• European equity indices & US futures are firmer; E-mini S&P +0.2%
• DXY is firmer as peers trade mixed; EUR/USD and GBP/USD maintain 1.19 and 1.39 status respectively
• Oil has pared back from session highs to be near flat on the day. Precious metals trade somewhat choppy
• White House is expected to propose tax increases include raising corporation tax to 28% from 21%
• Looking ahead, highlights include ECB asset purchases & ECB's Centeno
• Note, following the US switching from EST to EDT, the time differential between London and New York will be 4-hours instead of 5 up until March 28th

CORONAVIRUS UPDATE

US CDC reported total COVID-19 cases rose to 29.23mln from 29.18mln the day before and total deaths rose to 531.8k from 530.7k the day before. (Newswires)

Johnson & Johnson (JNJ) Scientific Director Paul Stoffels said the Janssen COVID-19 vaccine will start being distributed in Europe from late April and that 200mln doses will reach the EU by the end of summer. (Le Journal du Dimanche)

Irish authorities recommended to temporarily pause the use of the AstraZeneca (AZN LN) COVID-19 vaccine amid reports of “serious blood clotting events” from the Norwegian Medicines Agency and the Netherlands also suspended the use of AstraZeneca's COVID-19 vaccine until at least March 29th. However, there were separate comments from the Medicines and Healthcare products Regulatory Agency that it is not confirmed that blood clots were caused by the vaccine and AstraZeneca also stated that safety data of people vaccinated in the UK does not show any evidence for increased risk of blood clots from its vaccine. (Newswires)

UK COVID-19 cases +4,618 (prev. +5,534) and deaths +52 (prev. +121), French cases +26,243 (prev. +29,759) and deaths +140 (prev. +169), while Italian cases +21,315 (prev. +26,062) and deaths +264 (prev. +317). (Newswires)

Every adult in the UK will be offered at least one COVID-19 vaccine jab by around June 10th which would be sooner than the government target of the end-July, while the EU is expected to achieve that by the first week of August, according to research firm Airfinity. (The Times)

Several EU countries including Austria, Czech Republic, Slovenia, Bulgaria and Latvia are demanding an EU Summit on what they claim is uneven distribution of COVID-19 vaccines in the bloc. (Newswires)

A decline in hospitalizations in the Tokyo region has allowed Japan’s government to plan lifting the state of emergency in the capital region by the expiry date of March 21 rather than extending it. (Sankei)

China discovered the first cases of a new COVID-19 variant in the Guangdong province. (SCMP)

UK's ONS has warned that a further wave of COVID-19 infections in autumn is inevitable despite early evidence of protection from vaccines. (Times)

The Dutch watchdog notes 10 reports of potential side effects after the AstraZeneca (AZN LN) vaccine was taken, according to a statement. (Newswires)

German ICU doctors are reportedly calling for an immediate return to partial lockdown measures, according to AFP. (Newswires)

ASIA

Asian equity markets traded mixed with the region tentative heading into this week's plethora of central bank announcements including from the Fed, BoE and BoJ, while the latest Chinese activity data showed a larger than expected increase in Industrial Production and Retail Sales although the tailwinds from the data were short-lived with the surge largely due to base effects. ASX 200 (+0.1%) was choppy as losses in tech and mining names were counterbalanced by strength in energy and defensives, while Nikkei 225 (+0.2%) was kept afloat after machinery orders showed surprise growth Y/Y and with a decline in hospitalizations for the Tokyo region said to allow the government to plan lifting the state of emergency for the capital region instead of extending it when it expires at the end of this week. Furthermore, Rakuten shares rocketed by around 20% in early trade to hit limit up after news the Co. plans a USD 2.2bln share sale to Walmart, Tencent and Japan Post for stakes of 0.9%, 3.6% and 8.3% respectively. Hang Seng (+0.3%) and Shanghai Comp. (-1.0%) were varied with the Hong Kong benchmark led higher by strength in energy names and with Xiaomi the biggest gainer after a US federal judge ordered a temporary halt on enforcing the US investment ban on the Co. The latest activity numbers from China were also encouraging as Industrial Production (35.1% vs exp. 30.0%) and Retail Sales (33.8% vs exp. 32.0%) topped estimates which helped the mainland bourse briefly pare early losses, although the recovery in the mainland was short-lived and the surges in the figures weren’t much of a surprise given the low base from a year ago when China industrial output suffered its sharpest pace of decline in 30 years due to virus-related shutdowns amid the peak of its COVID-19 outbreak. India's Sensex (-0.8%) fell below the 50k mark following disappointing data on Friday. Finally, 10yr JGBs are rangebound amid the tentative mood in stocks and with yields stable overnight, while the lack of BoJ purchases today also ensured quiet trade.

