• European equities pressured. US futures softer, but to a lesser extent; E-mini S&P -0.1%
• DXY has seen upside and resides near best levels after surmounting 90.50, to the detriment of its broader peers
• US President Biden's USD 15/hr minimum wage proposal was ruled out of order for the Senate relief bill
• US Treasuries has already secured a foothold overnight; US 10yr yield steady below 1.5%
• Looking ahead, highlights include BoE’s Ramsden, US personal/consumption, US core PCE/PCE price index & US Chicago PMI

CORONAVIRUS UPDATE

FDA said it is authorizing the emergency use of Eli Lilly's (LLY) BAMLANIVIMAB for COVID-19 treatment, while it also allowed more flexible storage and transportation conditions for the Pfizer (PFE)/BioNTech (BNTX) vaccine which permits frozen vials of the vaccine to be transported and stored at conventional temperatures in freezers for as long as 2 weeks. (Newswires)

Merck (MRK) said it received FDA feedback that additional data would be required to support potential EUA application for COVID-19 therapeutic MK-7110 and based on the feedback, is no longer expects to supply the US government with the treatment in H1. (Newswires)

Robert Koch head says they AstraZeneca (AZN LN) COVID-19 vaccine is very effective. (Newswires)

Pfizer (PFE) COVID-19 vaccine could significantly decrease transmission after one dose, according to a UK study. (Newswires)

Independent committee meets today to review the Johnson & Johnson (JNJ) COVID-19 vaccine candidate, following Wednesday's FDA release noting there is nothing to prevent EUA; if approved, could be made available for use from Saturday. (WSJ)

European Medicine's Agency reportedly to approve the Johnson & Johnson (JNJ) vaccine in March, potentially on March 11th. (Newswires)

ASIA

Asia-Pac stocks slumped after reacting to the sell-off on Wall St amid a global bond rout and surge in yields whereby the US 10yr yield surpassed 1.6% and with Fed speakers providing very little pushback on the rising yield environment. ASX 200 (-2.4%) and Nikkei 225 (-4.0%) suffered heavy losses from the open as yields in the region also advanced and with tech the worst-hit sector in Australia following similar underperformance stateside where the Nasdaq 100 fell 3.6% for its steepest decline since October, while the Japanese benchmark saw intraday losses of more than 1,000 points with selling exacerbated by detrimental currency flows and after mixed data releases which showed Y/Y declines in Industrial Production and Retail Sales. Hang Seng (-3.6%) and Shanghai Comp. (-2.1%) conformed to the bloodbath in the region after the PBoC continued its reserved liquidity efforts and with further punchy rhetoric from USTR nominee Tai who stated that China needs to deliver on commitments under the Phase 1 trade agreement and that the US can work with other countries to craft new rules to cover 'grey areas' where China is not being held accountable. Furthermore, reports that US President Biden's proposed minimum wage increase to USD 15/hour was ruled out of order for the Senate relief bill and a US airstrike on Iranian-backed militia in eastern Syria which destroyed multiple facilities and killed 17 pro-Iran fighters in response to recent attacks against US personnel in Iraq, further added to the overnight concerns. Finally, 10yr JGBs weakened and briefly declined beneath the 150.50 level on spill-over selling from the global bond rout which saw the Japanese 10yr yield breach 0.18% to print its highest since early 2016, while the results of the latest 2yr JGB auction was mostly weaker than previous.

PBoC injected CNY 20bln via 7-day reverse repos with rate kept at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.4713 vs exp. 6.4714 (prev. 6.4522)

• Japanese Industrial Production (Jan P) M/M 4.2% vs. Exp. 4.0% (Prev. -1.0%)
• Japanese Industrial Production (Jan P) Y/Y -5.3% vs. Exp. -2.0% (Prev. -2.6%)
• Japanese Retail Sales (Jan) M/M -0.5% vs. Exp. -1.2% (Prev. -0.8%)
• Japanese Retail Sales (Jan) Y/Y -2.4% vs. Exp. -2.6% (Prev. -0.3%, Rev. -0.2%)
• Tokyo CPI (Feb) Y/Y -0.3% vs. Exp. -0.4% (Prev. -0.5%)
• Tokyo CPI Ex. Fresh Food (Feb) Y/Y -0.3% vs. Exp. -0.4% (Prev. -0.4%)
• Tokyo CPI Ex. Fresh Food & Energy (Feb) Y/Y 0.2% vs. Exp. 0.2% (Prev. 0.2%)

