• European indices are firmer, Euro Stoxx 50 +0.9%, while US futures remain hindered amid tech underperformance, ES -0.6% & NQ -1.5%
• Brent surpassed the USD 70/bbl mark (high USD 71.38/bbl) following a Houthi attack on a Saudi oil yard, though the benchmarks have retraced this and are now negative
• The USD remains underpinned as yields climb and the curve continues to steepen, to the detriment of peers ex-GBP benefitting from EUR/GBP action
• 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
• Looking ahead, highlights include ECB asset purchase data

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)

China is said to be ramping up efforts to vaccinate 560mln people (40% of China's population) by the end of June, and another 330mln people will be vaccinated by the end of the year. (Global Times)

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 (-0.4%) 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 (-1.9%) and Shanghai Comp. (-2.3%) 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 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. Adds, Kuroda was voicing his personal view on Friday, saying the review will be discussing whether to increase the 10yr JGB target band(Newswires)

US

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)

UK/EU

Link to newsquawk primer on today's ECB net PEPP release (14:45GMT/09:45EST)

BoE Governor Bailey reiterates that the proposal for banks to prepare for negative rates within the next six months does not imply the BoE’s intentions in that direction, “nor does it imply that negative rates are our chosen marginal policy tool”. Outlook for the economy is positive. Expects to have a lower unemployment profile in the next set of forecasts, will see short-term increase in inflation. May require more evidence than normal to determine if any inflation increase is persistent. (BoE/Newswires)

UK PM Johnson’s European Adviser Lord Frost said the EU must stop sulking over the Brexit and work to make it a success. Subsequently, European Vice Commissioner Sefcovic will be briefing EU ambassadors tomorrow regarding options for legal action against the UK over the Northern Ireland dispute, according to sources cited by FT's Brundsen. (Telegraph/Twitter)

EU Commission says they have concluded negotiations with the US regarding an adjustment to the EU's WTO agricultural quotas. (Newswires)

EQUITIES

European cash markets kicked off the week with gains across the board (Euro Stoxx 50 +1.0%) as the region reacted to the late-doors rally on Wall Street on Friday whilst shrugging off a mostly downbeat APAC lead. Since then, major bourses have waned off best levels with the UK's FTSE 100 (+0.1%) the laggard amidst Sterling's resilience to Dollar strength coupled by the reversal in crude prices - thus pressuring index heavyweights Shell (-0.1%) and BP (-0.4%). US equity futures meanwhile have somewhat stabilised in early European trade after drifting lower throughout the overnight session - with the tech-laden NQ futures (-1.5%) back on the boil and the YM (-0.1%) slightly more cushioned. Back to Europe, aside from the aforementioned pullback in oil prices, the broader sectors reflect a pro-cyclical bias, with defensives Healthcare, Utilities and Staples the laggards and in-line with the mass vaccination narrative. However, the top gainers include the likes of yield-sensitive Banks, Autos and Insurance. Onto individual movers, Pearson (+4.9%) is firmer post earnings after suggesting it is launching a strategic review of its international courseware and local publishing businesses. Pernod Ricard (-0.6%) trades softer following reports it is mulling a GBP 5bln bid for Treasury Wine Estates. Finally, Airbus (+2%) is firmer despite an overall downbeat delivery report which highlighted mass cancellations emanating from Norwegian Airlines, with the French aircraft-maker potentially latching onto the reopening narrative.

GEOPOLITICAL

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 and Japan are said to be eyeing a summit as soon as April in Washington, sources state. (Newswires)

FX

DXY - Only a relatively short-lived and shallow pull-back in DXY terms before the Buck bounced across the board to extend gains and the index probed beyond last Friday’s post-NFP peak within a 91.840-92.303 range. Technical analysts are now looking at Fib resistance around 92.450 – 23.6% retracement of the move from 102.97 to 89.20 - ahead of the next half round number as US Treasury yields rebound and the curve re-steepens into supply and the House vote on President Biden’s Usd 1.9 tn relief bill on Tuesday. More immediately, employment trends for February and January wholesale trade.

NZD/CHF/AUD - The Kiwi is underperforming in advance of Q4 NZ manufacturing sales, with Nzd/Usd now at risk of losing 0.7100+ status as a high beta, and also not gleaning as much underlying support as the Aussie from Chinese trade data or a firmer PBoC CNY midpoint fix overnight, albeit neither helping the CNH subsequently slipping towards 6.5000 vs the Greenback. Hence, Aud/Usd is now below 0.7650 even though the Aud/Nzd cross remains elevated around 1.0750 in the run up to NAB business confidence, conditions and a speech from RBA Governor Lowe all on Tuesday. Elsewhere, the Franc continues to flounder irrespective of Swiss fundamentals like jobs data or the fact that weekly sight deposit balances indicate no intervention again, with Usd/Chf up near 0.9350 and through the base of a weekly chart formation.

