• Asian equities traded higher following the positive performance on Wall Street where the S&P 500 and DJIA extended on record levels
• The Nasdaq led the advances as tech and growth were favoured as yields eased
• In FX, the DXY is steady around 91.80, EUR/USD was contained on a 1.19 handle and GBP/USD extended its move below 1.39
• WTI crude futures were contained beneath USD 65.00/bbl following the declines during yesterday's session
• Looking ahead, highlights include German ZEW, US retail sales, industrial production, ECB gross purchases, supply from the UK, Germany & US

CORONAVIRUS UPDATE

US COVID-19 cases +40,428 (prev. +52,504), deaths +589 (prev. +1,073), vaccines administered 109mln (prev. 107mln). (Newswires)

Eli-Lilly's (LLY) Bamlanivimab and Etesevimab together reduced hospitalisations and deaths in a Phase Three trial for early COVID-19. (Newswires)

EMA said its safety committee is continuing its investigation of the AstraZeneca (AZN LN) vaccine and thromboembolic events, while it holds the view that benefits of the vaccine in preventing COVID-19 with associated risk of hospitalization and death, outweigh the risks. The PRAC is also to further review information tomorrow and has called an extraordinary meeting on Thursday 18th March to conclude the information. (Newswires)

Italian Medicines Regulator said the decision to suspend the AstraZeneca vaccine by was "political", the vaccine is safe and the benefit/risk ratio is "widely positive". (Newswires)

Canada is to recommend AstraZeneca (AZN LN) COVID-19 vaccine use for those aged 65 above 65 years old and Thailand's PM said the AstraZeneca vaccine rollout will go ahead which had been halted due to reports of blood clots in Europe. Conversely, Spanish Health Minister Darias confirmed to suspend the use of AstraZeneca's COVID-19 vaccine for at least two weeks and Slovenia also temporarily halted the use of the vaccine, while Venezuelan Vice President Rodriguez said they will not approve the AstraZeneca COVID-19 vaccine due to the effect on patients. (Newswires)

Mexico requested for the US to share its AstraZeneca (AZN LN) vaccine doses and stated the Co.'s vaccine production in Mexico is delayed until the first week of May, according to a diplomat. (Newswires)

French Health Ministry says it has discovered a new COVID variant in the Brittany region but adds initial analysis does not show it to be more serious or more transmissible than other variants. (Newswires)

ASIA

Asian equity markets traded higher following the positive performance on Wall Street where the S&P 500 and DJIA extended on record levels and the Nasdaq led the advances as tech and growth were favoured as yields eased, with stronger than expected NY Fed Empire Manufacturing data also conducive to the upbeat mood. ASX 200 (+0.8%) was firmer with tech and healthcare spearheading the broad gains across most industries aside from the commodity-related sectors including energy following a recent pullback in oil prices. Nikkei 225 (+0.6%) edged mild gains and briefly reclaimed the 30k level where it then met resistance, with upside also capped heading into the decision whether to lift the State of Emergency for the capital region and the outcome of the BoJ’s policy review. Hang Seng (+0.7%) and Shanghai Comp. (+0.7%) conformed to the rising tide across regional stocks and with firm gains in Xiaomi after FTSE Russell proposed the Co. will be eligible for re-inclusion to its indices from June 21st, while the mainland initially lagged amid concerns of tighter regulations with China to step up supervision of the internet platform economy and data ownership, as well as strengthen antitrust regulatory powers. Finally, 10yr JGBs held on to its gains overnight following the bull flattening stateside and despite the positive mood across regional stocks, while softer demand at the enhanced liquidity auction for 10yr, 20yr and 30yr JGBs did little to dent price action.

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 6.5029 vs exp. 6.5059 (prev. 6.5010)

FTSE Russell proposed that Xiaomi (1810 HK) will be eligible for re-inclusion to FTSE Russell indices from June 21st, while China Mobile (941 HK) is reportedly considering an A-share listing following removal from the US. (Newswires)

Japanese PM Suga said the government wants a little more time to decide on emergency lift, while there were separate reports that Japan is to decide on Thursday whether to lift the state of emergency. (Newswires)

Japanese Finance Minister Aso confirmed the cabinet approved cash handouts for low-income families and are assembling an aid package for depressed people, while he added that nothing has been decided on US beef imports after press reports stated that Japan will temporarily place higher tariffs on US beef. (Newswires)

Japan's Foreign Minister Motegi has agreed with the US Secretary of State Blinken on visiting the US at an early date to hold a bilateral meeting. (Newswires)

UK/EU

UK Chancellor Sunak said he spoke with US Treasury Secretary Yellen regarding Special Drawing Rights allocations which would help low-income nations and discussed how to use Friday's G7 meeting to work towards a potential agreement by the IMF spring meetings. (Newswires)

The UK is planning tighter security measures across technology and sensitive sites in order to facilitate trade with China, the UK's "biggest state-based threat". (Times)

BoE Governor Bailey says inflation will remain below the 2.0% threshold, but it will initially flare in the short-term due to public support measures; will continue to buy bonds in 2021. (Newswires)

ECB's Centeno said monetary policy is not exhausted, especially when used with fiscal policy and that all policies must be kept actively in place, while he is happy with progress on PEPP and stated that decisions on adjustments can be made on a monthly basis to respond to challenges. Furthermore, he noted the ECB can adapt the baseline amount of PEPP depending on market conditions and does not see YCC becoming a key stability instrument in the EU. (Newswires)

ECB's Schnabel said do not read too much into the weekly purchase data under the PEPP as an extrapolation from weekly to overall monthly data may lead to misleading conclusions. (Newswires)