PBoC injected CNY 10bln via 7-day reverse repos with the rate maintained at 2.20% for a net neutral daily position and it also announced CNY 100bln marginal lending facility operation with the rate maintained at 2.95%. (Newswires) PBoC set USD/CNY mid-point at 6.5010 vs exp. 6.4999 (prev. 6.4845)

China NBS said China's economic recovery is not solid yet and positive factors for the domestic economy are increasing, while it added the economy is still in the recovery process and that China's economy could show a sharp rebound in Q1 from the prior year but also noted imbalances to the economic recovery. (Newswires)

This week’s high-level meeting between US Secretary of State Blinken and National Security Adviser Sullivan with China Foreign Minister Wang and top diplomat Yang in Alaska is not likely to lead to any major diplomatic breakthrough, according to Chinese observers. (Newswires)

It was reported that China accused the UK of “groundless slanders” after the British government claimed Beijing’s crackdown in Hong Kong was in breach of the Sino-British Joint Declaration that paved the way for the handover of Hong Kong to China. (Newswires)

US federal judge ordered a temporary halt on enforcing the US investment ban on Xiaomi late on Friday and stated the decision to blacklist the company was deeply flawed. (Newswires/WSJ)

• Chinese Industrial Production YTD (Feb) Y/Y 35.1% vs. Exp. 30.0% (Prev. 7.3%)
• Chinese Retail Sales YTD (Feb) Y/Y 33.8% vs. Exp. 32.0% (Prev. 4.6%)
• Chinese House Prices (Feb) Y/Y 4.3% (Prev. 3.9%)
• Japanese Machinery Orders (Jan) M/M -4.5% vs. Exp. -5.5% (Prev. 5.2%)
• Japanese Machinery Orders (Jan) Y/Y 1.5% vs. Exp. -0.2% (Prev. 11.8%)

US

Note, as US clock's changed for Daylight Savings Time on Sunday the time-gap between London and New York has narrowed to 4-hours from the usual 5-hours, a gap that will remain until UK/European clocks change on March 28th.

US President Biden is to appoint Gene Sperling to lead implementation of COVID-19 relief plan and it was also reported that President Biden will be speaking on implementing the American Rescue Plan at 13:45EDT/17:45GMT. (Newswires)

US Treasury Secretary Yellen suggested inflation risks remain subdued and noted that some prices which fell last year due to the pandemic will likely recover but added that it is a temporary movement in prices, while she doesn’t think there is a significant risk regarding inflation and noted that they have the tools to address it if it materializes. (Newswires/ABC)

The White House is expected to propose a suite of tax increases, mostly mirroring Biden’s 2020 campaign proposals; proposals include raising the corporate tax rate to 28% from 21%, paring back tax preferences for businesses, according to sources. (Punchbowl)

UK/EU

BoE Governor Bailey says he is more positive but with a large dose of caution on the recovery, economic effects of restrictions appear to be reducing; COVID-19 impact on the economy is 'huge'. BoE is not out of policy tools, could introduce new tools. More balanced picture of risks; savings build-up is an upsized one. Thinks we could see spending of these savings. Does not see inflation increasing towards 4 to 5%; expects a pick-up in inflation towards 2% in the next few months, but the question is on whether this is sustained. Will need to see evidence the trend is sustainable. The rise in market rates is deemed to be consistent with changes in the economic outlook. (Newswires)