EUR/CAD/JPY - All unable to resist latest Greenback advances, as the Euro retreats further below 1.1900, the Loonie tests support/bids at 1.2700 and Yen pivots 108.50 after holding just a few pips above its US payrolls low awaiting a raft of Japanese data including household spending, earnings, Q4 GDP and money supply.

GBP - No real reaction to comments from BoE Governor Bailey underlining a reticence towards using NIRP, but Sterling is holding up better than other majors against the backdrop of Dollar strength with some assistance via selling interest in Eur/Gbp following recent retracement or corrective price action. Indeed, Cable is holding above 1.3800 as the cross reverses from circa 0.8622 to almost 0.8580 pre-ECB and UK GDP later this week.

SCANDI/EM/PM - Although oil prices have recoiled quite a lot from fresh OPEC+ peaks a fraction under Usd 68/brl in WTI and over Usd 71 in Brent, the Nok has pierced 10.1600 against the Eur and is not too far from parity vs the Sek in wake of a strong rebound in Norwegian manufacturing production. However, the Try has been down to 7.6650 or so and underperforming alongside other EM currencies and precious metals on the aforementioned resumption in UST bear-steepening and resulting Usd appreciation. Xau is only just keeping its head above key support around Usd 1690/oz, while the Brl could be heading for more than merely catch-up losses given a new Brazilian strain of COVID-19 that can reinfect people that have recovered from other variants.

Link to FX option expiries, NY Cut

FIXED

After trading mostly in lock-step initially, Bunds and US Treasuries have succumbed to more downside pressure and selling into upticks within 170.84-171.16 and 131-25/132-05 respective ranges for the 10 year debt futures, but Gilts and non-core Eurozone bonds have carved out new intraday peaks to pare some of their yield premium. The UK benchmark has been up to 128.49 (+22 ticks vs -27 ticks at one stage) amidst ongoing FTSE underperformance and ongoing rhetoric from BoE Governor Bailey stressing that sub-zero rates would be a last resort if the need arises for the MPC to deliver more stimulus, while the EZ periphery and French OATs could be front-running ECB QE updates on the premise that more of the PEPP and PSPP may have been spread in their direction last week. Also ahead, US employment trends and wholesale trade plus the expiry of Mar21 Eurex contracts.

COMMODITIES

WTI and Brent front-month futures have retreated from their overnight highs and have closed the gap seen at the electronic open - with the former back under USD 66.50/bbl (vs high 67.98/bbl) and the latter sub-70/bbl (vs high 71.38/bbl). Prices were bolstered overnight amid reports of further Saudi oil infrastructures being targeted by Houthi militia, but no personnel were injured nor infrastructure damaged. Nonetheless, crude markets at the time saw a pricing of geopolitical risk premia amidst the increasing frequency of these attacks, with other supportive factors including the US COVID bill's passage through the Senate, OPEC's surprise last week and the Chinese trade data overnight. However, since the cash open, prices have been on a downward trajectory as the complex moves in tandem with sentiment whilst being weighed on by a firmer Buck, potentially also prompting some profit-taking. Further, ING suggests that the bullish sentiment in the paper market is not reflected to the same extent in the physical market - "Investors appear to be looking further forward to expectations for a strong demand recovery over the second half of this year", the bank remarks, adding that a significant correction could be on the cards if stronger demand does not materialise. Something else to ponder - some desks suggest that the OPEC+ surprise decision to maintain its production pact last week risks overheating the market and prompting further instability in the future. Also, as economies grasp onto a firmer footing via ramped up mass vaccinations, it begs the question of how long OPEC+ will keep this support, namely with regards to Saudi's excess unilateral cut which was rolled over as a precautionary measure. Elsewhere precious metals bear the brunt of the rising Dollar with spot gold back below USD 1,700/oz (vs high USD 1,714/oz) and spot silver inching closer towards the USD 25/oz mark (vs high USD 26.925/oz). Base metals meanwhile trundle lower, in-fitting with the risk sentiment, with LME copper back under USD 9,000/t (vs high 9,120/t) after shrugging off the Chinese trade balance which was distorted amid lower base effects.

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)

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)

Citi upgrades near-term copper point price forecast (0-3 months) to USD 10,500/t (prev USD 9,000/t); raises 2021 forecast to USD 10,000/t (USD 9,000/t). (Newswires)