in Texas is coming back online - a subsequent reflection in the price of WTI may be noticed as ING states it expects to see further crude oil builds in the weeks ahead. WTI resides mid-to-low USD 63/bbl (vs high USD 63.79/bbl) and Brent holding the USD 67/bbl handle (vs high USD 67.70/bbl). Notable tail-risks on the table surrounds month-end factors which may offer volatility, several Fed officials speaking through the session alongside US data which includes Initial Jobless Claims and Q4 PCE prices. Elsewhere, precious metals are mixed on the session, with spot gold trading below the USD 1800/oz handle amid headwinds from rising yields and spot silver nursed earlier losses. As a side note for silver, Reddit retail traders have been driving GME prices higher again so it may be something to just keep an eye on for any potential targeting of silver. Turning to base metals, LME copper has gains of around 0.5% and trades above USD 9,500/t, continuing the narrative as a recovery metal surrounding the reflationary backdrop. More on base metals. Looking further ahead, some suggest aluminium supply in China could be affected by China’s journey to net-zero CO2 emissions by 2060. China Inner Mongolia has seen a series of environmental changes which would inhibit further capacity growth as the region accounts for 9.0% of total Chinese aluminium supply.

CITGO Corpus Christi, Texas Refinery (165k bpd) plans to restart as soon as today. (Newswires)