BoJ will highlight climate change related risks for the first occasion as part of key themes in bank examinations, according to sources. (Newswires)

China's Politburo says the basics of its recovery is not solid, according to State Media. (Newswires)

US

US President Biden's USD 15/hr minimum wage proposal was ruled out of order for the Senate relief bill, while the White House Press Secretary later stated that President Biden is disappointed regarding the Senate parliamentarian ruling and will work with congressional leaders on a path forward. There were also reports that Senator Sanders is to propose a minimum wage increase in the budget bill amendment and include ending tax breaks to force higher wages, while US Senator Wyden is looking at a tax penalty for companies that are not paying a living wage which would be aimed at mega corporations. Furthermore, House Speaker Pelosi said the ruling was disappointing and that the minimum wage increase will remain part of the American Rescue Plan in the House. (Newswires)

UK/EU

BoE's Haldane says there is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets. But given likely trends in these factors, my judgement is that the risks to inflation in the UK are skewed to the upside, rather than being balanced. (BoE)

BoE Governor Bailey said the central bank expects negative GDP growth for Q1 and suggested that clearly there has disruption from the impact of the Brexit and pandemic. (Daily Echo)

ECB's Schnabel says changes in nominal rates need to be monitored closely. If a rise in nominal yields reflects rising inflation expectations, this is a welcome sign. (Newswires)

UK Chancellor Sunak will unveil a new state-backed loan programme bringing lending criteria more in-line with normal conditions as the emergency COVID-19 loan support schemes are wound down; however, other COVID-19 support measures e.g. VAT relief and furlough will be extended until June. (FT)

• UK Lloyds Business Barometer (Feb) 2 (Prev. -7)

Senior EU figures are contemplating a major reset in relations with the UK that would coincide with the formal ratification of the free trade agreement at the end of April, via RTE's Connelly. (Twitter)

French Government Spokesman says Govt. will assess local authority's plan for a 3 week lockdown in Paris. (Newswires)

UK Joint Committee on Vaccination and Immunisation is expected to announce the next phase of the vaccine rollout at a 11:00GMT briefing today, Sky's Powell. (Twitter)

Eurasia Groups Rahman pushes back on earlier reports of a 'major reset in UK/EU relations', saying there is no reset. However, notes that the EU acknowledges the UK is commencing a more reasonable negotiation process and are exploring easing NI tensions. (Twitter)

GEOPOLITICAL

US Pentagon confirmed reports that the US conducted a strike on Iranian-backed militia in eastern Syria where it destroyed multiple facilities at a border control point in response to recent attacks against US personnel in Iraq, while the Syrian Observatory for Human Rights stated that the strikes killed 17 pro-Iran fighters. (Newswires)

US President Biden held a call with Saudi King Salman in which they discussed regional security including a diplomatic end to the Yemen war and US commitment to help Saudi defend itself against attacks from Iranian-aligned groups. (Newswires)

US Intelligence report on the killing of Khashoggi could occur as soon as today, following conversation between the US & Saudi leaders; sources state potential responses to the event could include Treasury and/or State Department sanctions on specific individuals. (FT)

US Secretary of State Blinken calls on Russia to end its occupation of Crimea, while other reports noted that Russia's Navy will be testing Tsirkon missiles this year. (Newswires/Twitter)

Turkish Defense Minister says the US' restrictions on the F-35 jet in particular do not conform to the 'spirit' of the alliance and can still utilise the S-400 missile system in response to threats. (Twitter)

German Government spokesperson notes there is exchange between the US and German Govts regarding the Nord Stream 2 pipeline, but no details. (Newswires)

