• European equity indices have been somewhat choppy within ranges printing a slightly mixed performance while US futures are contained but erring higher
• DXY strengthens post-Powell to the detriment of peers though yields are steady but at comparatively elevated levels pre-NFP
• Crude surges after the OPEC+ confab aided by forecast upgrades from a number of banks
• China targets ’21 GDP growth of above 6% with CPI target ̴ 3% & budget deficit target of around 3.2% of GDP
• Looking ahead, highlights include US NFP, Canadian trade balance, BoE's Haskel & Fed's Bostic

CORONAVIRUS UPDATE

The US Senate has adjourned until 09:00EST/14:00GMT following ~11 hour reading of the COVID-19 relief bill, according to Bloomberg News' Wasson. (Twitter)

Robert Koch Institute head says more contagious COVID-19 variants are spreading within Germany. (Newswires)

There is evidence that a longer prime boost interval of the single-dose AstraZeneca (AZN) COVID vaccine results in higher vaccine efficacy, according to a Lancet study, but further studies are needed to assess the efficacy of longer-intervals vs variants. (Newswires)

Italy's Health Minister has requested to extend use of AstraZeneca's COVID-19 vaccine to people over the age of 65, according to a spokesman. (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 (-0.2%) 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 (-0.5%) and Shanghai Comp. (U/C) 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. However, pressure was seen as the session came to a close and European participants began entering the fray. 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)

US

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)

CBO finds the stimulus bill to be within budget limit which allows the stimulus bill to pass with 51 votes at the Senate. (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)

Germany's DIHK says 17% of internationally active companies forecast better business conditions over the next 12 months vs 2020; 27% expect worse conditions; 47% are experiencing growing trade barriers; 32% expect better conditions in China. (Newswires)

Key market gauge of long-term EZ inflation expectations surpassed 1.40% for the first time since May 2019. (Newswires)

GEOPOLITICAL

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 coalition is intercepting and destroying a drone launched by the Houthi terrorist militias towards Khamis Mushit, south-west Saudi Arabia, according to Sky News Arabia. (Twitter)

Russia Foreign Ministry says it will soon publish the retaliatory list of US citizens in response to the latest US sanctions, according to Tass. (Newswires)

EU is prepared to take additional steps in response to the continued deterioration of freedoms/rights in Hong Kong. (Newswires)

Saudi coalition says they have intercepted and destroyed a sixth drone launched by the Houthis towards Khamis Mushait, south-west Saudi Arabia. (Newswires)

EQUITIES

European equities kicked off the last session of the week softer across the board (Euro Stoxx 50 -0.4%) following on from a similarly lacklustre APAC lead. US equity futures initially conformed to this tone but have experienced some mild support on the US' entrance to market. Moreover, fundamental catalysts have remained light in this morning after Fed Powell’s speech underwhelmed equity markets in the run-up to the US jobs report. Back to Europe, all sectors opened in negative territory aside from Oil & Gas - which sees underlying support from the broader price action in the energy complex. However, since the market open Oil & Gas has been choppy but the energy (+1.5%) sub-sector remains firmer. To the downside, Travel & Leisure (-1.3%) is the notable laggard which may be due to the markets trying to pare back some of their recent “re-opening” gains, whilst Germany also warned of COVID variants spreading across Germany. Aside from this, Media (-1.0%) and Insurance (-1.3%) also see a downbeat performance in early morning trade. Alongside this and in terms of narratives, the broader sectors (ex-energy) portray more of a risk-off bias as defensives fare slightly better than cyclicals, but the Consumer Staple (-0.4%) sub-sectors remain in the red. In terms of individual movers, in-fitting with the price action seen this morning there are only a handful of companies within the Stoxx 600 that trade in the green. Unsurprisingly, energy names including Shell (+1.8%), BP (+2.4%), Total (+1.5%) and Tullow Oil (+9.0%) are firmer but off best levels. Moving on, LSE (-9.0%) is in the red despite a beat on FY Total Income, GBP 2.44bln vs exp. GBP 2.43bln, and the Co. stating it is nicely positioned for future growth despite an uncertain macro-economic & regulatory environment. Continuing on the earnings front, Dassault Aviation (-0.8%) reported a better-than-expected FY revenue EUR 5.49bln vs exp. EUR 5.16bln but remain hindered on broader price action and perhaps after outlining a lower than expected dividend distribution.

Chevron (CVX) has announced an agreement to purchase Noble Midstream Partners (NBLX), expected to be closed in Q2, details remain light. (Newswires)

Norwegian Cruise Line Holdings (NCLH) launches a public stock offering of 47.6mln ordinary shares of company stock. (Newswires)

FX

DXY - A quick look at the Dollar index and its latest exertions effectively tells the full story, as it extended gains beyond all remaining technical and psychological barriers on the way to topping 92.000, but the impetus behind the most recent rally came from another jump in UST yields following an address from Fed chair Powell that did not match considerable if not consensus expectations for some form of policy response. Explicitly, a significant proportion of the ‘market’ was looking for a QE twist, WAM or sign that expiring SLR exemptions might be extended, but were left disappointed and the Buck proceeded to breach upside chart levels that were proving tough to scale convincingly, like the 100 DMA. NFP looms next, but in the current environment only a real shocker and worse than the last payrolls miss is likely to stop bond bears and Buck bulls in their tracks, and even in that event the latter may benefit from heightened safe-haven demand if equities suffer on labour market concerns rather than long term rate angst.

