• Asian equity markets eventually traded mostly lower as underperformance in tech sapped the early momentum from stimulus progress
• The US Senate passed the USD 1.9tln COVID-19 relief bill. The House is set to vote on the bill on Tuesday
• Chinese trade data showed February YTD exports surged by 60.6% Y/Y amid soft base effects from last year
• In FX markets, the DXY briefly reclaimed 92.00, EUR/USD found a floor at 1.19, GBP/USD remains on a 1.38 handle
• Houthi Rebels attacked a Saudi oil storage yard in Ras Tanura and Aramco facilities in Dhahran
• Looking ahead, highlights include ECB asset purchase data, BoE's Bailey

CORONAVIRUS UPDATE

US CDC reported total COVID-19 cases rose to 28.77mln from 28.71mln the day before and total deaths rose to around 523.0k from 521.3k the prior day, while it was separately reported that US COVID-19 hospitalizations continued a downward trajectory and declined to a fresh 4-month low. (Newswires/FT)

US government scientists are pushing back against calls for one-dose regimens for the Pfizer (PFE) and Moderna (MRNA) COVID-19 vaccines which are designed to be administered in two doses and warned there isn’t sufficient evidence that a single dose provides long-term protection. (WSJ)

AstraZeneca (AZN LN) began stockpiling its COVID-19 vaccine for use in the US which could provide a potential supply boost and speed up the inoculation timetable once it receives authorization. There were separate reports that the EU is to urge the US to permit the export of millions of doses of AstraZeneca’s vaccine to Europe as the bloc seeks to bridge supply shortfalls that have hampered its inoculation drive. (FT)

A preliminary small-scale study found that the Brazil’s principal COVID-19 vaccine manufactured by China’s CoronaVac may not be as effective against the Brazilian variant of the virus. (WSJ)

UK COVID-19 cases +5,177 (prev. +6,040) and deaths +82 (prev. +158), France cases +21,825 (prev. +23,306) and deaths +130 (prev. +170), Italy cases +20,765 (prev. +23,641) and deaths +207 (prev. +307). (Newswires)

Public Health England official Hopkins said that new variants are unlikely to affect the easing of lockdown restrictions during the next 3-5 weeks. (Newswires) COVID-19 Genomics UK head Professor Sharon Peacock suggested optimism for a return to normal and stated that new variants of the virus are “very unlikely” to halt Britain getting back to normal in the summer. (Sunday Times)

Italian government is considering tighter COVID-19 curbs including making the entire country a high-risk “red” zone at least during weekends, to curb a surge in the pandemic. (Newswires)

Chinese Foreign Minister Wang Yi stated that China wants to make its COVID-19 vaccines a global good and is prepared to talk with other nations regarding mutual recognition of vaccinations, while he also stated China opposes vaccine nationalism and attempts to politicize vaccine cooperation. This follows comments on Friday from the White House that the US is concerned about the use of COVID-19 vaccines as a means of diplomacy by China and Russia. (Newswires)

ASIA

Asian equity markets eventually traded mostly lower as underperformance in tech sapped the early momentum from stimulus progress after the US Senate passed the USD 1.9tln COVID-19 relief bill which includes USD 1,400 of stimulus checks and with the House set to vote on the bill on Tuesday. ASX 200 (+0.4%) rallied at the open with the commodity-related sectors leading the advances, especially gold miners after the precious metal reclaimed the USD 1700/oz level and with M&A speculation driving price action in some of the notable gainers including Myer Holdings which is being eyed by a private equity group and with Pernod Ricard rumoured to be mulling a GBP 5bln bid for Treasury Wine Estates. Nikkei 225 (-0.6%) was indecisive and initially reclaimed the 29k level but then came off intraday highs with upside capped by a choppy currency and tech weakness. Hang Seng (-1.6%) and Shanghai Comp. (-1.2%) were also boosted at the open after strong Chinese trade data which showed February YTD exports surged by 60.6% Y/Y although Chinese markets then gave up their gains with some downplaying the strong data as partly due to low base effects and amid underperformance in tech which suffered in a continuation of the rotation out of the sector and resulted in the Hang Seng Tech Index dropping by more than 5%. Finally, 10yr JGBs declined as they tracked the downside in T-note futures which briefly fell beneath the 132.00 level shortly after the resumption of electronic trade, while the lack of BoJ purchases in the market today also kept demand subdued.

