• European equity indices & US futures are firmer with RTY the outperformer, +1.2% & DAX cash printed record highs
• DXY is choppy with peers mixed at present and USD/JPY nearing 107.00 while GBP is erring higher pre-budget (12:30GMT/07:30EST)
• ECB sources state no need for drastic action to curb advances in yields, supressing core debt/elevating yields while UST yields bear-steepen
• Crude has been bolstered by OPEC+ sources around no production curb easing in April as we go into today's JMMC gathering
• Looking ahead, highlights include US services PMIs, UK Budget, US ADP, ISM services, DoEs, OPEC JMMC, ECB's Panetta, de Guindos, Schnabel, Fed's Harker, Bostic, Evans, BoE's Tenreyro

CORONAVIRUS UPDATE

US President Biden said there will be enough vaccines for every American adult by end-May and that he hopes the US will be back to normal by this time next year. (Newswires)

White House COVID adviser Slavitt that he hopes Texas Governor Abbott reconsiders lifting of the mask mandate. (Newswires)

SinoVac's finalised Phase III results for its COVID vaccine presents 83.5% efficacy, according to Anadolu Agency. (Newswires)

Japanese government is to extent the COVID-19 state of emergency for the Tokyo region until March 21st, according to TBS. (Newswires)

ASIA

An improved mood was observed in Asia as equity markets shrugged off the weak handover from Wall Street where the major indices declined led by ongoing selling in tech amid reopening optimism and regulatory concerns after US Senator Warren commented that we need to break up big tech and that she was more concerned about big tech now than a year ago. ASX 200 (+0.8%) was underpinned by strength across the mining sectors after yesterday’s rebound in metal prices and with participants cheering stronger than expected Q4 GDP data which showed the economy expanded Q/Q by 3.1% vs. Exp. 2.5%. Nikkei 225 (+0.5%) traded with cautious gains as early support from a predominantly weaker currency gradually faded amid expectations of an extension to the state or emergency for Tokyo where officials are considering requesting for the government to maintain the emergency declaration in the capital for an additional two weeks. Hang Seng (+2.7%) and Shanghai Comp. (+2.0%) conformed to the positive tone across the region after Chinese press reported that analysts suggested the PBoC could reduce RRR for certain banks this month, although the advances in the mainland were gradual after the latest Chinese PMI data releases including Caixin Services PMI which printed its lowest reading since April last year. Finally, 10yr JGBs were contained amid the mostly positive risk tone across the region and with demand for bonds also subdued by the lack of BoJ purchases in the market, while the RBA were active today for AUD 1bln of semi government bonds which was inline with last Wednesday’s operation.

PBoC injected CNY 10bln 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 6.4565 vs. Exp. 6.4566 (Prev. 6.4625)

• Chinese Caixin Services PMI (Feb) 51.5 (Prev. 52.0)
• Chinese Caixin Composite PMI (Feb) 51.7 (Prev. 52.2)

Japanese Gov't is planning on not accepting overseas spectators to the Summer Olympics, final decision to be made this month; via Mainichi. (Newswires)

US

Fed's Daly (voter) stated the recent rise in bond yields is a sign that investors see a "brighter future" and that should monetary policy become less accommodative than appropriate, this could be addressed with tools like changing the maturity of bond purchases to put downward pressure on the long-end. (Newswires) Comments published alongside closing bell

White House was reportedly planning to withdraw Neera Tanden's nomination to head the OMB as soon as Tuesday evening, while President Biden later confirmed that he accepted Tanden's request to withdraw her nomination and stated that Tanden will serve in another role within the administration. In relevant news, the US Senate voted 95-4 to confirm Cecilia Rouse as Chair of the White House Council of Economic Advisers. (Newswires)

UK/EU

UK Chancellor Sunak is to announce an extension of the furlough scheme until September in which employers will pay 10% of furlough scheme costs in July and 20% in both August and September, according to the Treasury. Furthermore, it stated that a fourth Self-employment Income Support Scheme (SEISS) grant will be available next month worth 80% of up to 3 months trading profits at a maximum GBP 7,500 total, while Sunak will unveil details of a fifth SEISS grant for the self-employed in the budget with the rules of the scheme to be relaxed to help 600k more workers. (Newswires)

• UK BRC Shop Price Index (Feb) Y/Y -2.4% (Prev. -2.2%). (Newswires)

ECB said to see no need for drastic action in order to curb advances in yields, according to sources: reports suggest that policymakers view verbal intervention and the flexibility of PEPP as the tools to manage the recent rise in yields. (Newswires)

EU Markit Comp Final PMI (Feb) 48.8 vs. Exp. 48.1 (Prev. 48.1)

• EU Markit Services Final PMI (Feb) 45.7 vs. Exp. 44.7 (Prev. 44.7)