AUD/NZD - It seems almost churlish to single out a G10 loser as several currencies are contesting the race to the bottom vs the Greenback, but in percentage terms the high betas and cyclicals are naturally nursing heavier losses. The Kiwi is now under 0.7150 attempted to reclaim and sustain 0.7300+ status on Tuesday and Wednesday, while the Aussie has lost grip of the 0.7700 handle and is trying to keep its head above 0.7650 compared to consecutive peaks just shy of 0.7840 on March 2nd and 3rd.

GBP/JPY - Sterling has surrendered another big figure to the resurgent Dollar, and Cable is now in danger of letting go of 1.3800 following a couple of forays beyond 1.4000, while the Pound has also retreated against the Euro after testing, but not breaking 0.8600 yesterday. Similarly, after defending 107.00 quite resolutely, the Yen has subsequently caved and put up relatively little fight through the 100 WMA (107.24), 107.50 or 108.00 on the way down to 108.50 and a fraction below in wake of somewhat mixed messages from BoJ Governor Kuroda. To recap, he expressed a desire to keep the JGB curve low and stable, but also stated that widening the 10 year yield target is likely to be up for debate.

CHF/EUR/CAD - The Franc has pared some declines from sub-0.9300 vs the Buck and more against the Euro from circa 1.1150, but is still among the worst major performers over the week given its depreciation from 0.9075+ and 1.0970+ respectively. Nevertheless, the Euro has not gone unscathed as it hovers beneath 1.1950 and a key chart ‘support’ at 1.1945 vs 1.2110+ just 2 days ago, albeit holding above 1.1900 with some assistance from the aforementioned bounce in Eur/Gbp. Elsewhere, the Loonie is striving to contain losses between 1.2651-1.2711 parameters by virtue of crude prices that have rebounded further in relief post-OPEC+, and will look towards Canadian trade data for some independent direction or distraction from the US labour report.

SCANDI/EM/PM - Oil is also offering some underlying support to the Nok, Mxn and Rub amidst the broader risk-off tone and yield-related Usd advances, while the Cnh trying to repel pressure at 6.5000 after a weaker PBoC fix for the Cny overnight and China setting GDP, CPI and deficit goals for 2021, at marginally above 6%, around 3% and 3.2% respectively.

FIXED

The early EU rebound in bonds has stalled or petered out in some cases and it could simply be a case of waiting for the monthly US employment report before deciding whether to take more profit or cut losses before the final of the session of the week draws to a close. However, intraday and short term technical factors may also be at play as Bunds found underlying bids ahead of 170.67 support and faded after breaching a 50% Fib at 171.22, but only reached 171.28 vs the next resistance zone between 171.34-39. Meanwhile, Gilts waned just over 128.50 and have retreated towards the middle of their 128.53-16 Liffe range in contrast to firmer/flatter US Treasuries in consolidative trade after their post-Fed chair Powell slide on Thursday stopped short of propelling benchmark yields back up to recent cycle peaks, just.

COMMODITIES

WTI and Brent front-month futures are both firmer on the session and continue to print fresh recovery highs in the aftermath of the OPEC+ confab. To recap, producers surprisingly decided to maintain production curbs - with Saudi unilaterally keeping its 1mln extra cut out of the market, whilst only Russia and Kazakhstan will be easing next month by a combined 150,000 BPD which is far inferior to the 1.5mln BPD cut the market was initially expecting. Due to the lack of easing and the tight supply, some suggest prices will continue to edge higher until the next meeting on April 1st. Furthermore, a number of banks have upgraded their forecasts in lieu of the surprise agreement. Goldman Sachs forecasts Brent to increase to USD 75/bbl in Q2 and USD 80/bbl in Q3 2021 and UBS upgraded its forecast for Brent to USD 75/bbl and WTI to USD 72/bbl for H2 2021 while 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. Citi states the measures taken by OPEC are likely to quicken up the oil stock drawn down and increase prices more than OPEC+ already has. Moving away from OPEC, China announced its GDP growth target of above 6%. In turn, due to China being one of the biggest consumers and producers of commodities it may lead to higher economic activity which could support prices. However, the growth target was on the softer-side of analyst estimates for the figure. WTI resides around mid USD 65/bbl handle (vs low USD 63.84/bbl) and Brent trades near USD 68.50/bbl handle (vs low USD 66.69/bbl). Notable risk events on the table includes US non-farm payrolls and central bank speakers such as Bostic & Haskel. Elsewhere, spot gold fell to a near nine-month low and is set for a third straight weekly decline after Fed Chair Powell remarked that the rise in yields were not "disorderly". As such, spot gold trades at USD 1695/oz (vs high 1,700/oz) and spot silver resides at USD 25.20/oz (vs low USD 25.04/oz); overall, the metals are relatively little changed on the session. Moving onto base metals, LME nickel is on course for its worse week since 2011 following on from the rising battery-grade supply outlook following the major supply deal in Shanghai. Conversely, LME copper nurses some of its recent losses, potentially deriving support from the China economic announcements.

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. Citi said that the recent action taken by OPEC is likely to accelerate the oil stock drawn down and raise prices even more than OPEC+ already has. In contrast, ABN AMRO still downward oil price risks in the short term from a fundamental standpoint (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 aluminium 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)

Indian Oil Minister says OPEC+ decision to continue with production curbs will undermine the consumption-led rebound. (Newswires)