PBoC injected CNY 10bln via 7-day reverse repos at rate of 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.4795 vs exp. 6.4779 (prev. 6.4904)

• Chinese Trade Balance YTD (USD)(Feb) 103.3B vs. Exp. 60.2B (Prev. 78.2B)
• Chinese Exports YTD (USD)(Feb) Y/Y 60.6% vs. Exp. 38.9% (Prev. 18.1%)
• Chinese Imports YTD (USD)(Feb) Y/Y 22.2% vs. Exp. 15.0% (Prev. 6.5%)
• Chinese Trade Balance YTD (CNY)(Feb) 675.9B vs. Exp. 369.7B (Prev. 516.8B)
• Chinese Exports YTD (CNY)(Feb) Y/Y 50.1% vs. Exp. 11.2% (Prev. 10.9%)
• Chinese Imports YTD (CNY)(Feb) Y/Y 14.5% vs. Exp. -2.0% (Prev. -0.2%)
• Chinese FX Reserves (USD)(Feb) 3.205T vs. Exp. 3.200T (Prev. 3.211T)

China General Administration of Customs spokesperson Li stated that the large increase in foreign trade during the first two months is partly due to a low base the prior year, while there were separate comments from NDRC Vice Chair Ning that he is confident China will achieve economic targets this year and that liquidity will be kept reasonably ample as nominal GDP growth could be relatively high. (Newswires)

Chinese Foreign Minister Wang Yi said China is willing for communications with the US on the basis of mutual respect and that the differences between the two countries must be managed carefully, while he added both countries must advocate healthy competition and not zero-sum finger pointing. Wang also hopes the US will drop all unreasonable restrictions for bilateral cooperation and suggested the US has created trouble across the globe by its interference with other nations. Furthermore, Wang stated there is no room to compromise regarding the Taiwan issue and called on President Biden to stop crossing the lines and playing with fire regarding Taiwan. (Newswires)

US State Department said the US condemns China's continuing assault on democratic institutions in Hong Kong and that changes in the Hong Kong legislature are a direct attack on freedoms and democracy, while it stated the US is working to galvanize collective action against human rights abuses in China's Xinjiang region and elsewhere. (Newswires)

US renewed its tariff exclusion on China medical supplies for six months. (Newswires)

BoJ Deputy Governor Amamiya says the purpose of the BoJ March review is to ensure the BoJ can act effectively and in a timely manner to economic changes. Important to balance need to maintain market functions and control yields to make YCC sustainable, as well as have room for tweaks, adding that now is the time to keep entire yield curve stably low. (Newswires)

UK/EU

UK PM Johnson’s European Adviser Lord Frost said the EU must stop sulking over the Brexit and work to make it a success. (Telegraph)

FX

In FX markets, the DXY was firmer and briefly reclaimed the 92.00 level after last week’s better than expected US jobs data and Senate passage of President Biden’s USD 1.9tln COVID-19 relief bill to send it back to the House for a vote this Tuesday. EUR/USD was subdued amid the USD strength but with losses in the single currency stemmed so far by a floor at the 1.1900 level and GBP/USD was rangebound at the 1.3800 handle while today sees the first step of UK PM Johnson’s roadmap to exit the lockdown with schools set to reopen later. USD/JPY was indecisive amid the mixed risk appetite and antipodeans remained afloat following the firmer than expected Chinese trade data, a firmer PBoC reference rate setting and the continued gains in oil prices.

COMMODITIES

Commodities traded mixed with outperformance in oil prices amid stimulus progress and after reports of an attack on a Saudi oil storage yard in Ras Tanura, as well as on Aramco facilities Dhahran which despite resulting in no casualties nor loss of property, lifted WTI crude futures to above the USD 67.00/bbl level. Other pertinent headlines for the complex failed to impact price action including several more unit restarts among Texas refineries and with Goldman Sachs forecasting WTI crude at USD 69.75/bbl and USD 72.00/bbl for 2021 and 2022, respectively. Gold extended above the USD 1700/oz level, while copper prices underperformed as risk appetite gradually deteriorated throughout the session.

US Baker Hughes Rig Count (w/e March 5th): Oil +1 at 310, Nat Gas unch. at 92, Total +1 at 403. (Newswires)

Saudi Arabia set April Arab light crude oil OSP to Asia at Oman/Dubai +USD 1.40/bbl and OSP to North West Europe at ICE Brent -USD 2.20/bbl and OSP to US at ASCI –USD 0.95/bbl. (Newswires)

Lyondell's Houston, Texas refinery (268k bpd) restarted its gasoline unit, while it was also reported that Exxon's Baytown, Texas refinery (584k bpd) is restarting its large crude unit and that Total's Port Arthur, Texas refinery (185k bpd) large crude unit is to returning to production this Monday. (Newswires)