UK Markit/CIPS Services PMI Final (Feb) 49.5 vs. Exp. 49.7 (Prev. 49.7)

• UK Composite PMI Final (Feb) 49.6 vs. Exp. 49.8 (Prev. 49.8)

ECB's Weidmann says that German inflation in 2021 is now seen "just somewhat higher" than the 1.8% December forecast. Furthermore, he states they must very carefully analyse the increase in bond yields, can flexible adjust the pace of PEPP purchases. Yet to hit the reversal rate. (Newswires)

EU Commission says EU budget rules should remain suspended in 2022, could be reinstated in 2023; fiscal impulse must remain supportive in 2021 and 2022. (Newswires)

GEOPOLITICAL

Iraqi sources note of missile strikes targeting Ain al Asad base, according to Sky News Arabia; this strike did not result in any casualties. (Twitter)

Saudi-led coalition say it has destroyed a drone launched by Yemen Houthis towards the sourthern region of Saudi Arabia, according to State tv. (Newswires)

Russian Kremlin says that US and EU sanctions over the Navalny case are unacceptable; will take reciprocal steps. (Newswires)

EQUITIES

European indices opened the session firmer across the board (Eurostoxx 50 +0.6%) following on from APAC’s positive handover - with the FTSE 100 (+0.9%) the leading bourse in the run-up to the much-anticipated UK budget. Stateside, US equity futures abide by the same pattern with RTY (+1.1%) the outperformer and relatively broad-based gains across the NQ (+0.6%) , ES (+0.5%) and YM (+0.7%). Back to Europe, sectors are all in the green but in the most part seeing relatively modest gains. A slight pro-cyclical approach is perceived with the leading sector being Autos (+3.0%), whilst Energy (+1.3%), Travel & Leisure (+1.4%), Basic Resources (+1.0%) and Banks (+1.8%) among the top performers. Ahead of the UK Budget at 12:30 GMT (link to newsquawk preview), homebuilders and pub stocks are among the stocks to watch as it has been suggested UK Chancellor Sunak will announce further specific support for the housing sector and damaged hospitality sector. Some stocks on watch include: homebuilders Taylor Wimpey (+3.4%) and Persimmon (+4.3%); residential banks Lloyds (+2.0%) and NatWest (+1.4%); pub chain JD Wetherspoon (+4.3%); retailers Marks & Spencer (+2.2%) and JD Sports (+2.8%); infrastructure names Balfour Beatty (+1.7%) and CRH (+1.8%); “sin” stocks BATS (+0.6%), Imperial Brands (+0.8%), Diageo (+0.6%) and trading platform Hargreaves Lansdown (+1.7%). Alongside this, to the detriment of the UK equity market, Goldman Sachs have forecast that if corporation tax increases 6% to 25% it could spark a fall in UK stocks and cut up to 4% off the FTSE 100 index’s market capitalization. Nonetheless, the bank has noted that the COVID vaccine rollout and unlocking of the economy will matter more for UK stocks. Elsewhere, Hiscox (-9.5%) have seen the most downside this morning following their earnings where they reported a FY pretax loss of USD 268.5mln & a missed on gross written premiums USD 4.0bln vs exp. USD 4.13bln. Saint-Gobain (+4.0%) trades higher after the Co. invested in a plasterboard line which is expected to help the company expand its range of products.

Apollo (APO) funds to acquire The Venetian Resort and Sands Expo and Convention Center Operating Co from Las Vegas Sands (LVS) for USD 6.25bln. (Newswires)

FX

USD - The Buck is trying to stop the rot and draw lines in the sand right across the board following yesterday’s fall from grace, with some assistance from a resumption in UST bear-steepening that has pulled the recovery rug from bonds in general. However, trade is volatile and having flattered to deceive above the 50 DMA on Tuesday, the DXY only just evaded a clear downside breach of the 21 marker (90.627) within a 90.871-626 band and the Dollar remains mixed vs major counterparts and weaker for choice against EMs ahead of a busy agenda including weekly MBA mortgage applications, ADP, the final Markit services and composite PMIs, non-manufacturing ISM and more Fed speak before the latest Beige Book.

GBP/NZD/AUD/CAD - All firmer vs the Greenback, as Sterling hovers around 1.4000 in the run up to the UK Budget and the Pound also picks up momentum relative to the Euro following indecision in the cross around 0.8650 even though final services and composite PMIs were somewhat underwhelming vs manufacturing, flash readings and their Eurozone prints. Meanwhile, the Kiwi is holding near 0.7300 where 1.4 bn option expiries lie in wake of eyewatering rises in GDT auction prices, the Aussie has taken firmer grip of the 0.7800 handle on the back of firmer than expected Q4 GDP and the Loonie has extended gains to test 1.2600 following decent Canadian Q4 growth and gleaning support from firm crude prices ahead of building permits.

