• Asia-Pac bourses traded mostly positive as the region built upon the somewhat mixed performance stateside
• The DJIA posted fresh record highs whilst tech suffered from a continued rotation into value
• ECB draft forecasts assume only a fleeting jump in inflation and that savings will not fuel a spending boom, according to sources
• The House passed the USD 1.9tln COVID-19 relief bill as expected; President Biden is set to sign it on Friday
• In FX, the DXY remained subdued below 92.00, EUR/USD and GBP/USD sit on 1.19 and 1.39 handles respectively
• Looking ahead, highlights include the ECB policy announcement, US IJC, OPEC MOMR, supply from Italy & the US

CORONAVIRUS UPDATE

US COVID cases +52,815 (prev. +124,338), deaths +1,503 (prev. +845), vaccines administered 95.7mln (prev. 93.7mln). (Newswires)

New York Governor Cuomo said NY restaurants will likely expand to 50% capacity on March 19th, while New Jersey is also to raise indoor restaurant, gyms and barber shop capacity to 50% on March 19th. (Newswires)

South Korea approved AstraZeneca's (ANZ LN) COVID-19 vaccine for those aged 65 and over. (Newswires)

A Sao Paulo official stated the Sinovac COVID-19 vaccine is effective against the Brazilian variants, as well as UK and South African variants. (Newswires)

ASIA

Asia-Pac bourses traded mostly positive as the region built upon the somewhat mixed performance stateside where the DJIA posted fresh record highs whilst tech suffered from a continued rotation into value. ASX 200 (Unch.) opened higher with strength seen in airlines and tourism-related stocks after Australia’s government unveiled a AUD 1.2bln stimulus package focused on tourism including subsidized airfares for 800k domestic flights, although the gains in the index were later pared amid underperformance in tech and losses in the top-weighted financials sector as yields eased. Nikkei 225 (+0.6%) traded positive with exporters underpinned by a predominantly weaker currency and the KOSPI (+2.3%) was among the outperformers after strong early trade figures for this month which showed exports rose 25.2% Y/Y and imports increased by 31.4% Y/Y during the first 10 days in March. Hang Seng (+1.4%) and Shanghai Comp. (+1.9%) were also lifted after US and Chinese officials agreed to conduct a 2-day summit next week in Alaska where Secretary of State Blinken and White House National Security Advisor Sullivan will meet with Chinese Foreign Minister Wang Yi and Director of the Central Foreign Affairs Commission Yang Jiechu in what will be the first in-person meeting between US and Chinese senior representatives under the Biden administration, while the latest data releases from China also provided encouragement in which both New Yuan Loans and Aggregate Financing topped estimates. Finally, 10yr JGBs were initially subdued amid gains in stocks and with T-notes pulling back in the aftermath of a lacklustre 10yr government bond auction in US, although 10yr JGBs later gained on return from the lunch and following mixed results at the 20yr JGB auction which printed a higher b/c but weaker accepted prices.

PBoC injected CNY 10bln via 7-day reverse repos with the rate kept at 2.20% for a net neutral daily position. (Newswires) PBoC is expected to set USD/CNY mid-point at 6.5025 (prev. 6.5106)

Top US and Chinese officials will meet for a two-day summit next week in Alaska with Secretary of State Antony Blinken and White House National Security Advisor Jake Sullivan to meet with China’s Foreign Minister Wang Yi and Director of the Central Foreign Affairs Commission Yang Jiechu, which will be the first in-person meeting between senior representatives of the two countries since President Biden took office. Furthermore, an official stated the goal will be to compare notes on what each of our hopes and plans are for domestic politics, as well as what our goals are internationally, regionally and globally, while topics will include COVID-19, climate change and issues of disagreement including China’s stance on Hong Kong, pressure on Taiwan and the undeclared economic embargoes it has placed on Australia. (WSJ)

US Secretary of State Blinken said China should provide the world access to the Xinjiang region and that the Alaska meeting is an important opportunity to lay out US concerns, while he also stated the US will take steps against "egregious violations" of human rights in Hong Kong. (Newswires)

US and China semiconductor associations are to set up a work team and will communicate on export curbs, according to the China Semiconductor Industry Association. (Newswires)

MSCI (MSCI) will delete Advanced Micro Fabrication (688012 CH) from MSCI China All Shares citing the US executive order for deletion. It was also reported that S&P confirmed the removal of Luokung (LKCO) and Xiaomi (1810 HK) from indices on March 15th, while CNOOC (883 HK) filed a written request to the NYSE for a review of determination by committee of NYSE directors to reverse the determination to delist its American depositary shares. (Newswires)

South Korea March 1st-10th Exports rose 25.2% Y/Y, Imports rose 31.4% Y/Y and Trade Balance was at a deficit of USD 1.1bln. (Newswires)

UK/EU

UK RICS Housing Survey (Feb) 52 vs. Exp. 45.0 (Prev. 50.0, Rev. 49)

Over a third of UK manufacturers are said to have lost revenue since the UK left the EU and 74% of businesses are facing delays with exports and imports, according to a survey of over 200 leading industrial companies by manufacturing trade body Make UK. (FT/Guardian)

ECB draft forecasts reportedly assume only a fleeting jump in inflation and the forecasts assume savings will not fuel a spending boom, according to sources. (Newswires)

