• Equity indices are softer this morning in Europe as are US futures, ES -0.6%, NQ -1.8%, as tech pulls back from yesterday's gains with yields gaining ground
• Pressure in the space has been evidenced since the European cash open as US 10yr yields advanced to 1.6140% session highs thus far; elevating the DXY to near-92.00
• Sentiment was mixed in APAC trade with China bourses weighed on trade tensions from multiple perspectives
• WHO spokesperson says there is no indication to not use the AstraZeneca (AZN LN) vaccine
• Looking ahead, highlights include US PPI, Canadian jobs report, University 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)

AstraZeneca (AZN LN) expects to 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. Elsewhere, a WHO spokesperson says there is no indication to not use the AstraZeneca (AZN LN) vaccine. (Newswires)

German Health Agency says that the nation is at the start of the third wave of COVID-19; case numbers have been too high for a while now. Separately, Italy is to impose a nationwide lockdown over the Easter weekend, according to a draft decree and will be enforcing tighter curbs in low-risk areas as of Monday. (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)

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 (-2.2%) and Shanghai Comp. (+0.5%) 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 Secretary of State Blinken 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)

BoJ is likely to insert clearer guidance in its upcoming policy statement next week on what it regards as acceptable levels of fluctuations for long-term yields, according to sources. (Newswires)

US

US President Biden 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)

US 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)

UK/EU

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)

UK GDP Estimate MM -2.90% vs. Exp. -4.90% (Prev. 1.20%); YY -9.20% vs. Exp. -10.90% (Prev. -6.50%)

• 3M/3M -1.70% vs. Exp. -2.50% (Prev. 1.00%)

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)

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)

ECB's Villeroy says ECB will maintain accommodative monetary policy as long as needed, there is no danger now of Europe overheating, there will be flexibility at all levels on bond purchases. (Newswires)

EQUITIES

Equities in Europe have been drifting lower since the cash open (Euro Stoxx 50 -0.6%) in a reversal of the notable upside seen this week, and as the region failed to grapple onto the mostly positive APAC handover. The pressure across stocks is seemingly emanating from the increase in yields after US President Biden unsurprisingly signed the COVID relief bill into law and 30yr issuance, with the US 10yr oscillating around 1.60% and in turn weighing on US equity futures, namely the tech-laden and growth-heavy NQ (-1.7%) following this week's impressive rebound from technical correction territory. Back to Europe, news flow has remained light as attention remains on yield action, with European bourses modestly softer, but with losses less dire vs State-side futures. FTSE MIB (-0.3%) upside is capped by reports of fresh lockdown measures across Italy, whilst the IBEX (-0.1%) is cushioned by its banking exposures. Sectors in Europe are mostly lower but Banks reap rewards from the higher yields and thus outperform. In-fitting with the NQ performance, Tech resides at the foot of the pile. Autos are also pressured as DAX-heavyweight Daimler (-2.3%) is subdued after Renault (-0.4%) announced the successful sale of its entire Daimler Stake (1.54%) at EUR 69.50/shr, whilst Daimler is also to recall 2.6mln Mercedes-Benz vehicles in China, according to the Chinese Market Regulator. In terms of individual movers, Barclays (+2.2%) is bolstered by an upgrade at Goldman Sachs coupled with the high-yield environment, whilst Deutsche Bank (+0.6%) also sees some positive omens from a reaffirmation of its earnings. Burberry (+7%) stands as the European outperformer as the boost in Asia sales had been strong enough to lift its annual profit forecasts. On the flip side, Berkeley Group (-6.5%) plumbs the depths as the group anticipates the value of reservations to be some 20% lower Y/Y.

Tesla (TSLA) and Tata Power are said to be exploring an arrangement on charging infrastructure, with talks reportedly at very early stages. (CNBC)

FX

USD - If there was any doubt about the power of yields in terms of an overarching force, the abrupt turnaround in direction for the Greenback and broad risk sentiment should remove all uncertainty. However, the catalyst for the latest reversion to bear-steepening in US Treasuries and other global bonds is less clear-cut, as the 30 year auction was not a flop and the fact that President Biden signed off on stimulus a day earlier than initially anticipated is neither here nor there, albeit cheques and direct back account credits will arrive more promptly. Hence, the rationale may actually lie elsewhere given a sharp fall from grace in Eurozone debt after a brief PEPP boost and even more pronounced reversal in UK Gilts in wake of mostly better than forecast data and details of Q2 DMO issuance. Moreover, the Buck may be benefiting from some supportive technical factors as the DXY stages an impressive comeback from 91.396 to 91.956 and back above 91.740 that remains a key pivot on many charts. Ahead, PPI data and the first look at Michigan sentiment for March.