EUR - Not the biggest net G10 mover or even on a cumulative basis, but in focus amidst the aforementioned mostly firmer than forecast Eurozone PMIs, bar German for a change, and an ECB report via sources suggesting that the GC sees no need to take drastic action to cap debt yields, in contrast to some officials that have advocated enlarging the PEPP. Eur/Usd is back below 1.2100 from circa 1.2113 at one stage when a 38.2% Fib retracement level was hurdled (1.2088) to expose a 50% Fib (1.2117) of the same pull-back from 1.2243 to 1.1992.

CHF/JPY - The Franc is looking rather deflated after weaker than anticipated Swiss CPI, with Usd/Chf pivoting 0.9150 and Eur/Chf revisiting recent peaks into 1.1100, but the Yen is underperforming and still looking vulnerable to losing its battle to stay afloat of 107.00 given dovish BoJ vibes from Kataoka overnight.

SCANDI/EM - More traction for the Nok from oil rather than a narrower Norwegian current account surplus after back month revision, while the Sek has taken on board an acceleration in Sweden’s services PMI, but the Cnh does not seem unduly ruffled by a slowdown in Caixin Chinese PMIs in part due to the PBoC’s firmer Cny midpoint fix. Conversely, the Try is softer irrespective of Turkish CPI exceeding consensus again and applying more pressure on the CBRT to tighten policy further.

• Australian GDP (Q4) Q/Q 3.1% vs. Exp. 2.5% (Prev. 3.3%)
• Australian GDP (Q4) Y/Y -1.1% vs. Exp. -1.8% (Prev. -3.8%)

FIXED

Gilts may be erring towards the side of caution within a 128.48-129.14 range as the clock ticks down to UK Chancellor Sunak’s Budget, but Bunds are nursing deeper wounds inflicted by what appears to be a rather innocuous if not inaccurate ECB ‘sources’ article to the effect that drastic action to address the recent spike in yields is not warranted, as verbal intervention pushing the existing PEPP should be enough to cap the rally. Of course it goes without saying that is the GC felt the need to respond physically it would have or at least may have flagged an impending move, so the core Eurozone bond has bounced from 174.08 along side peers despite a tepid 2036 auction and US Treasuries remaining near the base of overnight session extremes with the curve steeper ahead of a busy pm docket.

COMMODITIES

WTI and Brent front-month futures have seen a tear higher in recent trade and are hovering around best levels during early European trade. Oil prices saw gains following President Biden revealing he hopes for every adult in the US to be vaccinated by May which in turn boosted demand hopes and the economic outlook. However, gains were capped due to the big builds in private inventories, crude stocks increased by 7.4mln bbls, ahead of the EIA data later today which may provide further short-term volatility on prices. Despite saying this, it could be overlooked due to the fundamental OPEC+ meeting later today. Ahead of the confab, it was reported OPEC+ members are in agreement that the market can take more supply which would be expected to amount to a reduction in oil prices. On the flipside, it was reported this morning OPEC+ options include a rollover of current cuts and several members support the idea of no supply easing in April which resulted in immediate upside for both WTI and Brent. Note, a Rolling Headline covering the event is available on the Headline Feed. Meanwhile, it’s also worth keeping tabs on the geopolitical landscape as Iraqi sources noted of missile strikes targeting a base that houses US troops, albeit no casualties were reported. Furthermore, a Saudi-led coalition said it has destroyed a drone launched by Yemen Houthis towards the southern region of Saudi Arabia – the latest in a series of increasing attacks against the oil-rich nation. WTI has eclipsed USD 61.00/bbl (vs low USD 59.27/bbl) and Brent USD 64.00/bbl (vs high USD 62.40/bbl) at best, but just below these handles currently. Elsewhere, precious metals are both softer on the session during early European hours with spot gold trading at USD 1,725/oz and spot silver trading at 26.60/oz – with the precious metals failing to garner much impetus from the receding Dollar. Elsewhere, base metals predominantly softer on the session with LME copper -1.0%. Leading on from this and of note for aluminium, the US Commerce Department issued an anti-dumping duty from 18 countries, including up to 242.8% on imports from Germany and 4.83% on imports from Bahrain. Additionally, these duties will come on top of 10% US tariffs imposed on the majority of aluminium imports.

OPEC+ options include a rollover of current cuts - several members support the idea of no curb easing in April, according to sources. (Newswires)

US Private Inventory Data (bbls): Crude +7.4mln (exp. -0.9mln), Cushing +0.7mln (exp. +58k), Gasoline -9.9mln (exp. -2.3mln), Distillates -9.1mln (exp. -3.0mln). (Newswires)