• Asian equity markets mostly took impetus from the gains on Wall Street where the S&P 500 and the DJIA notched fresh record highs, Nasdaq outperformed
• US President Biden signed the USD 1.9tln COVID-19 relief bill, as expected. Direct deposits could be received by US citizens this weekend
• US State Department spokesman said the US will not pull any punches in areas of disagreement with China
• The DXY recouped some of yesterday’s losses after briefly declining beneath 91.50. US yields have picked up ahead of the EU open
• ECB does not intend quicker bond-buying to lead to further stimulus, according to sources
• Looking ahead, highlights include UK GDP, US PPI, Canadian jobs report, Uni. of Michigan

CORONAVIRUS UPDATE

US COVID-19 cases +60,264 (prev. +52,815), deaths +1,513 (prev. +1,503), vaccines administered 98.2mln (prev. 95.7mln). There were also separate reports that LA County issued reopening guidelines for cinemas. (Newswires)

Novavax (NVAX) confirmed its vaccine showed 96.4% efficacy against the original COVID-19 strain and demonstrated 100% protection against severe disease in the UK and South Africa trials. Furthermore, the efficacy of its vaccine against the variant circulating in the UK was at 86.3% but was just about 55% against the South African variant. (Newswires)

Pfizer (PFE) CEO said they are very confident the Co. and BioNTech (BTNX) can produce up to 2.4bln doses of its vaccine globally by year-end which is up from the prior 2bln estimate, while they expect to be able to supply US with 120mln doses by the end of March and for the run rate to be at 3bln vaccine doses a year in 2022. (Newswires)

Johnson & Johnson (JNJ) aims to begin delivering its vaccine to the EU in the latter half of April and is committed to supplying 200mln doses in 2021. There were also comments from its chief scientist that the Co. anticipates making more than 2bln and possibly 3bln vaccine doses in 2022, while an executive stated they are making the manufacturing plant in the Netherlands bigger which they aim to have completed by summer and are hopeful to deliver 55mln doses to the EU in Q2. (Newswires)

AstraZeneca (AZN LN) may deliver less than half the vaccines the EU expects between April and June which would be 76mln vs 180mln expected. Co. also expects delivery of about 30mln doses of COVID-19 vaccines to the EU for Q1 which is lower than the previous forecast of 40mln and it expects to deliver 20mln doses in April as part of its contract which anticipates 180mln doses in Q2. (Newswires)

Thailand halted the use of AstraZeneca's (AZN LN) vaccine following blood clot reports in Europe. In relevant news, Canada's Health Ministry said it is aware of the adverse events in Europe concerning the AstraZeneca vaccine but noted the benefits outweigh the costs and that there is no indication that the vaccine caused the adverse events, while it added that none of the batches in question were sent to Canada. (Newswires)

French Health Minister said the health situation in greater Paris is particularly concerning and the infection rate is close to what it was at the start of the second wave, while the Health Minister also stated the current COVID strains are more contagious and dangerous hence responsible for increased ICU cases than the original variant of the virus. (Newswires)

New Zealand PM Ardern announced Auckland will exit distancing restrictions and will move to alert level 1 at midday. (Newswires)

ASIA

Asian equity markets mostly took impetus from the gains on Wall Street where the S&P 500 and the DJIA notched fresh record highs as sentiment was supported by incoming stimulus after US President Biden signed the USD 1.9tln COVID-19 relief bill and with outperformance in the Nasdaq amid a resurgence of the tech sector. ASX 200 (+0.8%) was positive with the gains in Australia led by tech stocks which found inspiration from their stateside counterparts and with strength across commodity-related sectors. Nikkei 225 (+1.7%) continued to coat-tail on currency moves and with speculation rife ahead of next week’s BoJ meeting with rumours that the BoJ plans to scrap its ETF target which is currently at JPY 6tln annually with a ceiling of JPY 12tln. Hang Seng (-0.7%) and Shanghai Comp. (+0.2%) lagged as US-China tensions persisted ahead of next week’s high-level meeting, with the US planning to address Uighur genocide and Secretary of State Blinken also stated the US condemns China's assault on democracy in Hong Kong. Furthermore, the US placed fresh restrictions on licenses for some Huawei suppliers in which it informed suppliers that Huawei licenses are not valid for 5G use and participants also digested weak earnings results including AIA Group, China Unicom and MTR Corp. Finally, 10yr JGBs traded rangebound with demand sapped by gains in Japanese stocks although downside was also cushioned by the BoJ’s presence in the market today for a total 950bln of JGBs with varying maturities.

PBoC injected CNY 10bln via 7-day reverse repos with the rate kept at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY at 6.4845 vs exp. 6.4872 (prev. 6.4970)

US State Department spokesman said the US criticizes China's persistent assault on democracy in Hong Kong and there will be tough conversations held next week, while the US will not pull any punches in areas of disagreement with China and will be honest in illustrating how Beijing's actions challenge the security and prosperity of US and its allies. Furthermore, the spokesman added US is not looking to partake in the meeting for the sake of having talks with China, although conversations do not have to be adversarial and there will be occasions to bring up possible areas of cooperation. There were also comments from the White House that the US will address the Uighur genocide in next week's meeting with Chinese officials and Secretary of State Blinken later stated that the US condemns China's assault on Democracy in Hong Kong. (Newswires)

EU is set to target China with sanctions for the first time since the Tiananmen Square crackdown by blacklisting four people and one entity over human rights abuses in Xinjiang, while the EU also threatened additional measures against China regarding the Hong Kong vote. (Newswires/WSJ)

