• Asia-Pac bourses extended on recent declines amid spillover selling from the US where tech took the brunt again and the bond rout persisted
• Fed Chair Powell stuck to a dovish script and noted that that the current stance is appropriate which came as a disappointment for those awaiting commentary on SLR adjustments, YCC or operation twist
• BoJ Governor Kuroda said the BoJ will likely debate whether to expand the implicit band for the 10yr JGB yield target
• China is to target GDP growth of above 6% this year, with CPI target at around 3% and a budget deficit target of around 3.2% of GDP
• In FX, the DXY remains firm, EUR/USD sub 1.20, USD/JPY above 108.00 and GBP/USD trades on a 1.38 handle
• Oil remained firm above USD 64.00/bbl after the OPEC+ decision to roll over current output curbs and with Saudi also maintaining its voluntary cuts next month
• Looking ahead, highlights include US NFP, Canadian trade balance, BoE's Haskel, Fed's Bostic

CORONAVIRUS UPDATE

US COVID-19 cases +65,424 (prev. +54,276), deaths +1,947 (prev. +2,103), vaccines 82.6mln (prev. 80.54mln). (Newswires)

California is to loosen reopening tier requirements as more vaccines reach vulnerable areas. (ABC7)

Moderna (MRNA) and IBM (IBM) plan to collaborate on COVID vaccine supply chain and distribution data sharing. (Newswires)

ASIA

Asia-Pac bourses extended on recent declines amid spillover selling from US where tech took the brunt again and the bond rout persisted after market participants were underwhelmed by the latest rhetoric from Fed Chair Powell who stuck to a dovish script and noted that that the current stance is appropriate which came as a disappointment for those awaiting commentary on SLR adjustments, YCC or operation twist. ASX 200 (-0.7%) was pressured by broad losses across its sectors and amid concerns of an impact to the ongoing vaccine rollout efforts after the EU blocked a shipment of AstraZeneca vaccines to Australia citing the drug maker’s failure to honour EU contracts, although there was notable outperformance in energy names after the OPEC+ decision to roll over current output curbs and with Saudi also maintaining its voluntary cuts for April. Nikkei 225 (-0.4%) was subdued in tandem with the global lacklustre risk appetite and as exporters suffered from a predominantly stronger currency, with participants looking towards PM Suga’s COVID announcement later after the government recommended a 2-week extension for the state of emergency in Tokyo. Hang Seng (+0.4%) and Shanghai Comp. (+0.4%) were initially negative after the PBoC continued with its tepid liquidity operations and with the US proposing to build an anti-China missile network to bolster its deterrence against China in islands including Taiwan, Okinawa and Philippines which China sees as its first line of defence. Chinese markets then gradually pared losses in the aftermath of Premier Li Keqiang opening speech at the NPC in which he delivered the government work report and announced an official growth target of above 6% for this year which also helped Hong Kong alleviate the pressure from the recent tech sector woes. Finally, 10yr JGBs were initially subdued and declined beneath the 151.00 level amid a resumption of the global bond rout but then prices surged on reopen of from the lunch break after comments from BoJ Governor Kuroda that he doesn't think it is necessary and appropriate to widen the band around the BoJ's long-term rate target, while he added that now is the time to keep the yield curve stably low.

PBoC injected CNY 10bln via 7-day reverse repos at a rate of 2.20% for a net daily drain of CNY 10bln. (Newswires) PBoC set USD/CNY mid-point at 6.4904 vs exp. 6.4758 (prev. 6.4873)

Chinese Premier Li delivered the government work report at the start of the NPC and announced that China targets GDP growth of above 6% this year, with CPI target at around 3% and a budget deficit target of around 3.2% of GDP. Premier Li stated that China will keep liquidity reasonably ample and large commercial banks will increase SME loans more than 30% this year, while China is to further push loan rates lower and guides the financial system to sacrifice profit for the real economy. Furthermore, Li stated that China will further reduce the negative list for foreign investment and will not make a sharp turn in macro policies this year but will provide targeted support for enterprises and industries enduring a sustained impact from the pandemic, as well as expand effective investment and promote steady development in imports and exports. (Newswires)

