• European equity indices are firmer across the board but US futures have pared back gains and are pressured with the tech-heavy NQ the underperformer, -1.2%
• Dollar has firmly bounced as US yields have flown post-FOMC and 10yr currently resides ~1.73%; Norges Bank guides for a hike towards end-2021
• WHO Vaccine Safety Panel will issue its findings on the AstraZeneca COVID vaccine on Friday amid the suspension of vaccine rollouts in Europe
• Russian Kremlin states US President Biden's comments on Putin are "very bad" and shows Biden does not want to build ties with the nation
• Looking ahead, highlights include BoE rate decisions, US IJC, Philadelphia Fed Business Index, Japanese CPI, ECB's de Guindos, Schnabel, BoE's Haldane, Fed Chair Powell & supply from the US

CORONAVIRUS UPDATE

WHO Vaccine Safety Panel will issue its findings on the AstraZeneca COVID-19 vaccine on Friday, according to a spokesman. Additionally, the EMA is due to provide a press conference today from around 15:00GMT/11:00EDT on the AstraZeneca COVID-19 vaccine. On the matter, the EMA could indicate potential groups at risk from the AstraZeneca COVID-19 vaccine, according to the Italian Medicines Agency. Additionally, WHO European Director says the AstraZeneca vaccine benefits outweigh any risks, use should continue to save lives (Newswires)

Pfizer (PFE) and AstraZeneca (AZN LN) denied there was a coronavirus vaccine shortage and said they are on track to fulfill delivery commitments despite the NHS warning of vaccine shortages for April. (Sky News) (Newswires)

UK states that shielding advice for the clinically extremely vulnerable to stop from April as COVID infection rates continue to fall. (Newswires)

Japanese PM Suga states that the Government have decided to lift the state of emergency in Tokyo. (Newswires)

Germany's 7-day COVID-19 incidence rate rises to 90 out of 100k vs. yesterday's 86 out of 100k, according to RKI. (Newswires)

Moderna (MRNA) spokesman expects UK delivery to begin next April, and is on track to meet its vaccine supply commitment. (Newswires)

University of Oxford says existing COVID-19 vaccines may offer protection from the Brazilian variant; importantly, the P1 strain may be less resistant to these antibodies than was initially feared. (Newswires)

Morgan Stanley says Europe's slow vaccine rollout could delay reopenings, exacerbate North/South divide in Europe, which could trigger further policy easing. (Newswires)

ASIA

The FOMC spurred the S&P 500 and DJIA to fresh record highs and provided a constructive backdrop for the Asia-Pac region. That said, the ASX 200 (-0.7%) failed to take advantage of this with the index dragged amid weakness across tech, financials, healthcare and property, while a blockbuster jobs report did little to spur the risk appetite in Australia. Nikkei 225 (+1.0%) reclaimed the 30k status amid favourable currency flows and as Japan makes final preparations to end the Tokyo state of emergency on Sunday, although the index then pared some of its gains after reports suggesting the BoJ is to widen the yield target band to +/- 25bps and scrap its JPY 6tln target for ETF purchases. Hang Seng (+1.3%) and Shanghai Comp. (+0.5%) were both positive but with gains in the mainland somewhat limited after China lowered the bar on expectations ahead of the US-China meeting in Alaska and stated it will not compromise with the US on sovereignty. It was also reported that the US Commerce Department served subpoenas on multiple Chinese companies that provide information and communications technology or services in the US and the FCC voted to adopt procedures to determine whether to revoke China Unicom’s authority to conduct wireless operations in the US. Finally, 10yr JGBs were initially stable as participants looked ahead to tomorrow’s BoJ conclusion, but then saw a bout of pressure on reopen from the lunch break following the source reports that the BoJ is to widen the yield target band and drop its ETF target which saw prices move lower by around 30 ticks before paring a majority of the losses.

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 6.4859 vs exp. 6.4871 (prev. 6.4978)

China is to propose lifting of Trump policies in US-China meeting in Alaska and will propose Biden-Xi virtual meeting during April climate summit, while Chinese officials also plan to propose re-establishing regular high-level meetings between the 2 countries and plan to propose the creation of a vaccine passport as proof of immunization, according to sources. In relevant news, it was also reported that China does not have high expectations concerning the meeting with the US and will not compromise with the US on sovereignty. (Newswires/WSJ)

Chinese Foreign Ministry spokesperson said China firmly opposes and strongly condemns US sanctions on 24 Chinese mainland and Hong Kong officials regarding Hong Kong's electoral reform, while China has taken countermeasures. (Global Times)

BoJ is said to widen the target yield band to +/-25bps to from the current +/-20bps and scrap the JPY 6tln ETF target but pledge to conduct such purchases during periods when markets are turbulent, according to sources. (Nikkei)

China Commerce Ministry says China is facing a severe and complex situation in attracting foreign investments this year. (Newswires)