BoE’s Executive Director for Financial Stability Brazier said the central bank’s QE program to stimulate the economy is not ideal in the long run and gives the message that people should not worry whenever they are struggling for cash as the BoE will come in and buy gilts. (Newswires)

UK and EU are reportedly at loggerheads over post-Brexit fishing rights. People close to the discussions disclosed that both sides hit problems from the start. Additionally, the EU will today be taking legal action against the UK over its unilateral move to alter the Northern Ireland protocol terms, RTE's Connelly; European Commission will issue legal proceedings via two letters to the UK Government. (Twitter)(Newswires)

ECB’s Kazaks said the central bank’s faster pace of emergency bond purchases to rein in bond yields is a temporary strategy which will only last until the economy strengthens. (Newswires)

German Chancellor Merkel’s CDU suffered defeats in two state elections in Germany with projections showing the Green Party widened its lead in Baden-Wurttemberg at 32.6% vs. CDU at 24.1% (prev. 30.3% vs 27.0% in 2016) and SPD widened its lead in Rhineland-Palatinate at 35.7% vs. CDU at 27.7% (prev. 36.2% vs. 31.8% in 2016). (Politico)

S&P affirmed Austria at AA+; Outlook Stable and affirmed Norway at AAA; Outlook Stable. (Newswires)

• UK Rightmove House Prices (Feb) M/M 0.8% (Prev. 0.5%)
• UK Rightmove House Prices (Feb) Y/Y 2.7% (Prev. 3.9%)

GEOPOLITICAL

Saudi-led coalition said it intercepted and destroyed a drone launched by Yemen's Houthis towards Khamis Mushait in Saudi Arabia. (Newswires)

Myanmar imposed martial law in the Yangon after violent protests in which activists claimed at least 38 were killed as securities forces fired on protesters, while the Chinese Embassy in Myanmar reported that many Chinese workers were injured as factories in Yangon were looted and destroyed. (Newswires)

Iranian Foreign Ministry spokesperson calls for a lifting of US sanctions and guarantees that the 'mistakes' of former-President Trump's administration will not occur again. (Newswires)

Iran's Revolutionary Guard have unveiled a new 'missile city', according to State TV. (Newswires)

EQUITIES

European equities have kicked off the new week with modest gains across the majors (Euro Stoxx 50 +0.4%), after the region brushed off the selloff seen in China, with the tone across the markets somewhat tentative awaiting the US entrance - which will be an hour earlier due to the US time shift, with volatility expected heading into the open as Americans receive stimulus checks as part of the USD 1.9tln COVID relief package. US equity futures have nursed the mild losses experienced during APAC hours, with the value/cyclically-driven RTY (+0.6%) modestly outperforming peers. Back to Europe broad-based gains are seen across the majors, whilst the periphery sees the FTSE MIB (+1.1%) the outperforming region as banks are bolstered by price action in BTPs alongside potential sector consolidation following reports that the UniCredit (+0.9%) CEO could consider a merger with Mediobanca (+2.4%) or Generali (+0.4%), but was also mulling tie ups with Monte dei Paschi (+0.5%) or Banco BPM (+1.4%), according to Italian press. Further, the index sees tailwinds from Stellantis (+3.2%) after an "overweight" reaffirming at JPM. Sectors in Europe are mostly in the green with no real risk bias nor a particular growth/value skew. Travel & Leisure reside as the top performers amid the continuing vaccinations efforts, whilst IAG's (+2.0%) British Airways is planning for travelers to be able to register their vaccines status via its app in a bid to make it easier for passengers to prove they are safe to travel. Telecoms are also faring well as BT (+3.2%) props up the sector as Ofcom is set to announce on Thursday that BT's Openreach division will be able to make a "fair return" on its super-fast internet, which will allow the Co. to make a double-digit rate of return on its GBP 12bln investment in full-fibre broadband. Autos are bolstered by the aforementioned Stellantis performance whilst EV makers eye Volkswagen's (+2.8%) battery day event. On the flip side, Oil & Gas have continued declining amid price action in the complex. Banks reside at the foot of the pile amid the lower-yield environment. In terms of individual movers, AstraZeneca (Unch) has largely shrugged off the mixed weekend reports whereby Ireland suspended its rollout of that particular drug amid the blood clot reports in Norway, albeit AstraZeneca released a press statement highlighting there there is no evidence of a link between blood clots and the vaccine. Flutter Entertainment (+7.0%) is firmer as the group confirmed it is weighing plans to spin-off its American FanDuel sports betting brand in a US listing. Danone (+3.6%) was bolstered after the Co's board ousted Faber as Chairman amid activist pressure. Finally, ABN AMRO (-4.5%) trades at the foot of the pile with some pointing to a broadened investigation into the bank by Dutch persecutors.