US placed fresh restrictions on licenses for some Huawei suppliers and informed suppliers Huawei licenses are not valid for 5G use. (Newswires)

UK/EU

UK ministers intend to overhaul capital markets rules, specifically Mifid II, in efforts to counter fears the City is losing competitiveness against rivals and are looking to change rules to make it easier for banks to hold capital, while ministers are also planning a more wide-ranging review of UK financial markets to discard other EU standards. (FT)

UK PM Johnson on Sunday will make it clear that he will not grant a second Scottish independence referendum, even in the event that the SNP wins a majority in the May elections. (Telegraph)

EU governments are said to be examining ways to pressure the UK to adhere to post-Brexit obligations and some of the bloc's capitals have conducted informal discussions on further measures to retaliate for UK 'provocations'. (FT)

ECB does not intend quicker bond-buying to lead to further stimulus and policymakers will spend more now but plan to pull back later, while the majority of the Governing Council are said to not be worried by yield gains, according to sources. (Newswires)

EU leaders are expected to “confirm readiness to move forward” on introducing a new tax on Big Tech if a “global solution” continues to look unlikely, according to draft guidelines for their conclusions at the summit in two weeks time. (Politico)

FX

In FX markets, the DXY recouped some of yesterday’s losses after having briefly declined beneath 91.50 as US stock markets rose to unprecedented levels and after yields slightly eased following the result of the 30yr auction stateside which was tepid but allayed concerns that it may follow the dismal 7-year auction seen late last month which at the time, had stoked the vicious bond selling. Price action in EUR/USD was at the whim of the USD fluctuations with the single currency paring back recent gains to revert to levels seen before the ECB meeting. Source reports later noted that bond-buying is not intended to lead to further stimulus. GBP/USD marginally pulled back due to the firmer USD and after the pair hit resistance at 1.4000 and USD/JPY was supported amid the mostly positive risk tone, while antipodeans were kept rangebound amid the lack of pertinent data releases and despite New Zealand PM Ardern’s announcement to lift social distancing restrictions in Auckland.

COMMODITIES

Commodities were uneventful overnight with a mild pullback seen in WTI crude futures to below the USD 66.00/bbl level following yesterday's gains which were driven by the heightened risk appetite for stocks, incoming stimulus stateside and the OPEC 2021 demand forecast in its MOMR. Elsewhere, gold prices marginally softened as the greenback recouped losses although precious metal remained above the USD 1700/oz level, while copper was also lacklustre as sentiment in its largest purchaser China lagged regional peers.

US

Curve spreads were steeper - aside from 2s5s - amid concession into the 30-year bond offering and the chunky Verizon dollar deal, with a dovish ECB ultimately looked through by USTs. By settlement, 2s -1.4bps at 0.143%, 5s -1.4bps at 0.778%, 10s +1bps at 1.528%, 30s +4bps at 2.282%; TYM1 volumes at 1.8mln. Short TIPS yields fell while long TIPS yields rose. USTs had been catching a bid out of Europe, only to accelerate after the ECB said it would "substantially" raise the pace of its PEPP programme, seeing spillover from the strong bid in EGBs. However, the tide soon turned after Verizon announced a USD 25bln 9-part jumbo deal. There had been a slew of chunky selling across the futures curve, in addition to widening swap spreads, linked to dealers making room for the corporate deal, which is the largest of 2021 so far, also matching 2020's record deal from Boeing (BA). The selling was acute for a few hours but eventually subsided as Europe began closing shop. Yields then traversed sideways into the USD 24bln 30-year Treasury bond auction. Similar to Wednesday, the long-bond auction was slightly lacklustre, at least by auction standards: tailed 0.5bps, covered 2.28x (vs avg. 2.34x), while dealers took less than average, although indirect (foreign demand) was again disappointing, with domestic real money accounts stepping up instead. However, yields actually knee-jerked lower after the results, with a similar rationale to Wednesday: a horrible auction (like February's 7-year) was averted. Yields moved slightly higher gradually into the settlement, however. T-note (M1) futures settled 2+ ticks higher at 132-19+.

Fed's Q4 2020 Financial Account stated that US Household net worth increased to USD 130.2trln in which stock market gains added USD 4.9trln and real estate ~ USD 900bln. Furthermore, household debt grew at 6.5% annual rate in Q4 20 vs 5.7% in Q3 and non-financial business debt rose at 0.8% annual rate vs 0.5%. (Newswires)

US President Biden signed the USD 1.9trln COVID relief plan and later stated that total US deaths from COVID-19 stood at 527,726, while he confirmed to make all adults eligible for vaccine shots by May 1st and that they are on track to reach the goal of 100mln vaccine doses by his 60th day in office. (Newswires)

White House said direct deposits from the COVID-19 stimulus bill will come as soon as this weekend, while Treasury Secretary Yellen separately commented that the stimulus package is the correct size and that some will receive the USD 1,400 payments this weekend. (Newswires)

US Democrats are reportedly looking to terminate some tax incentives created by former US President Trump and offer no tax breaks for outsourcing act, while there were separate reports that 3 Senators introduced a bill to extend PPP. (Newswires)

US Democrats suggested a gas tax hike, VMT tax and corporation tax hike as methods to raise revenue for the infrastructure bill, while the GOP suggested carbon tax and diversifying the highway trust fund although told Democrats to go for it alone if they are going to have green energy and climate initiatives involved. (Newswires)