China announced it will keep economic operations within a reasonable range in 5 years and will keep liquidity reasonably ample, as well as keep growth in money supply and social financing basically in line with nominal GDP over next 5 years. China will step up breakthrough in tackling frontline technologies such as AI, quantum information, semiconductors, gene and biotech over next 5 years, as well as develop vaccines against major infectious diseases in its 5-year plan. China will reduce import tariffs and increase imports of consumer goods, advanced technologies and energy products, with the 5-year plan to also bolster the role of consumption in supporting economic development. Furthermore, China will resolutely deter any Taiwan separatist activity and a parliament official said China they will conduct changes to the number, composition and method of forming Hong Kong's Election Committee which will continue to decide the Chief Executive and will participate in nominating all Legislative Council candidates. (Newswires)

BoJ Governor Kuroda said the BoJ will likely debate whether to expand the implicit band for the 10yr JGB yield target although more discussions are needed before the final decision and that it is a difficult issue. Furthermore, Governor Kuroda later stated that he doesn't think it is necessary and appropriate to widen the band around the BoJ's long-term rate target, while he added that now is the time to keep the yield curve stably low as the pandemic is still impacting the economy. (Newswires)

UK/EU

European Commission VP Sefcovic has warned that Brussels is to launch legal action "very soon" amid a move by the UK to unilaterally delay part of the Brexit deal concerning Northern Ireland. (Guardian)

FX

In FX markets, the DXY remained firm around 91.70 amid weakness in stocks and rising yields after comments from Fed Chair Powell. Markets now eye the latest NFP jobs data due later today. EUR/USD was subdued with the single currency suffering as a counterparty to the USD strength and after recent disappointing EZ retail sales data, while GBP/USD failed an attempt to reclaim the 1.3900 handle. Protocol. USD/JPY reclaimed 108.00 to the upside on the USD strength and amid some murmurs of Gotobi demand although JPY-crosses were pressured by haven flows and antipodeans were also kept lacklustre due to their high-beta statuses, a weaker CNY reference rate setting and lack of pertinent data releases.

COMMODITIES

Oil remained firm after the OPEC+ decision to roll over current output curbs and with Saudi also maintaining its voluntary cuts next month which it will phase back gradually. This underpinned WTI crude futures above the USD 64.00/bbl level and prompted several upward revisions to oil forecasts from large banks including Goldman Sachs, JPMorgan and UBS. Gold prices languished beneath the USD 1700/oz level due to the firmer greenback following a lack of push back from Fed Chair Powell, while copper weathered the lacklustre spooked risk sentiment and reclaimed the USD 4.00/lb level.

OPEC+ kept its output quota unchanged and the Saudi Energy Minister confirmed an extension of voluntary oil cuts into April which they will gradually phase back in a period longer than one month, while the compensation scheme was extended until July. Furthermore, OPEC+ are set to meet again in April to decide output for May and beyond with the next JTC to be held on 1st April, the next JMMC to be held on 6th April and the OPEC+ meeting will be on 7th April, according to delegates. (Newswires)

Russian Deputy PM Novak said the price increase in oil attests to optimism and we have to be cautious not to overheat the market, while he added that the oil market will return to pre-crisis levels in early or mid-2022 and that oil prices are likely to stabilise. (Newswires)

Total is warming up crude units for a restart at its Port Arthur, Texas refinery (185k bpd), according to sources. (Newswires)

Goldman Sachs raised its Brent crude price forecast by USD 5/bbl due to OPEC+ supply shock and sees prices at USD 75/bbl in Q2 and USD 80/bbl in Q3. Furthermore, JPMorgan raised its Brent crude price forecasts by between USD 2-3/bbl to USD 67/bbl this year and USD 74/bbl next year due to the OPEC+ decision, while UBS raised its Brent crude forecast to USD 75/bbl and WTI crude forecast to USD 72/bbl for H2. (Newswires)