US

S&P Dow Jones Indices said the Index Committee increased the market capitalization eligibility criteria to USD 11.8bln from USD 9.8bln for the S&P 500. (PR Newswire)

UK/EU

Netherland's PM Rutte is set for a 4th term and stated he is looking to form a new government quickly following an overwhelming election win. According to an IPSOS exit poll, Dutch PM Rutte's VVD party is set to win 36 seats (prev. 33) and coalition partner D66 will become second largest party with 27 seats (prev. 19), while other coalition partner CDA is set to win 14 seats (prev. 19) and CU is set to win 4 seats (prev. 5 seats). (Newswires)

ECB's de Guindos says the ECB is carrying out a Eurozone-wide climate stress test which encompasses 4mln companies covering a 30yr period. (Newswires)

ECB President Lagarde, on PEPP, says weekly data will remain distorted by short-term factors e.g. redemptions but, the step-up in the run-rate of our programme will become visible when ascertained over longer time intervals. Additionally, Lagarde states they will respond to yield increases that get ahead of the economic recovery. There were later comments, there is an expectation of a "reasonably high" TLTRO take up today. (Newswires)

ECB TLTRO III.7 Allotment: EUR 330.5bln vs exp. EUR 150bln (forecast range EUR 30bln - 400bln)

German IFW increases 2021 forecast for GDP growth to 3.7% vs prev 3.1%; 2022 to 4.8% vs prev. 4.5%

Norges Bank maintains its Key Policy Rate at 0.00%, as expected. Policy rate will most likely be raised by 10bps in Dec 2021 (13bps) vs prev. Jun 2022; a full 25bps seen by March 2022 (31bps) vs prev. Sep 2022.

• The overall outlook and balance of risks imply a continued expansionary monetary policy stance.

Turkish CBRT Weekly Repo Rate (Mar) 19% vs. Exp. 18.0% (Prev. 17.0%)

• CBRT hikes its Weekly Repo Rate by 200bps to 19.00% vs exp. 100bps hike to 18.00%; the MPC has decided to implement a front-loaded and strong additional monetary tightening; additional monetary tightening will be delivered if needed

GEOPOLITICAL

North Korea said the US attempted to initiate contact multiple times recently by emails and telephone messages, but it will disregard US attempts for contact until hostile policies are dropped. Furthermore, North Korea said it has only heard lunatic theory of threats and complete denuclearisation from the new US administration, while it will respond to power with power and to goodwill with goodwill. (Newswires/KCNA)

US Secretary of State Blinken said President Biden is to complete North Korea policy review in the approaching weeks and that we're committed to denuclearization of North Korea, while he added the US will consider pressure and diplomatic options regarding North Korea and stated that China aggression in the region poses a challenge but also called on China to play a role in convincing North Korea to pursue denuclearization. (Newswires)

Russian Kremlin says that US President Biden's comments on Putin are "very bad" and without precedent; comments show how Biden clearly does not want to build ties with the nation and this will now be taken into account. (Newswires)

US said steps to remove Turkish parliament member Gergerlioglu from his parliamentary seat is troubling and efforts to dissolve the Pro-Kurdish People's Democratic Party undermines democracy in Turkey. (Newswires)

Russian Foreign Minister Sergey Lavrov will visit China on March 22 and 23, according to Global Times. (Global Times)

China's Foreign Ministry says a potential meeting between Biden & Xi is not among the discussion topics for today/tomorrow's discussions. (Newswires)

European Court Adviser says the EU top court should reject Germany's appeal against the tribunal ruling curtailing Gazprom's access to the Nord Stream 2 pipeline. (Newswires)

EQUITIES

European equities opened the session with modest gains across the board (Euro Stoxx 50 +0.4%) and continue to inch higher, following on from APAC’s predominately firmer lead. APAC took its lead from Wall Street after the S&P 500 and DJIA reached fresh record highs following the FOMC’s rate decision and Fed Chair Powell’s press conference. Moreover, US yields saw considerable upside in early European trade, and at the time of writing, sit over 1.73% having had eclipsed 1.7450% at best. Thus, US equity futures have been giving back some of the aforementioned gains and currently all reside softer, with the tech-heavy NQ (-1.1%) the underperformer. Back to Europe, sectors opened mostly in the green with the underperformance in Food & Beverage (-0.4%) persisting throughout early European trade. Banks (+1.2%) are faring well due to the clearly favourable yield environment but they have since pared back a touch. Moreover, the Autos sector (+1.8%) is the clear outperformer which could be in part down to Porsche’s (+5.1%) and Volkswagen’s (+0.4%) earlier upside, with the latter’s Audi division also planning a disruptive entry into the EV market with some 20 EV models set for release by 2025. Note, BaFin said it is keeping an eye on Volkswagen share prices. Leading on from this, in-fitting with the upside seen in these Cos. the DAX (+1.3%) is the notable leading index on the day. Other notable gainers include Sartorious (+9.4%), which is led by the Co. raising its forecasts for FY 2021 and now sees revenue growth of around 35% against the prior forecast of 19-25%. The leading bank this morning is Deutsche Bank (+3.7%), as aside from the favourable economic environment, Board member Campelli stated the Cos. momentum has continued strongly into Q1 and revenues are up 20%. Lastly on the morning’s gainers, Adidas (+0.8%) are firmer after it was announced they are working with Peloton on an exclusive apparel line. Onto the downside, Elekta (-1.4%) are softer after influential bank JP Morgan downgraded the Co. to underweight in a broker move. National Grid (-0.1%) are also residing in the red which could be factored down to the Co. proposing the acquisition of Western Power Distribution for GBP 7.8bln, which would see an outflow of funds.