EU regulators are reportedly struggling to gather enough evidence to bring forward antitrust charges against Amazon (AMZN) in-spite of two-years work on the case; due to issues with understanding how the Co’s algorithm functions. (FT)

FX

In FX markets, the DXY traded subdued beneath 92.00 in the aftermath of the inline-to-soft US inflation data. Focus during the prior session was also on Congress where the House passed the USD 1.9tln COVID-19 relief bill as expected and which President Biden is set to sign on Friday, while there was increasing talk regarding an infrastructure bill which could be valued as much as USD 2.5tln over 4 years and with some expecting details to be leaked in the days ahead. EUR/USD remained near the prior day’s highs at the 1.1900 handle owing to a weaker greenback and as attention shifts to the looming ECB meeting later today with source reports suggesting ECB draft forecasts assume only a fleeting jump in inflation and that savings will not fuel a spending boom, while GBP/USD was also seemingly content to rest on its laurels after having reclaimed the 1.3900 status. JPY weakened overnight as the mostly positive risk appetite spurred haven outflows which helped USD/JPY alleviate some of the pressure brought on by recent source reports that the BoJ is to seek ways to enable yields to fluctuate more after its review while sticking with the current implicit band which allows +/-20bps movement from the 0% target. Antipodeans marginally extended on this week’s highs with AUD/USD eyeing 0.7750 and NZD/USD just about holds above 0.7200 amid the USD weakness, constructive risk tone and firmer PBoC reference rate setting.

COMMODITIES

WTI crude futures tested the USD 65.00/bbl level to the upside with prices underpinned amid ongoing stimulus optimism in the US. This helped oil prices recover from yesterday's gyrations which were triggered by misconstrued comments from Russian Deputy PM Novak and after the latest EIA data showed a much larger than expected build in crude stockpiles, which were offset by large draws in gasoline and distillates. Gold prices marginally extended above the USD 1700/oz level amid a lacklustre greenback and copper outperformed amid the stimulus developments and broad constructive mood.

Qatar set April marine crude OSP at Oman/Dubai + USD 0.90/bbl and land crude OSP at Oman/Dubai + USD 0.75/bbl. (Newswires)

Total (FP FP) Port Arthur, Texas Refinery (185k BPD) small crude unit restart is waiting on the return of gasoline unit, according to sources. (Newswires)

GEOPOLITICAL

UK PM Johnson told Iranian President Rouhani that Iran must seize the opportunity created by the US willingness to return to the nuclear accord, while he added the UK remains committed to the nuclear agreement and urged for Iran to halt all its breaches. (Newswires)

US

The belly led Treasury yields lower by a few bps on Wednesday after the soft CPI data kickstarted a short squeeze, where the lacklustre Treasury auction didn't alter the dial. By settlement, 2s -1bps at 0.157%, 5s -3bps at 0.791%, 10s -2.3bps at 1.521%, and 30s -0.9bps at 2.250%; TYM1 volumes decent at 1.7mln. Real yields were lower across the TIPS curve, with the 10-year BEI hitting its highest level since 2014 (above 2.26%). Heading into the US session yields had been rising modestly, with 10s reaching above the 1.56% figure. However, as core CPI prints for February came in beneath expectations, there was a knee-jerk higher in duration assets, seeing yields move lower. Desks were noting some chunky steepener block trades going through the futures market. IFR noted, "massive short-covering, hedge fund buys, momentum-type price chase and a blocked ultra-10yr buy led the late morning price spike in 10s". Yields continued to fall heading into the much-anticipated 10-year auction. The USD 38bln offering was lacklustre: tailed the 1.513% WI by 1bp, covered 2.38x (in-line with avg.), while dealers took more than average again after yet another lacklustre indirects turnout (proxy for foreign demand). The post-auction reaction was a mini spike higher in yields, before swiftly returning to lows as traders were satisfied (enough) with the mediocrity of the auction, so much as the horror show of February's 7-year offering was not present. Thursday's 30-year auction is next up. T-note (M1) futures settled 7+ higher at 132-17.

US House passed the USD 1.9trln COVID-19 relief bill, as expected, with the final vote count at 220-211 and the White House stated that President Biden will sign the COVID-19 stimulus bill on Friday afternoon. (Newswires)

US Treasury Secretary Yellen said it was a pivotal day for the US economy and we are now charting a very different course out of the crisis, while she added that this law will help clear away the immediate crisis in front of us and expects the US could reach full employment by as soon as next year. Furthermore, Yellen stated that the Treasury team will be doing everything it can to accelerate the recovery and it was also reported that the Treasury and IRS are working to get stimulus payments sent out this month, while White House Press Secretary Psaki later commented that Americans should receive stimulus checks this month and that President Biden wants the increase in child tax credit to be permanent. (Newswires)

US President Biden's second big bill may be a package of China-related measures pushed by Senate Democrat Leader Schumer and would likely include action on semiconductors, supply chains, US manufacturing and 5G although the infrastructure bill timing is unclear, according to Washington Post. (Twitter/Washington Post)

US President Biden is reportedly seeking a bank buy-in for a massive infrastructure spending program, according to sources. It was also reported that the infrastructure bill could be as high as USD 2.5trln over 4 years and there may be some public-private partnerships that could leverage government spending, while details will start to leak in coming days. (Twitter/Fox Business)