CHF - Far from alone in context of literally yielding to the resurgent Dollar, but bearing the brunt after reinforcement from the SNB that negative rates and intervention are essential to curb Franc strength. Usd/Chf is over 0.9300 again and Eur/Chf probing 1.1100 to the upside.

NZD/AUD - Little chance for the Kiwi to appreciate a further easing of COVID-19 restrictions in Auckland as Nzd/Usd retreats from circa 0.7233 towards 0.7170 and Aud/Nzd edges closer to 1.0800 even though the Aussie is also flagging against its US peer having touched 0.7800 before waning to sub-0.7750. At this stage, more decent option expiry interest in the cross at the 1.0730 strike (1.3 bn) looks safe, but Aud/Usd is currently at the lower end of 0.7745-60 expiries (1.2 bn) and not too far from similar size sitting between 0.7725-20 (1.1 bn).

EUR/JPY/GBP - The Euro remains very volatile in wake of Thursday’s ECB policy meeting and unexpected QE shift designed to keep financing conditions favourable in the face of higher yields, if not put a lid on long term rates explicitly. Eur/Usd is now trying to retain hold of the 1.1900 handle after getting to within a whisker of yesterday’s 1.1990 high that aligned with a Fib retracement from recent peak to y-t-d low (38.2% of the move from 1.2243-1.1836 to be precise). Note also, heavy option expiry interest protects the upside as 2.6 bn sits from 1.1995 to 1.2000, while 1 bn at 1.1930 may offer the Euro some support. Elsewhere, the Yen is eyeing Tuesday’s 2021 trough after falling through 109.00 again and failing to extend beyond 108.50 every day so far this week or gleaning any lasting traction from the numerous BoJ reports via sources touting clarity around YCT at the upcoming policy review meeting. Conversely, the BoE is still more inclined to let the market determine the path for yields, but Cable has been unable to breach 1.4000 convincingly for psychological reasons and a major Fib level in keeping with the Euro, as 1.4010 represents a 50% retracement of the fall to 1.3779 from 1.4240.

CAD - Another rebound in crude prices has helped the Loonie resist Greenback advances to a degree, as Usd/Cad straddles 1.2550, but Canadian jobs data looms hot on the heels of the BoC’s Economic Progress Report that essentially echoed Wednesday’s policy meeting assessment of the economy and outlook.

EM - Almost all change, as the return to higher yields and a firmer Usd undermines sentiment, but the Try is handing back more ground than most as Turkey continues rail against US pressure on purchases of missiles from Russia and latest CBRT forecasts reveal an appreciably weaker Lira by year end and higher inflation.

Notable FX Expiries, NY Cut:

• EUR/USD: 1.1900(574M), 1.1930 (1BLN), 1.1940-50 (475M), 1.1995-1.2000 (2.6BLN)
• AUD/USD: 0.7690 (520M), 0.7720-25 (1.1BLN), 0.7745-60 (1.2BLN)
• AUD/NZD: 1.0730 (1.3BLN)

FIXED

It looks like US Treasuries are on the brink of another downturn that is almost bound to drag EU debt lower in sympathy after a period of sideways trade and a chance to nurse losses. Indeed, the 10 year T-note is hovering only a fraction above worst levels at 131-29 vs 131-28+, while Bunds sit at 171.26 vs 171.17 at the Eurex low and Gilts are back down near 128.00 vs a marginally higher 128.20 Liffe recovery high. Some pre-weekend short covering may offer a lifeline, but it could be a very bad end to Friday’s session.

COMMODITIES

WTI and Brent front month futures have nursed overnight losses despite a distinct lack of pertinent news, but potentially on the aforementioned reflation/fiscal narrative. WTI May has returned to its pre-APAC level above USD 66/bbl (vs low USD 65.40/bbl), whilst its Brent counterpart gains further ground north of USD 69.75/bbl (vs low USD 69.03/bbl). The only notable news thus far emanated from Saudi Aramco who lowered oil supplies to some Northern Asian purchasers in April, according to sources, and maintained average monthly oil supply to Indian refineries in April, rejecting calls for additional volumes. Elsewhere, precious metals bear the brunt of rising yields and a firmer Buck, with spot gold briefly giving up the USD 1,700/oz in early European trade (vs high USD 1,728/oz), whilst spot silver trades subdued on either side of USD 25.50/oz. Turning to base metals, LME copper future are pressured by the overall downbeat tone and firmer Buck, with the red metal briefly dipping below USD 9,000/t. Finally, Dalian iron ore futures saw another session of losses amid the ongoing pollution-curbs imposed by China's top steel-making city Tangshan.

Saudi Aramco has maintained average monthly oil supply to Indian refineries in April, rejecting calls for additional volumes, according to sources; lowered oil supplies to some Northern Asian purchasers in April, according to sources. (Newswires)