EQUITIES

European equities are mostly softer (Eurostoxx 50 -0.9%), albeit off worst levels as global stocks attempted to claw back the losses seen as European participants entered the fray; though, some pressure has returned ahead of the US' entrance to market. Stateside, equities were faring slightly better with the e-mini S&P & Nasdaq back in the green with gains of around 0.3%; however, on the aforementioned dip they are negative once again. In terms of a macro overview, not a great deal has changed since yesterday’s close beyond the ongoing rise in yields which saw the US 10yr surmount 1.5% yesterday; a level which it currently resides south of. The slew of Fed speakers this week have provided little in the way of pushback to the recent moves and as such, yields could continue to act as a driving force for price action, all things equal. Note, today is month-end and as such volatility could act as a feature for today’s session. Back to Europe, sectors are broadly lower with the defensively-inclined healthcare industry the only gainer thus far. To the downside, cyclical names have bore a brunt of the selling with notable laggards comprising of basic resources, oil & gas and travel & leisure names. For the latter, losses have been stemmed by upside in IAG (+3.7%) shares post-earnings despite posting a record EUR 7.43bln loss and refraining from providing FY guidance. Support for the airline industry could also be a by-product of the UK’s decision to extend the “slots waiver”. Elsewhere, tech is also softer in a sign of how broad-based the selling across Europe has been (ex-healthcare).

UK is extending the 'slots waiver' to assist UK airlines. (Gov.co.uk)

Bipartisan US Congress members are, in the coming weeks, to introduce a bill allowing smaller news organisations to effectively negotiate with Facebook (FB) and Google (GOOG), according to a Congressman. (Newswires)

FX

GBP/AUD/NZD/DXY - The Pound has unwound more gains vs the Greenback and Euro, or vice-versa, as global bonds yields finally show some sign of topping out after extended rallies to even loftier pinnacles above and beyond psychological levels. Currency markets are also consolidating after extended moves bordering on extreme in certain cases, such as Cable’s spike through 1.4200 and the simultaneous or adjacent slide in Eur/Gbp below 0.8550 before marked retracement to sub-1.3900 and circa 0.8730 respectively; although, ‘Hawkish’ Haldane commentary has provided a perhaps brief respite. Similarly, the Aussie reached a symbolic 0.8000 vs its US rival, but could not soak up all offers and breach barrier defences, while losing more momentum vs the Kiwi post-RBNZ as well, with Aud/Usd now sub-0.7800 in wake of softer than forecast private sector credit for January. Meanwhile, the Aud/Nzd cross has pulled back further from 1.0800+ to probe 1.0650 even though Nzd/Usd is under 0.7300 compared to 0.7465 at best yesterday following disappointing NZ trade data and relatively dovish rhetoric from RNBZ Governor Orr who reiterated that more monetary stimulus may be needed, with NIRP among the policy options that are being kept open. Given all the above and broader recovery gains, the US Dollar is confounding more bearish month end rebalancing signals via a UK bank flagging a strong sell vs all majors, as the index reclaims 90.500+ status (high of ~90.65) from 89.677 at the deepest point on Thursday.

EUR/JPY/CAD - Also caught out by the speed and magnitude of the Buck revival, with the DXY continuing to rise, as the Euro hovers near the base of 1.2184-05 parameters, Yen tests half round number support at 106.50 having been above 106.00 at the other extreme and Loonie reverses from 1.2587 to test 1.2650 alongside oil.

CHF - The Franc is holding up better than the rest in G10 land, though again largely due to corrective trade and only partially on fundamentals, like Swiss GDP not contracting as much as anticipated in Q4 on a y/y basis and the KOF index rebounding firmly in February. Usd/Chf is straddling 0.9060 and Eur/Chf 1.0970 vs 0.9094 and 1.1097 respectively earlier in the week.

