• European indices are firmer across the board, Euro Stoxx 50 +0.5%, though US futures outperform with the Nasdaq +2.4% recuperating some of yesterday's losses
• APAC markets were mixed with China pressured but derived short-lived support from reports that state funds were said to purchase domestic equities after a worsening of the plunge
• The OECD upgraded their 2021 & 2022 global GDP view vs the December release
• US President Biden is nominating Lina Khan to the Federal Trade Commission, Politico citing confirmed sources; regarded as being 'anti-tech'
• The DXY has continued to move lower throughout the session to the benefit of peers across the board as debt climbs and therefore yields slip somewhat
• Looking ahead, highlights include EIA STEO, BoE's Haldane, RBA's Lowe, Fed's Kaplan, supply from the US

CORONAVIRUS UPDATE

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)

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 (+1.0%) 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 (+0.8%) and Shanghai Comp. (-1.8%) 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 briefly 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%)

US

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)

OECD forecasts 2021 global GDP at 5.6% (+1.4% from Dec forecast) and 2022 at 4.0% (+0.3% from Dec forecast). (Newswires) Link to full release

UK/EU

EU Commission VP Sefcovic will brief Ambassadors today following the UK unilaterally changing the implementation of the NI protocol, with two parallel legal moves to be instigated via the WA and infringement procedures. (RTE)

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%)

GEOPOLITICAL

Russian Kremlin says it is alarmed by reports that the US is planning cyberstrikes on Russian networks, adding that such strikes would amount to cyber crimes. (Newswires)

EQUITIES

European stocks trade mostly higher but off best levels (Euro Stoxx 50 +0.3%) after recovering from modest opening losses following yesterday's European rally and amid a mixed APAC handover. US equity futures meanwhile are higher across the board with outperformance seen in the NQ (+2.0%) after cash Nasdaq closed in technical correction territory yesterday amidst the rotation out of the highly-valued large tech firms and into value stocks - pushing the DJIA to fresh highs. Back to Europe, stocks see varying degrees of gains, with the SMI (-0.1%) in the red as heavyweight Novartis slumps (-1.2%) after its Phase III CANOPY-2 trial failed to meet its endpoint. Sectors in Europe now present a more pro-cyclical bias, compared with a somewhat directionless open with Tech outperforming, closely followed by Oil & Gas and Travel & Leisure; whilst the other side of the spectrum sees Banks and Basic Resources at the bottom amid pullbacks in yield and base metal prices. Over to individual movers, Continental (-6.8%) is pressured post-earnings after it did not declare a dividend for 2021, but looks to resume payments as soon as is possible. In terms of banking commentary, Citi suggests that all USD 9bln Euro Stoxx 50 futures shorts above 3,700 are in losses and "liable to unwind in a short squeeze that could support markets through the week". The bank also sees futures positioning supportive for S&P 500 but would be on the lookout for a break below 3,750 which would increase downside risks.

FX

DXY - The charts will say that the index breached a key Fib retracement level and crossed another semi-psychological barrier at 92.500, but the lack of follow-through buying suggests that bullish technical momentum was already fading, and the Dollar may have over-extended gains or simply rallied too far in short order. Whatever the reason, 92.506 appears to have been a turning point and the DXY is now testing 92.000 to the downside (91.949 low to be precise) amidst a broad Greenback retreat vs major peers, EM currencies and precious metals that were undermined by the post-US jobs data ratchet higher in yields.

AUD/NZD/GBP - Aside from the Buck reversal, marked improvements in NAB business conditions and sentiment have boosted the Aussie before attention turns to remarks from RBA Governor Lowe, with Aud/Usd retesting 0.7700 from the low 0.7600 zone that has formed a base of late, while Aud/Nzd continues to pivot 1.0750 due to Kiwi underperformance following declines in ANZ business confidence and the activity outlook rather than a sharp slowdown in NZ manufacturing sales. However, Nzd/Usd has bounced firmly following several retreats towards last Friday’s trough just under 0.7100 to hover above 0.7150, and Sterling has also survived latest attempts to fill 1.3800 bids on the way back up to touching 1.3900 in the run up to comments from BoE’s Haldane.