CME lowered COMEX 100 gold futures and gold enhanced delivery futures initial margins for speculators by 9.1% to USD 11,000/contract, while it raised aluminum futures initial margins for speculators by 15.8% to USD 2,420 per contract. Furthermore, it raised COMEX copper futures maintenance margins by 10% to USD 5,500 per contract and raised NY Harbor heating oil maintenance margins by 10% to USD 4,400/contract. (Newswires)

GEOPOLITICAL

US and UK reportedly weighing more Russia sanctions and possibly targeting debt. (Newswires)

Israel is reportedly updating plans to strike Iranian nuclear sites and is prepared to take action independently, according to its Defence Minister. (Fox News)

Saudi-led coalitions said it destroyed a ballistic missile launched by Yemen's Houthis towards Jazan, according to State TV. (Newswires)

US

By settlement, 2s+0.4bps 0.145%, 5s +5.3bps at 0.780%, 10s +8bps 1.550%, 30s +5.3bps at 2.304%; TYM1 volumes were strong, particularly in the wake of Powell's comments; the breakeven curve pulled back some of its inversion as short TIPS were sold the hardest. The Eurodollar strip continued to price in a more aggressive hiking cycle, with the September 2022 contract implying a 3m Libor rate of 30bps. Meanwhile, it's worth keeping an eye on current Libor fixings, which are now flirting with record low territory with the move lower in front-end rates. USTs had been choppy and tight for most of the session up until the day's apex, Powell. It was what the Fed Chair didn't say rather than what he did say that ignited the aggressive selling in USTs, led by the belly. There had been questionable speculation on Wednesday of "operation twist" potentially getting a nod today, as well as potential other adjustments to its asset purchases, not to mention any update on the SLR exemption. Alas, no dice. As Powell reached the end of his interview, sticking to the script and not following up on some of the commentary (regarding QE/WAM/twist) that preceded him in the last few days, the selling was well underway across the curve, and on volume. Yield peaks for duration were eventually found at 1.55% on 10s and 2.32% on 30s; butterfly spreads such as the 2s5s30s also blew out again. T-note (M1) settled 21 ticks lower at 132-12+.

Fed Chair Powell repeated the Fed is still a long way from goals and stated that while there are risks, there are good reasons to expect job creation to pick up in coming months and repeated that it will take time to get back to maximum employment. Powell stated the Fed wants to see broad-based employment gains and wage gains but is unlikely to see maximum employment this year and when asked if the market is wrong, he responded that the Fed monitors a broad range of financial conditions and would be concerned by disorderly conditions, as well as tightening in financial conditions. Furthermore, Powell stated there are reasons to believe outlook is becoming more positive and suggested for the Fed to raise rates, it wants to see inflation on track to reach 2% and moderately exceed it but noted there is a lot of ground to cover before we get there, while he also reiterated that any taper of asset purchases will be signalled ahead of time and did not want to speculate on a 'Twist' operation. (Newswires)

US Senate voted 50-50 to start the debate on COVID-19 relief with VP Harris casting the tie-breaking vote, while GOP Senator Ron Johnson objected to waiving the reading of the 628-page bill which is seen as delay tactic which means Senate clerks have to read the full bill aloud before senators can begin debating on the bill. (Newswires/Guardian)

US CBO projected US public debt to average 202% of GDP in 2051 vs 102% in 2021; 145% of GDP in 2041 and 107% of GDP in 2031, while long-term budget projections are based on current laws and do not include Biden administration's proposed USD 1.9trln stimulus plan. It was later reported that the CBO finds the stimulus bill to be within budget limit which allows the stimulus bill to pass with 51 votes at the Senate. (Newswires)

White House said US President Biden is exploring the possibility of making Child Care Tax Credit permanent after COVID-19 relief bill is passed and the White House Press Secretary Psaki commented that infrastructure is a top priority for President Biden. Furthermore, House Democrat De Fazio said he will propose to President Biden for the infrastructure effort be split in two, while he added that President Biden wants to move quickly on infrastructure and he wants a very big infrastructure package. (Newswires)

US Senators are mulling a USD 30bln funding for chip-making incentives approved last year and the goal is to bring a bill including the funding to a full Senate vote in April, according to congressional sources. (Newswires)