• Indices are mixed but largely contained on the session with US futures mixed and somewhat pressured ahead of US' arrival and as yields err higher with focus on CPI later; ES -0.1%
• DXY briefly dipped below 92.00 but has since regained the figure with peers a touch softer but rangebound
• 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
• Chinese inflation data was firmer than expected but still showed CPI Y/Y in negative territory at -0.2% vs. exp. -0.4%
• Looking ahead, highlights include US CPI, BoC rate decision, DoEs, supply from the US

CORONAVIRUS UPDATE

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

BioNTech (BNTX) sees the potential to supply 3bln COVID-19 vaccine doses in 2022. (Newswires)

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 (+0.5%) and Shanghai Comp. (U/C) were kept afloat for the most part 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)

• 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%)

Chinese M2 Money Supply YY* (Feb) 10.1% vs. Exp. 9.4% (Prev. 9.4%)

• New Yuan Loans* (Feb) 1360B vs. Exp. 950.0B (Prev. 3580.0B)
• Outstanding Loan Growth* (Feb) 12.9% vs. Exp. 12.7% (Prev. 12.7%)

China is reportedly considering tighter rules around first time share sales on the STAR board. Including a requirement for Co's to prove their technology credentials. (Newswires)

US

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)

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)

EQUITIES

Stocks in Europe are trading mostly positive (Euro Stoxx 50 +0.2%) after experiencing somewhat of a lacklustre open after the region took the wheel from a choppy/mixed APAC session. US equity futures meanwhile traded in the green before trimming the mild gains, with some outperformance in the more value-driven RTY and YM vs the tech-laden NQ, albeit the divergence is modest ahead of key risk events including US CPI and arguably the more-important US 10yr auction ahead of tomorrow's ECB confab. Elsewhere on the fiscal front, the Senate's USD 1.9tln COVID bill is expected to pass through the House today before landing on President Biden's desk to be signed into law. Thus, some suggest this could translated to another bout of flows for some of the Reddit stocks in upcoming sessions. Back to Europe, UK's FTSE 100 (Unch) resides as the laggard, albeit the index has narrowed the gap vs some of its EZ counterparts, albeit gains remain capped by Sterling dynamics. The index experienced a bout of weakness at the start amid losses across mining and oil names, albeit this has since been trimmed. Sectors in Europe are relatively mixed with no real biases, with consumer discretionary driving the gains amid earnings from Adidas (+5.8%) who resides as one of the top performers after stellar metrics and amid anticipation for revenue to increase in all market segments, with competitor Nike (+0.8%) modestly firmer pre-market. On the flip side, Tech and Materials are the laggards with the latter pressured by the slide in iron ore prices and the former taking a breather from yesterday's firm performance, although source reports overnight also suggested that Apple (-0.2%) is planning to reduce its planned iPhone 12 mini amid weaker-than-expected demand. In terms of other moves, Spanish heavy-weight Inditex (-0.7%) is softer post earnings after missing analyst forecasts. Meanwhile, ABN AMRO (-3.0%) slid lower as it is poised to get relegated from the AEX (+0.1%) alongside Galapagos (-1.5%), and replaced with BE Semiconductor (+0.4%) and Signify (+0.5%) - with the changes effective from 22nd March.

Russian Communications Watchdog has placed restrictive measures on Twitter (TWTR) due to its failure to remove illegal content, labels information being disseminated by the Co. as a threat; if demands are ignored, Twitter could be blocked. (Newswires)

FX

DXY - After Tuesday’s fall from grace, the Dollar seems to have settled down and looks content to bide time before US CPI and external events that could have an indirect impact, like the BoC policy meeting and ECB later today and Thursday respectively. Indeed, the index found underlying bids just shy of 92.000, at 91.967 vs yesterday’s 91.906 low and is now meandering either side of the new pivot level, with some external support from renewed weakness in certain major rivals that helped push the DXY up to 92.243 at one stage.

AUD/CAD - The Aussie has pared some overnight losses, but is looking less assured above 0.7700 and 1.0750 vs its US and NZ counterparts amidst a sharp decline in iron ore prices and dovish commentary from RBA Governor Lowe who reaffirmed rate guidance and said that that the Board will decide whether to extend QE further later this year. Moreover, he categorically stated that market expectations for hikes next year and in 2023 are not in line with the Bank’s view of no tightening until at least 2024. Meanwhile, a different kind of double whammy for the Loonie as oil prices retreat further from recent heady heights (WTI not far from Usd 63/brl vs just 2 cents shy of Usd 68, and Brent Usd 66.50 compared to Usd 71.38 on Monday) and Usd/Cad pivots 1.2650 in cautious trade ahead of the aforementioned BoE confab – full preview in the Research Suite.