Microsoft (MSFT) is set to receive in excess of USD 150mln for US cybersecurity as part of the COVID-19 relief bill, according to sources. (Newswires)

Tesla (TSLA) has stopped accepting orders for Powerwall unless they are linked to solar panel installations, via electrek. (Electrek)

Gilead (GILD) and Merck (MRK) are collaborating to develop a long-acting HIV treatment, via WSJ. (WSJ)

FX

NOK/SEK/EUR - Firm oil prices and a wider Norwegian trade surplus are helping the Krona make most of a broadly soft Euro against the backdrop of new lockdowns and tighter COVID-19 restrictions in Italy and elsewhere, not to mention defeat for Germany’s CDU party in regional elections. However, the Swedish Crown has been undermined by considerably softer than expected inflation data that may raise more eyebrows at the Riksbank via some of the more dovish members. Hence, Eur/Nok has breached 10.0500 to the downside and Eur/Sek 10.1700 to the upside even though Eur/Usd has slipped back further from recent almost aligning or twin peaks that also coincide with a key Fib retracement level at 1.1990 to trade under 1.1950.

NZD/AUD/USD - The Kiwi has regained 0.7200+ status, albeit marginally and in large part due to Aussie underperformance as Aud/Nzd retreats from just above 1.0800 to test bids/support around 1.0750 in wake of dovish commentary from RBA Governor Lowe that has more than offset positives via stronger than forecast Chinese data and the ongoing dividend conversion by mining companies. Indeed, Aud/Usd is pivoting 0.7750 having topped 0.7800 last Friday despite a general loss of recovery momentum in the Greenback that has nudged the DXY off best levels within a 91.866-537 range. Next up for the Antipodean Dollars, Westpac’s Q1 NZ consumer survey, RBA minutes and a speech by Kent.

CAD/GBP - Canadian housing starts and manufacturing sales loom, but the Loonie is still basking in jobs data glory following Friday’s impressive labour report, with extra fuel via the aforementioned bounce in crude. Usd/Cad has reversed from just shy of 1.2500 to probe 1.2450 and Sterling has also survived the potential loss of a round number, at 1.3900 with some assistance from quite unexpected remarks from BoE Governor Bailey just days before Thursday’s MPC event – see 8.11GMT post on the headline feed. Cable is now circa 1.3930, but the Pound more perky vs the Euro eyeing stops on a break of 0.8550 again vs a high of 0.8589 at one stage.

CHF/JPY - The Franc and Yen are narrowly mixed against the Buck after latest weekly Swiss bank sight deposits showing an absence of intervention and not as weak as feared Japanese machinery orders, with Usd/Chf hovering just under 0.9300 and Usd/Jpy a similar margin beyond 109.00. Note, the latter remains above key chart resistance in the form of the 200 WMA that comes in at 109.01, but has faded roughly 109.37 overnight.

EM - Not much deviation either side of 6.5000 for the Cnh or Cny on the back of Chinese ip and retail sales both exceeding elevated consensus forecasts based on favourable base effects, but the Try has rebounded within a wide 7.6160-5045 band in wake of a huge swing in Turkey’s budget balance to surplus from gaping hole.

