• Asia-Pac markets traded with a slight positive bias following on from the gains on Wall Street where stocks were led higher by an aggressive resurgence in tech
• The Nasdaq 100 surged higher by over 4% for its largest gain since November with advances also facilitated by an easing of yields
• Chinese inflation data was firmer than expected but still showed CPI Y/Y in negative territory at -0.2% vs. exp. -0.4%
• In FX, the DXY sits on a 92.00 handle, EUR/USD is choppy beneath 1.19 and GBP/USD maintains 1.38 status
• The USD 1.9tln relief bill passed the procedural hurdle in the House which paves the way for a 2-hour debate and final vote on Wednesday morning
• Looking ahead, highlights include US CPI, BoC rate decision, DoEs, supply from the UK, Germany & US

CORONAVIRUS UPDATE

US COVID-19 cases +124,338 (prev. +41,675), deaths +845 (prev. +877), vaccines administered 93.7mln (prev. 92.1mln). (Newswires)

Pfizer (PFE) and Moderna (MRNA) doses to states will increase to 15.8mln next week, while it was separately reported that BioNTech (BNTX) sees the potential to supply 3bln COVID-19 vaccine doses in 2022. (Newswires)

EU Commission is reportedly aiming for a vaccine passport by Summer, while there were comments from EU's Breton that the EMA is to authorise the Johnson & Johnson (JNJ) vaccine within days or hours. (Newswires/Handelsblatt)

Quad summit of US, India, Japan and Australia plans to announce a financing agreement on Friday to support boosting COVID-19 vaccine production capacity in India with focus on firms manufacturing vaccines for Novavax (NVAX) and Johnson & Johnson (JNJ), according to a senior US administration official. Furthermore, the Quad aims to reduce output backlog, speed up vaccinations and defeat some mutations, while some additional vaccine capacity created in India will be used to help vaccinate other southeast Asian countries and additional capacity will come online later in the year. (Newswires)

ASIA

Asia-Pac markets traded with a slight positive bias following on from the gains on Wall Street where stocks were led higher by an aggressive resurgence in tech which lifted the Nasdaq 100 higher by over 4% for its largest gain since November and with the advances also facilitated by an easing of yields which led to a pause in the reflation trade. ASX 200 (-0.8%) and Nikkei 225 (+0.1%) both opened higher but then reversed most of the gains with the initial momentum in Australia offset by weakness in the commodity-related sectors and with financials mired as yields softened, while sentiment in Tokyo was tentative amid detrimental currency effects from the recent pullback in USD/JPY and with reports noting that Japan is to host the Olympics without overseas spectators although a decision has not yet been made and is anticipated later in the month. Hang Seng (+0.1%) and Shanghai Comp. (+0.2%) were kept afloat by strength in tech and with China Telecom shares surging at the open amid plans to list in Shanghai. However, the gains were briefly wiped out as participants digested inflation data which was firmer than expected but still showed CPI Y/Y in negative territory at -0.2% vs. exp. -0.4% and amid mixed US-China related headlines with US and Japan said to be considering condemning China for its ship intrusions, while other sources stated that China and the US are in talks for their top diplomats to meet in Alaska in a bid to reset their relationship. Finally, 10yr JGBs were rangebound amid the indecisive mood in Japanese stocks and lack of BoJ bond purchases in the market today, although eventually eked mild gains after support at the 151.00 level held overnight.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.5106 vs exp. 6.5173 (prev. 6.5338)

The US State Department said it is unaware that atrocities in China's Xinjiang region has ended since reports of Genocide, while it was separately reported that US and Japan are considering condemning China for ship intrusion. (Newswires/SCMP/Nikkei)

• Chinese CPI YY (Feb) -0.2% vs. Exp. -0.4% (Prev. -0.3%)
• Chinese PPI YY (Feb) 1.7% vs. Exp. 1.5% (Prev. 0.3%)

UK/EU

EU nations, according to diplomats, are getting behind the Brussels’ plan to launch legal action against the UK over its decision to unilaterally ease the impact of Brexit on Northern Irish businesses. (FT)

FX

In FX markets, DXY nursed some of the prior day’s weakness after briefly slipping beneath 92.00 which was mostly due to gains in stocks and easing of yields during Wall St hours, while focus remained on Congress where President Biden’s USD 1.9tln relief bill passed the procedural hurdle in the House as expected which paves the way for a 2-hour debate and final vote on Wednesday morning. EUR/USD was choppy beneath 1.1900 as price action reflected shifting tides in the greenback, while GBP/USD retreated after a failed attempt to reclaim 1.3900 status and as cross-Channel tensions brew with EU nations said to be getting behind Brussels’ plan to launch legal action against the UK for easing the impact of Brexit on Northern Irish businesses. USD/JPY recouped some of yesterday’s lost ground but remained below the 109.00 handle and antipodeans were weaker following comments from RBA Governor Lowe who stuck to a dovish tone and reiterated that rates will stay at 0.1% until inflation is in the 2-3% band. Furthermore, Lowe also noted that the RBA does not share market expectations for rate increases in 2022 or 2023 and that the board will consider the case for extending the bond purchases program later in the year, while the RBNZ earlier announced to withdraw some of the temporary liquidity facilities that were launched due to the pandemic but added that it will not have implications on its monetary policy stance.