CME raised crude oil future NYMEX (CL) maintenance margins by 6.1% to USD 4,350 per contract from USD 4,100 for May 2021. (Newswires)

Goldman Sachs Equity Research forecasts WTI prices at USD 69.75/bbl in 2021 and USD 72.00/bbl in 2022, while it forecasts Brent prices at USD 72.61/bbl and USD 75.00/bbl in 2021 and 2022, respectively. (Newswires)

GEOPOLICTICAL

Saudi Arabia Defence Ministry said an oil storage yard in Ras Tanura was attacked with a drone and that there was another attempted attack of Saudi Aramco’s facilities in Dharan, although there were no casualties nor loss of property in both of the attacks which were conducted by Houthi rebels. There were also separate reports that Yemen’s Houthis claimed they downed a Saudi reconnaissance plane. (Newswires)

US is reportedly planning a cyberstrike on Russian networks in retaliation to large scale hacking of US government agencies and with the first move expected over the next 3 weeks. (NYT)

US Defence Secretary Austin commented that the US will do what it thinks is necessary to protect its interests and will retaliate to the prior rocket attack at the Ain al-Sada airbase if that is what we decide is needed, while he added that he hopes Iran would do the correct thing. (Newswires)

US and South Korean negotiators reached an agreement in principle regarding cost-sharing for US troops deployed in South Korea with the latter to increase its support for the presence of US forces under the agreement. (Newswires)

US

Treasuries were ultimately little changed after strong selling pressures post-NFP reversed throughout the session for no obvious reason, although book squaring into the weekend and pondering how much more gas is left in the tank regarding the reflation trade are likely key factors. By settlement, 2s -0.4bps at 0.141%, 5s +0.5bps at 0.787%, 10s +0.9bps at 1.559% and 30s -1.9bps at 2.289%; TY1 volumes were solid again, printing more than 2.4mln. TIPS were offered, led by the front-end as 5yr TIPS rose 7bps, while 30yr TIPS +1bps. Eurodollar reds were also little changed, with the back half of 2022 still pricing in some term premia. Trade was choppy overnight and through Europe, where there had been a bid amid spillover from the JGB market after the BoJ pushed back on speculation of alterations to its yield targeting. However, as European trade got underway, bond sellers re-emerged, particularly as US participants arrived, heading into the US jobs report. The stellar print saw an immediate spike higher in yields, seeing the 10-year print new cycle highs of 1.625%, although the 30-year was more tame, while the 5-year saw a spike to 0.847% (just missing last week's high of 0.865%). Nonetheless, the moves were faded throughout the rest of the session with traders citing position closing into the weekend, in addition to question marks around how much further the move higher in yields has after an impressive run. There was some fleeting selling pressure separately this afternoon as participants picked up on an overnight Politico report citing the FDIC Chair McWilliams saying she doesn’t see the need for the SLR relief extended at the subsidiary bank operating level. T-note futures (M21) settled 1+ tick lower at 132-11.

Fed's Bostic (voter) said US aggregate unemployment is near to 10% and that things have degraded for low-skilled workers since the fall but noted that policy stance remains appropriate. Bostic also said the stock market can sometimes send the signal of risk taking but Fed is more focused on the dual mandate of max employment and price stability, while he added that inflation has been a real stress point for quite a long time and signals do not suggest that has changed. (Newswires)

Fed's Bullard (non-voter) said 10-year yields were returning to a level consistent with the 6-months prior to the pandemic and is still quite low, while he added something would catch his attention but we are not at that point. Bullard also said he does not see operation twist as an option right now and that it is not matching up right now that we need to be more dovish than we already are. (Newswires)

Fed's Kashkari (non-voter) said uptick in real yields would be a concern that could warrant a policy response, but he is not seeing that. Kashkari said recent movements in the Treasury market suggest that the Fed's framework is delivering what he wanted, while he added the US true unemployment rate is around 9.5% and hopes progress can be made on this. (Newswires)

Fed's Mester (non-voter) said the bond market is reflecting strength in economic data and that the jobs report shows things are moving in the right direction but are still far from the Fed’s goals, while she added that sustained accommodation will be needed for some time. (Newswires)

US President Biden said the jobs report shows the American rescue plan is urgently needed and that without a rescue plan, jobs gains are going to slow. (Newswires)

US Senate voted 50-49 to pass the USD 1.9tln COVID-19 relief bill after giving some concessions to Senator Manchin who wanted a lower unemployment benefit of USD 300/week through September, while also making only first USD 10,200 of unemployment benefits untaxable and applies to households making less than USD 150k per year. (Newswires)

Robinhood reportedly picked the Nasdaq for its IPO, according to CNBC sources. (CNBC)