EUR/CAD - Also clawing back lost ground vs their US counterpart as bonds regroup and some consolidation sets in before this week’s headline events, like US CPI and the BoC tomorrow and then the ECB policy meeting on Thursday. The Euro is eyeing 1.1900 again and Loonie 1.2600 from nearer big figures below in both cases and the latter also gleaning some encouragement from a recovery of sorts in crude prices.

CHF/JPY - The Franc has pared some losses from 0.9375 to clamber back over 0.9350 and the Yen from sub-109.00 in wake of a downgrade to Japanese Q4 GDP and significantly weaker than consensus household spending for the month of February through 108.60 at one stage.

SCANDI/EM - Nok outperformance is being exacerbated by an upbeat Norges Bank regional survey, on balance, along with real monthly GDP data showing less contraction than envisaged in January, in contrast to somewhat mixed Swedish releases in the form of ip and new manufacturing orders. Elsewhere, the Zar has derived some traction from SA GDP falling less than expected and the Rub via Russia’s Finance Minister ruminating whether to reduce 2021 borrowing to cap the debt/GDP ratio at under 20% over the next 3 years, while the Cnh has rebounded from fresh 2021 lows beneath 7.5600 and Xau is back on the Usd 1700/oz handle vs a circa Usd 1680 nadir. Looking ahead, the Brl may get some respite after Monday’s mauling on the back of Brazil’s Supreme Court judge ruling to overturn the conviction of ex-President Lula before focus turns to jobs data.

• 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)

FIXED

From fragile and hesitant beginnings, recovery momentum in debt markets has continued and picked up pace to the extent that Bunds and Gilts have now reversed all their post-NFP declines and a bit more, while the 10 year T-note has recovered from 131-23+ to 132-12 vs 132-17 at best last Friday. So, the probability of completing a true turnaround Tuesday is markedly better approaching midday in London, especially for UK bonds that have made room for 20 year DMO supply. Technically, the main Eurex contract is now eyeing 171.63 vs 171.62 before 171.71 and its Liffe equivalent is on the brink of a late February peak at 129.03 vs 129.00, thus far, before turning sights on 129.14 from March 3rd and the current 129.27 m-t-d apex posted in the prior session. Ahead, only minor US data and for oil traders the EIA STEO in advance of API stocks.

UK DMO says investors show general support for the launch of a new 2051 Gilt via syndication, which could occur in April; additionally, investors have called for the 0.875% 2046 Gilt to be reopened; also, suggested the launch of a new I/L Gilt via syndication with a 2039-46 maturity. (Newswires)

COMMODITIES

WTI and Brent front-month futures have recovered off the APAC lows with upside owing to Dollar weakness coupled by broader upside across equities, before the complex saw tailwind from the OECD forecasts. The complex saw losses overnight as Texas continues to recover from its recent deep-freeze, while some also question how long OPEC+ can cap output against the backdrop of mass vaccinations and reopening economies. Meanwhile, desks are also flagging the impact of a sustained underlying rally on inflation and headaches it may cause central banks during the recovery phase. Crude markets experienced a leg-higher after the OECD raised its Real GDP forecasts vs its December release - pointing to a faster than expected recovery and also addressing one of the worries highlighted by OPEC in recent months, in reference to a sluggish recovery the cartel voiced as a risk due to intermittent lockdowns. Elsewhere, the morning saw commentary from Libya's NOC head who suggested the country's output will be raised to 1.4mln BPD (from some 1.3mln BPD recently), although this did little to sway prices. Nonetheless, WTI April reclaimed a USD 65/bbl handle (vs low USD 64.34/bbl) whilst its Brent April counterpart resides around USD 69/bbl level (vs low USD 67.61/bbl). Elsewhere, spot gold and silver benefit from the broader Dollar softer as the yellow metal regains a footing above USD 1,700/oz (vs low 1680.30/oz), whilst silver gains further ground above USD 25.50/oz (vs low 25.04/oz). Over to base metals, LME copper remains subdued after relinquishing the USD 9,000/t mark, despite the risk appetite and softer Buck. Elsewhere, Dalian iron ore fell some 10% overnight after China's largest steel-making city Tangshan announced anti-pollution restrictions.

Motiva's Port Arthur Texas (637k BPD) refinery reportedly 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)

Libya's NOC says they are targeting increasing oil production to 1.4mln BPD by year-end. (Newswires)

Gazpromneft oil pipeline reportedly burst at the Yarayner oil field in Russia, according to RIA. (Newswires)