RBA Governor Lowe said rates will stay at 0.1% until inflation is in the 2%-3% band and that the RBA does not share market expectations for rate increases in 2022 and 2023, while he added the board will consider the case for extending the bond purchases program later in the year. Lowe also stated they are not mulling removing the 3yr yield target nor changing it from 10bps and that he would be comfortable with a weaker AUD but cannot say the currency is overvalued. Furthermore, Lowe commented that they are doing a large amount of QE already and it is sensible to see how the economy develops before deciding on further QE. (Newswires)

RBNZ stated they will be withdrawing some of the temporary liquidity facilities set up during the COVID pandemic but added it will have no implications for its monetary policy stance. (Newswires)

SNB Vice Chairman Zurbruegg said he welcomes the recent CHF weakening and that it is premature to talk of long-term adjustment in rates. Zurbruegg also stated that negative rates and FX interventions remain necessary, while he added that the SNB spent CHF 100bln in the past year on FX interventions. (Newswires)

COMMODITIES

Oil prices were subdued as they continued to pullback from the multi-year highs seen at the start of the week and amid several bearish factors including the ongoing resumption of refineries in Texas and with the latest EIA STEO report lowering forecasts for global demand growth for this year by 60k BPD to 5.32mln BPD Y/Y increase but lifted its forecast for next year by 330k BPD to a 3.83mln BPD Y/Y increase. In addition, the private sector inventory data showed a much larger than expected build in headline crude stockpiles, although the immediate reaction to this was muted with the figures attributed to distortions from the recent refinery shutdowns across the US Gulf Coast. Gold prices traded sideways but held above the USD 1700/oz level, while copper was stuck around the USD 4.00/lb level amid some indecision during Asia-Pac trade and with continued pressure on Dalian iron prices which slumped over 5% shortly after the open.

US Private Inventory Data w/e March 5th (bbls): Crude +12.8mln (exp. +0.8mln), Cushing +0.3mln, Gasoline -8.5mln (exp. -3.5mln), Distillate -4.8mln (exp. -3.5mln). (Newswires)

EIA STEO cut 2021 world oil demand growth by 60k BPD to 5.32mln BPD Y/Y increase and raised 2022 world oil demand growth by 330k BPD to a 3.83mln BPD Y/Y increase. (Newswires)

Saudi Arabia February crude exports including Neutral Zone supplies fell 4% M/M to a seven-month low of 5.84mln BPD as Riyadh set out to implement its 1mln BPD cut below the OPEC+ quota. (Argus Media)

UAE's Adnoc set April Murban Crude OSP at a premium of USD 1.05/bbl to Platts Dubai. (Newswires)

GEOPOLITICAL

US senior official said a strategic review of policy regarding North Korea is expected to be completed in a month or so. (Newswires)

A senior Democratic senator expects the US to unveil further sanctions targeted at preventing construction of the Nord Stream 2 pipeline. (Newswires)

US

Treasuries held their bid on Tuesday after a solid 3-year auction saw traders lift offers across the curve after some mid-session weakness. By settlement, 2s +0.4bps at 0.167%, 3s -0.8bps at 0.331%, 5s -3bps at 0.820%, 10s -5bps at 1.544%, 30s -4.7bps at 2.257%; TYM1 volume above 1.7mln contracts. The TIPS curve bull-flattened with BEIs little changed (modestly wider at the long-end). Treasuries were bid out of Asia, as desks noted the presence of real money buys from the region as the US 10-year hovered around the 1.60% mark. There was also some chunky block buys at the CME futures open attributed to a mix of short-covering and fresh longs in duration from hedge fund types. There were also some block buys up to the five-year maturity later in the US morning. However, traffic was not one way lower in yields, where a high offer-to-cover ratio on the Fed's 7- to 20-year buyback operation (which was concentrated in the 20-year sector) leading to some broader weakness duration. Yields then hovered sideways up into the 3-year auction. The auction was solid: tailing by 0.4bps, covered 2.69x (vs avg. 2.39x), dealers took less than average thanks to a big takedown from directs, although indirects (proxy for foreign demand) was slightly soft. The short-duration offering was something of a "sigh of relief" for the whole Treasury curve after the complete breakdown of non-dealer community participation in last month's 7-year auction. Part of that demand is likely investors seizing the attractive carry/roll attributes of the 3-year, which offers double the yield of the 2-year. Following the auction, bidders re-emerged across the whole curve, lifting offers back towards session highs in T-Notes. Traders now look more attentively to Wednesday's 10-year offering and CPI data, before the long-bond auction on Thursday. T-note (H1) futures settled 13+ ticks higher at 132-09+.

US President Biden's USD 1.9tln COVID-19 relief bill cleared the procedural hurdle in the House, as expected, while the House will begin to debate the relief bill for 2 hours beginning at 09:00EST before conducting a vote. There were also separate reports that Progressive Democrats will support the COVID-19 relief bill which will ensure its passage, while the White House Press Secretary said reconciliation isn't off the table for the infrastructure bill. (Newswires/Fox News)

US Treasury Secretary Yellen said the Treasury will work to deploy USD 350bln in COVID-19 aid to states and local governments in the quickest way possible and by year-end, city economies will resemble 2019 much more than 2020. (Newswires)