FIXED

Gilts continue to fade and underperform after running into resistance ahead of 128.00 and have now been down to 127.69 (+2 ticks vs +29 ticks at one stage), with comments from BoE Governor Bailey weighing on sentiment to an extent, while Bunds and Eurozone debt peers remain elevated awaiting more aggressive PEPP buying from the ECB, as the former holds above 171.50 after inching to a minor new 171.66 Eurex intraday high (+54 ticks). Elsewhere, US Treasuries are firmer and a tad flatter in the run up to the FOMC and NY Fed manufacturing in the interim.

COMMODITIES

WTI and Brent front month futures started the week on the front foot and were both firmer on the session whilst hovering just of best levels despite APAC’s mixed lead. However, since the session opened and the early-arrival of US counterparts, crude futures have erased those gains and are flat on the session at the time of writing. Oil prices may have seen a rise in price following on from Chinese industrial output data which beat expectations and highlights their economy recovery has accelerated at the start of 2021, although this data has been distorted by a lower base effect and the Chinese Lunar New Year holiday. Moreover, top oil exporter Saudi Arabia has cut the supply of April-loading crude to at least four north-Asian buyers by up to 15% whilst meeting the standard monthly requirements of Indian refiners. In further news, the US overtook Saudi Arabia last month and became the second biggest oil supplier to India. This was potentially due to the lower crude demand in the US and Saudi Arabia’s voluntary 1mln BPD output cut alongside the OPEC+ agreement, although it remains to be see how distorted these figures were by the Texas deep-freeze. Adding some context, analysts note that due to the lower demand within the US, the crude had to go somewhere and with Asia seeing rapid demand recovery and China not taking US oil, because of trade problems, India was the obvious choice which resulted in the increase in supply. Additionally, regarding vaccination progress, the continued progression of the vaccine rollouts and increasing prospects of economic growth adds to the sentiment of rising oil prices. However, it should be noted a few countries have provisionally halted the rollout of the AstraZeneca vaccine with the worry it increases the chances of blood clots. WTI resides around the high-USD 65/bbl handle (vs high USD 66.40/bbl), and Brent trades low/mid USD 69/bbl handle (vs high USD 70.03/bbl). Risk events on the table today include ECB asset purchases and looking ahead to further in the week a plethora of central bank’s speaking. Elsewhere, precious metals have traded the early European hours choppy but are both firmer on the session with XAG (+0.8%) more so than XAU (+0.1%), and awaiting further direction from the upcoming risk events. At the time of writing, spot gold is trading just above the USD 1,728/oz handle and spot silver resides marginally above the 26/oz handle. Onto base metals, China's crude steel output rose 12.9% in the first two months of 2021 Y/Y as the mills expanded production in anticipation of strengthening demand from the construction and manufacturing sectors. That being said, Dalian iron ore futures fell some 6% in overnight trade amid the ongoing pollution curbs China's top steel-making city.

Total Port Arthur, Texas refinery (185k bpd) restarted its gasoline unit and the Shell Deer Park refinery, Texas (340k bpd) is preparing crude units for a restart. (Newswires)

UK Ministers are mulling declaring the beginning of the end for the North Sea oil industry through banning new exploration licenses. (Telegraph)

China reportedly imported an average of 306,000 bpd of crude oil from Iran totalling 17.8 million tonnes whereby 75% of the imports came indirectly through Malaysia, Oman or the UAE, while Chinese imports of Iranian oil are expected to increase 129% M/M in March to reach levels of 856,000 bpd. (OILPRICE.com)

China's top steelmaking city of Tangshan warned it will punish firms that have not adhered to the measures under its emergency anti-pollution plan or have illegally discharged pollutants, after weeks of smog in the northern part of the country. (Newswires)

US has overtaken Saudi as India's largest crude supplier in February, according to data; Saudi has fallen to number 4 following its unilateral cuts. (Newswires)

Yemen's Houthis have targeted Saudi Abha airport and King Khaled airbase in Khamis Mushait using armed drones, according to a spokesperson. (Newswires)

Iran sets April Iranian Light crude OSP to Asia at Oman/Dubai + USD 1.25/bbl; +0.40/bbl on the prev., according to sources. (Newswires)