ECB’s Lane says that there is still room for the ECB to cut rates deeper into negative territory, but the current issue is over efficiency around whether accommodation could be better provided by preserving favourable financing conditions; the priority remains to use bond-buying. Lane reiterated that the ECB could do more in terms of providing additional stimulus. Adds, that with enough policy support damage to the economy should be as little as possible i.e. ‘relatively contained’. Says YCC would be unnecessary as we are not in a ‘knife edge situation’ where fixing the 10yr yield makes sense. (FT)

French central bank forecasts 2021 GDP growth at 5.5% (prev. forecast 5.0%), 2022 at 4.0% (prev. forecast 5.0%) and 2023 at 2.0% (prev. forecast 2.0%). (Newswires)

FX

In FX markets, the DXY kept to within the prior session’s range and traded around the 91.80 level but with the gains capped as yields eased and with participants looking ahead to the FOMC on Wednesday. EUR/USD adhered to the broad uneventful theme across the FX space and following comments from ECB's Centeno who stated that monetary policy is not exhausted and that all policies must be kept actively in place. GBP/USD extended beneath 1.3900 after the EU launched legal action against British alterations to Northern Ireland trading arrangements. USD/JPY was steady after recently finding support at 109.00 and antipodeans flatlined following weaker New Zealand credit card spending data and with the RBA minutes providing very little in way of new information and instead reiterated that very significant monetary support will be needed for some time and they will not hike the cash rate until inflation is sustainably within 2%-3% target band, nor do they expect to reach unemployment and inflation goals until 2024 at the earliest.

RBA March meeting minutes stated that very significant monetary support will be needed for some time and it will maintain stimulatory conditions for as long as required, while the RBA will not hike the cash rate until inflation is sustainably within 2%-3% target band. RBA added it does not expect to reach unemployment and inflation goals until 2024 at the earliest and the board agreed it would not consider removing or changing 10bps target yield, as well as reiterated that negative rates remain extraordinarily unlikely. Furthermore, it stated that rising yields reflected increasing optimism about the economic outlook and increase in compensation for future inflation, while the board said it will look through the transitory fluctuations in inflation. (Newswires)

• Australian Home Price Index (Q4) Q/Q 3.0% vs. Exp. 2.0% (Prev. 0.8%)
• Australian Home Price Index (Q4) Y/Y 3.6% vs. Exp. 4.7% (Prev. 4.5%)
• New Zealand Credit Card Spending (Dec) M/M -0.1% (Prev. 0.1%)
• New Zealand Credit Card Spending (Dec) Y/Y -10.6% (Prev. -5.6%)

COMMODITIES

WTI crude futures were contained beneath USD 65.00/bbl following the declines during yesterday's European session amid the uninspired risk tone across the bloc with several EU member nations halting the use of AstraZeneca's COVID-19 vaccine due to blood clot issues. The pressure for crude had also been attributed to profit taking after the upward momentum seen in recent week's somewhat waned and focus for the complex turns to the latest inventory reports beginning with the private sector stockpile data due after-hours today. Gold prices eked mild gains with the precious metal contained by the steady greenback, while copper failed to benefit from the constructive risk tone and instead adhered to the humdrum overnight trade across commodities.

EIA forecasts US total shale regions April oil production down 46k BPD at 7.46mln BPD. (Newswires)

Marathon Petroleum (MPC) Galveston Bay, Texas refinery (585k BPD) reportedly plans a crude unit restart this week, while Total (FP FP) Port Arthur, Texas refinery (185k BPD) was reportedly restarting sulphur units ahead of a crude unit return, according to sources. (Newswires)

GEOPOLITCAL

An explosion was heard at the Balad airbase in Iraq’s Salah al-Din province and security sources noted five rockets hit the Iraqi military base but there were no casualties. (Walla News)

North Korea warned US President Biden's administration that if it wants peace it needs to avoid 'causing a stink', while it was also reported that North Korean Leader Kim's sister threatened to scrap the inter-Korean military agreement and slammed the US and South Korea for joint military exercises. (KCNA/Yonhap)

US

Treasuries bull-flattened on Monday by a few bps amid a subdued risk tone and generally quiet trade ahead of key risk events. By settlement, 2s +0.2bps at 0.153%, 5s -1.8bps at 0.829%, 10s -2.8bps at 1.607%, 20s -3.8bps at 2.276%, 30s -3bps at 2.371%; TYM1 volumes were light. Inflation breakevens little changed after paring a dip earlier in the session. Sovereigns were bid out of APAC with desks noting the presence of Asian real money accounts seizing the yield pick-up. Morgan Stanley has recently highlighted the growing strength for USTs in APAC trade as opposed to February, where it showed the majority of the move higher in US yields in the month had occurred in the overnight hours. A choppy appetite for risk assets supported the move lower in yields, coming alongside growing angst on AstraZeneca's vaccine and a sell-off in oil hitting inflation expectations, with the 20-year bond leading the charge on the US curve after its underperformance in Friday's bond sell-off, and ahead of the 20-year reopening on Tuesday. Barclays highlights the relative weakness of that part of the curve (30yr is only 10bps cheaper), where the Fed has been actively targeting the 20-year maturities in its 7-20yr bond buybacks - next one on March 22nd; one trader touted tactical 7-20yr flatteners into next week's 7-year auction. T-note (M1) settled 5+ ticks higher at 131-30+.

US Senators are said to put forward a bipartisan proposal for reforms in Section 232 tariffs, while it was also reported that just over a dozen Democrat Senators requested US President Biden suspend waivers to the Buy American program so US firms are prioritized in projects funded by the USD 1.9tln relief bill. (Newswires)

US House is reportedly to consider a PPP extension on Tuesday and reports noted that legislation introduced in the House and Senate would extend the PPP deadline from March 31st to May 31st. (Newswires)