CHF/JPY - No surprise to hear that SNB’s VC Zurbruegg is pleased with recent Franc depreciation, especially as the cost of curbing its strength over the last 12 months is estimated at Chf 100 bn. However, Usd/Chf reversed from circa 0.9375 through 0.9300 before basing again and Eur/Chf is straddling 1.1050 having topped 1.1100. Similarly, the Yen is maintaining recovery momentum around 108.70 falling through 109.00, but not to the extent to sustain gains beyond 108.50.

GBP/EUR/NZD - Sterling is a marginal G10 performer, albeit unable to extend beyond 1.3900 vs Greenback far enough to test Tuesday’s best (1.3925) or the 21 DMA just above (1.3931 today), while also waning on approaches to 0.8550 against the Euro even though the single currency is finding 1.1900 tough to retrieve relative to the Buck in the run up to the ECB. Elsewhere, the Kiwi is hovering above 0.7150 vs its US peer pre-NZ FPI and post-RBNZ Governor Orr announcing that some coronavirus liquidity provisions will be withdrawn.

SCANDI/EM - The Nok has weathered the latest pull-back in crude pretty well to keep its head above par vs the Sek and on an even keel with the Eur around 10.0800 on the back of firmer than forecast Norwegian headline inflation that offset a slightly softer than expected core. The Cnh and Cny are also gleaning some support from Chinese CPI, albeit y/y rate still sub-zero, while the Try has shrugged off a jump in Turkish unemployment amidst relief that imported oil costs have fallen quite sharply.

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)

FX Expiries, NY Cut:

• AUD/USD: 0.7600-05 (789M), 0.7720-25 (887M), 0.7750-55 (1.1BLN)
• EUR/USD: 1.1950 (669M), 1.2000-10 (1.3BLN)
• USD/JPY: 106.80-90 (610M), 107.25-30 (631M)

FIXED

It could be just caution ahead of US CPI, the BoC and then ECB that constitute this week’s highlights, aside from final votes on fiscal relief in Washington, but supply may also be a factor behind the retreat in core bonds given a looming 10 year T-note issuance and German/UK taps that were somewhat mixed. Probably a combination of factors, as Bunds, Gilts and Treasuries hover off worst levels within 171.39-07, 128.81-60 and 132-15+/132-05 intraday ranges.

COMMODITIES

WTI and Brent front month futures have nursed the pressure seen during APAC hours, which emanated from the significantly larger-than-expected and Texas-distorted build in Private Inventories (+12.8mln vs exp. +0.8mln), coupled with some questions as to whether the OPEC+ discipline will continue beyond April. Furthermore, the EIA STEO provided the complex with some downbeat omens after it cut 2021 world oil demand growth by 60k BPD but raised 2022 world oil demand growth by 330k BPD. However, prices since the European open have been climbing despite a distinct lack of news-flow, but more-so in tandem with the broader gains across stocks and the easing Buck. WTI now trades on either side of USD 64/bbl (vs low 63.13/bbl) whilst its Brent counterpart sees itself on either side of USD 67.50/bbl (vs low USD 66.50/bbl). Looking ahead, desks will be on the lookout for the US CPI metrics for some inflation/sentiment driven action, followed by the weekly EIA Inventories (Crude exp +0.816mln bbls), with further risk surrounding the US 10yr auction which could tap into traders' future inflation expectations. Elsewhere, spot gold and silver are relatively uneventful within tight ranges around USD 1,715/oz and on either side of USD 26/oz awaiting direction from the aforementioned risk events. Over to base metals, LME copper advanced amid the more constructive risk tone coupled with a softer Buck. That being said, a Shanghai copper brokerage that accumulated bullish bets valued at over USD 1bln has reportedly cut its position by almost 25%. Finally, Dalian iron ore futures overnight sunk in a continuation of the downside seen after pollution-controlling measures were imposed on China's largest steel-making city Tanghsan.

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)

Russian Foreign Minister Lavrov says they intend to develop cooperation with Saudi in OPEC+ as it yields results; current oil price more/less reflects balance between producers and consumers; OPEC+ will attempt to ensure there are no sharp oil price swings. (Newswires) Amid similar commentary from his Saudi counterpart

Commerzbank forecast copper averaging USD 8.65k/T in 2021 and USD 8.35k/T in 2022; aluminium USD 1975/T in 2021 and USD 1725/T in 2022. Nickel: USD 17.7k/T in 2021 and USD 19.3k/T in 2022. Zinc: USD 2.8k/T in 2021 and USD 2.775k/T in 2022. (Newswires)

UBS forecasts platinum reaching USD 1,300/oz over the next 12 months; cites undersupplied market in 2021. (Newswires)