• Asian equity markets traded choppy following the mixed lead from Wall St where the DJIA outperformed to post a fresh record high
• The Nasdaq 100 slumped by nearly 3% amid a heavy rotation out of tech and into value
• In FX, the DXY maintained a footing above 92.00, EUR/USD sits above 1.1850 and GBP/USD maintains 1.38 status
• Oil prices nursed losses overnight with WTI back above USD 65.00/bbl
• Looking ahead, highlights include Norges Bank Regional Network Report, US NFIB, EIA STEO, BoE's Haldane, RBA's Lowe, Fed's Kaplan, supply from the UK & US

CORONAVIRUS UPDATE

US COVID-19 cases +41,675 (prev. +57,586), deaths +877 (prev. +1,679), vaccines administered 92.1mln (prev. 90.4mln), while there were comments from the CDC that fully vaccinated people can meet indoors without masks. (Newswires)

UK PM Johnson welcomed the reopening of schools but noted that it would lead to an increase of transmissions and ruled out speeding up the exit from lockdown. It was also reported that the NHS expects a significant increase of COVID-19 vaccines supply from AstraZeneca (AZN LN) which it will roll out from March 15th. (FT/Times Radio)

Dutch PM Rutte said most COVID lockdown measures have to remain in place for the time being with curfews to remain in place until March 31st. (Newswires)

Preliminary data indicated that Sinovac's COVID-19 vaccine is effective against the Brazilian P1 variant, according to a source. (Newswires)

ASIA

Asian equity markets traded choppy following the mixed lead from Wall St where the DJIA outperformed to post a fresh record high but its major counterparts were pressured especially the Nasdaq 100 which slumped by nearly 3% amid a heavy rotation out of tech and into value. ASX 200 (+0.5%) was supported by strength in cyclicals and with the largest weighted financials sector atoning for the losses in tech and mining names, while M&A prospects also provide a boost with Westpac underpinned after reports that Dai-Ichi Mutual Life Insurance is thought to be interested in its life insurance business and Vocus shares surged on news it is to be acquired by a consortium including Macquarie Infrastructure and Real Assets and Aware Super. Nikkei 225 (+0.9%) was choppy as participants digested soft data including a wider than expected contraction in Household Spending and downward revisions to Q4 GDP, although a weaker currency was the determining factor in keeping the index afloat. Hang Seng (+1.0%) and Shanghai Comp. (-0.3%) were varied with initial pressure due to continued tech woes as the Hang Seng Tech Index initially slumped by more the 4% shortly after the open before staging a full recovery which also inspired a turnaround in the city’s benchmark, while the mainland bourse dropped by around 2% before rebounding on reports that China state funds were said to be purchasing domestic equities after a worsening of the plunge. Finally, 10yr JGBs were softer following the prior day’s late selling and comments from BoJ Deputy Governor Amamiya that the March review will discuss whether to increase the 10yr JGB yield target band and clarified that last week’s comments by Governor Kuroda was him voicing his personal view when he leant back from the idea of widening the band. Nonetheless, prices were off their lows but with the rebound limited by resistance at 151.00 and following weaker results at the 5yr JGB auction.

PBoC injected CNY 10bln via 7-day reverse repos at a rate of 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.5338 vs exp. 6.5319 (prev. 6.4795)

Chinese state funds were said to purchase domestic equities after a worsening of the plunge, according to press reports. (Newswires)

Japanese government nominated Nomura Asset Management CEO Junko Nakagawa to join the BoJ board and replace board member Takako Masai when her terms ends on June 29th. (Newswires)

• Japanese GDP (Q4 F) Q/Q 2.8% vs. Exp. 3.0% (Prev. 3.0%)
• Japanese GDP Annualised (Q4 F) 11.7% vs. Exp. 12.8% (Prev. 12.7%)
• Japanese All Household Spending MM* (Dec) -7.3% vs. Exp. -3.1% (Prev. -1.8%)
• Japanese All Household Spending YY* (Dec) -6.1% vs. Exp. -2.1% (Prev. 1.1%)

UK/EU

USTR announced the conclusion of WTO quota negotiations with the EU on Brexit related adjustments to tariff quotas in which the agreement will determine how to split tariff rate quota quantities between the EU and UK. (Newswires)

Barclaycard stated UK February spending declined 13.8% Y/Y but noted that confidence in the economy was at a 12-month high in February. (Newswires)

• UK BRC Retail Sales Like-For-Like (Feb) Y/Y 9.5% (Prev. 7.1%)