SCANDI/EM - Hardly any traction from Swedish data showing a recovery in retail sales, less contraction in the economy during Q4 than the previous quarter and a wider trade balance in January from December, as Eur/Sek pivots 10.1000. Conversely, the Try has pared some of its heavier declines beneath 7.4500 vs the Usd irrespective of Turkey’s Defence Minister arguing that US restrictions on the F-35 are against the spirit of the alliance, as the waning in global debt yields and a narrower trade deficit provide some comfort. By the same token, the Rub is weathering heightened Russia-US angst over the latter’s strike against Iranian-backed forces in Syria, and a downturn in Brent crude to trade around 74.5000, albeit not deriving as much support as other EM currencies from the calmer conditions in debt.

RBNZ Governor Orr said monetary settings will be stimulatory and the RBNZ will not be changing policy for a prolonged period of time, while he is convinced the best thing to do now is to be patient. However, he also commented that they may have to stimulate the economy even further which they can do so with a negative OCR and that they want to keep their options open. (Newswires)

• Australian Private Sector Credit (Jan) Y/Y 1.7% vs Exp. 1.9% (Prev. 1.8%)
• New Zealand Trade Balance (Jan) -626M (Prev. 17.0M, Rev. 69M)
• New Zealand Exports (Jan) 4.19B (Prev. 5.35B, Rev. 5.38B)
• New Zealand Imports (Jan) 4.82B (Prev. 5.33B, Rev. 5.32B)

FIXED

US Treasuries has already secured a foothold overnight, but the signs looked ominous again for Bunds when European desks returned to the fray to find them languishing again. However, it appears that either 172.00 or -20 bp, if not both, were deemed to be a step too far and the ‘correction’ in futures and cash bonds bears that theory out to a degree. However, the core Eurozone bond has subsequently faded at 173.79 and Gilts have reversed even more sharply from 128.63 to a new 127.68 low in wake of relatively hawkish comments from BoE’s Haldane that have also pulled the recovery rug from Short Sterling contracts – see 11.02GMT post on the headline feed for details and a link to the full speech. Back to USTs, calmer, firmer and flatter sums up the tone, outright pricing and curve profile awaiting the final data of the week/February in the form of personal income, spending, PCE price metrics, trade, Chicago PMI and final Michigan sentiment for the current month.

COMMODITIES

WTI and Brent front-month futures are softer on the session but picking up from their lowest levels during early European trade. The complex has seen downside this morning which is in-fitting with the overnight APAC session and stronger DXY. Moreover, with Texan refineries coming back online there has been some restoration in WTI supply after the weather storm, adding to the slight downside. Nonetheless, despite the mild softness, the broader narrative towards an upward trend of prices remains unchanged as both Brent and WTI are on track for gains of nearly 20% in February. In turn, fundamentals continue to be consistent with vaccination progress and OPEC+ meeting as the focusses given jet fuel demand continues to strengthen amid the vaccine rollout and prospective economic recovery. WTI resides just below the USD 63/bbl mark (vs high USD 63.57/bbl) and Brent low USD 66/bbl (vs high USD 66.90/bbl). Elsewhere, precious metals are softer on the session, with spot gold hitting an 8-month low and currently trading around USD 1760/oz. XAU's price has been pressured due to the brighter economic outlook and yield developments. As previously mentioned, spot silver follows this sentiment and is 2.3% softer trading beneath the USD 27/oz handle. Turning to base metals, LME copper is 2.1% lower on the session following the broader market sentiment but due to tight supply and a brighter demand outlook the red metal is set for its best month since 2016, up 17.5%. Dalian iron ore futures are 1.7% firmer alongside Chinese steel futures as they progressed on elevated downstream consumption. Lastly, Indonesia is “ready to fight” the EU’s challenge over the country’s ban on nickel ore exports at the WTO meeting arguing it would hinder their development plans. The South-eastern Asian country banned ore exports to incentivise foreign investors to help develop a full nickel supply chain in the country, but the EU claims the export bans are illegal and unfair to EU steel producers.

Marathon plans to restore 85% of output at Galveston Bay, Texas refinery (585k bpd) in 2 weeks and LyondellBasell is preparing to restart its Houston refinery (268k bpd) early next week, according to sources. (Newswires)