FX

In FX markets, the DXY was choppy but remained above the 92.00 level ahead of the House vote on the USD 1.9tln relief bill which is earmarked for Tuesday although a Democratic aide had suggested that this could instead occur on Wednesday. In addition, there was also yesterday's comments from US Commerce Secretary Raimondo that a strong USD is good for America. EUR/USD initially extended on its declines to beneath the 1.1850 level owing to the early USD strength although this was later reversed as stocks found some slight reprieve on reports of Chinese state fund intervention in the domestic equity market, while GBP/USD was rangebound with the 1.3800 level acting as support. USD/JPY was firmer and reclaimed the 109.00 status in a continuation of the recent uptrend and following soft data releases, while antipodeans were contained by the indecisive risk tone and fluctuations in CNH following a weaker reference rate setting by the PBoC which dragged the currency to a fresh YTD low before later reversing its losses. Furthermore, BRL was a notable underperformer among EM currencies after a Brazilian Supreme Court Judge cleared the country's former left-wing President Luiz Inácio Lula da Silva which restores his political rights and paves the way for possible candidacy in next year's presidential elections.

Brazil Supreme Court judge annulled the conviction of former President Lula and reinstated his political rights which means he can challenge current President Bolsonaro in next year's presidential election, although the ruling still needs to be considered by the full Supreme Court. (Newswires/BBC)

• Australian NAB Business Confidence (Feb) 16.0 (Prev. 10.0)
• Australian NAB Business Conditions (Feb) 15.0 (Prev. 7.0)
• New Zealand ANZ Business Confidence (Mar P) 0.0 (Prev. 7.0)
• New Zealand ANZ Activity Outlook (Mar P) 17.4 (Prev. 21.3)

COMMODITIES

Oil prices nursed losses seen yesterday after the initial support from reports of Saudi oil infrastructure being targeted by Houthis eventually faded and briefly dragged WTI crude futures beneath the USD 65.00/bbl level. Prices have since moved off their lows but with gains capped amid the choppy overnight risk tone and further resumption of operations among Texas refineries. Gold is relatively flat overnight beneath the USD 1700/oz level as the greenback held on to most the prior day's gains and price action in copper was contained by the indecisive risk tone and with early slump in Chinese Dalian iron ore prices which fell about 4% shortly after the open.

Total (FP FP) Port Arthur, Texas refinery (185k BPD) restarted its large crude unit and Lyondell's Houston, Texas refinery (268k BPD) gasoline unit running at 75% capacity, while other reports noted Motiva's Port Arthur Texas (637k BPD) refinery returned to normal operation following shutdown from the Texas freeze. (Newswires)

CME raised RBOB gasoline futures maintenance margins by 11.1% to USD 5,000/contract. (Newswires)

GEOPOLITICAL

White House stated they continue to be concerned by growing attacks on Saudi Arabia and they remain working closely with Saudi Arabia. It was also reported that the Saudi-led coalition destroyed a ballistic missile heading towards Khamis Mushait and a booby-trapped drone heading towards Southern region launched by Houthis, while a Yemen Houthi spokesman stated their forces hit a military target at the Abha International Airport using a ballistic missile with great accuracy. (Newswires)

Iran has reportedly started enriching uranium with a third cascade of advances IR-2m centrifuges at its underground Natanz plant, according to an IAEA report. Furthermore, the fourth IR-2M Cascade at the Natanz plant has reportedly been installed but not fed with uranium feedstock and the installation of the fifth cascade is ongoing. (Newswires)

US

Treasury yields were higher on Monday, led by the front and the belly amid a slew of corporate deals weighing in addition to the passing of fresh US stimulus in the Senate. By settlement, 2s +2.2bps at 0.163%, 5s +6.5bps at 0.850%, 10s +3.8bps at 1.592%, 30s +1.4bps at 2.302%; TYM1 were in line with recent averages at 1.4mln. In real yields, 5yr TIPS rose by over 15bps as inflation breakevens narrowed; long TIPS didn't sell as hard. Yields were already firmer from the open after the passing of fresh COVID-19 stimulus and decent Chinese economic data. Belly-to-long-end spreads saw flattening, with strong Eurodollars activity as traders embedded more term-premia. Furthermore, there were a dozen corporate issuers in the dollar market today, particularly in the belly, applying extra pressure there, although little tranches made at the topical 5s maturity following the spike higher in yield specifically at that maturity. There was little tier 1 data today and instead, Treasury participants are looking to this week's auction supply; no Fed-speak now we have entered the blackout window. There was also noticeable selling at the front-end today, perhaps with investors now confidently pricing in more bill supply post the passing of stimulus (remember the Treasury has said if more stimulus was to pass it would begin ramping up its bill supply), or maybe some concession for Tuesday's 3-year auction. T-note futures (M1) settled 15 ticks lower at 131-28.

US Democratic aide said the House may vote on the COVID-19 relief bill on Wednesday, although other reports suggested the House will vote on the COVID-19 stimulus bill on Tuesday evening. (Newswires/Fox)