Google (GOOG) - Co. plans to invest some USD 7bln in offices and data centers across the US alongside the creation of at least 10k full time jobs in the US this year. Additionally, US Justice Department is investigating antitrust concerns regarding Google's plans to block rivals' tracking cookies, sources state (Newswires)

Tesla (TSLA) have been dealt a blow by the UK government after it opted to alter its EV incentive program, which now excludes the Model 3, according to Electrek. (Electrek)

FX

USD - The Buck has bounced firmly on the back of the latest rout in bonds that has shunted benchmark Treasury yields up towards and beyond levels that many are flagging as potentially pivotal for overall risk sentiment, and in context of repercussions for other asset classes, like equities. Specifically, the 10 year cash rate is now approaching 1.75% and 30 year briefly breached 2.5% to widen spreads between USTs and global counterparts even further, such as T-note/Bund out to 200 bp. Hence, the DXY has reclaimed 91.500+ status from a 91.300 low, and the Euro is one of the major casualties given its prominent weighting in the index. However, the Greenback still has some way to go before retrieving all its losses in wake of ‘dovish’ Fed dot plots ahead of IJC, the Philly Fed and February’s leading index.

NOK/AUD - In stark contrast to unchanged rate guidance from the FOMC (albeit a few more policy-setters leaning towards an earlier start to normalisation), latest projections from the Norges Bank indicate that lift-off may now come at the end of this year compared to mid-2022 previously and the path going forward has been tilted accordingly – see 9.00GMT post on the Headline Feed for more details and links to the March policy statement and MPR. In response, Eur/Nok is back below 10.0500 and has been under 10.0200, but still not quite close enough to test the symbolic 10.0000 mark. Elsewhere, the Aussie is also a G10 outperformer and managing to stay above 0.7800 vs its US rival following a pretty resounding labour report in terms of the key metrics that smashed consensus forecasts, and with the impressive headline payrolls beat all down to full time jobs.

CHF/EUR/NZD/JPY - Little independent impetus for the Franc via mixed Swiss trade and producer/import price data as Usd/Chf pivots 0.9250 and Eur/Chf straddles 1.1050 even though the Euro continues to hit technical resistance ahead of 1.2000 vs the US Dollar amidst pandemic waves and vaccine shortages. Moreover, heavy option expiry interest at the 1.2000 strike (1.3 bn) looks almost as overbearing as those at 1.1900 (1.6 bn) that could underpin Eur/Usd. Back down under, the Kiwi has been undermined by much weaker than expected NZ Q4 GDP, leaving Nzd/Usd nearer the base of a 0.7217-69 range and lifting Aud/Nzd through 1.0800.

JPY/SEK - The Yen has been volatile between 108.62-109.32 parameters against the Buck post-Fed and pre-BoJ eyeing US-Japanese yield differentials that were diverging further until a Nikkei report hit screens claiming that a new 10 year band for the 10 year JGB could be set at +/- 25 bp. However, Usd/Jpy has returned to the 109.00 axis that has been the focal point for trade of late and is close to the 200 WMA, in keeping with Eur/Sek around 10.1500 after somewhat conflicting Swedish jobs data and findings from a Riksbank survey of large businesses.

GBP - Sterling has had another look at key or significant peaks vs the Greenback and Euro circa 1.4000 and 0.8541 respectively, but its fate from a UK standpoint could lie in the hands of the BoE at midday – checkout our preview via the Research Suite or Headline Feed.

EM - The Lira caught a bid as the CBRT opted to deliver a hike of 200bps vs exp. 100bps, whilst retaining a tight stance and pledging further tightening if needed. Usd/Try immediately fell from 7.4575 to 7.3300. Meanwhile, the Brl may get an extra fillip to fend of the Usd recovery after the BCB confounded expectations for a 50 bp SELIC rate hike by going 75 bp and signalling a back-to-back move next time.

Major FX Expiries, NY Cut:

• EUR/USD: 1.1900 (1.6BLN), 1.1950 (622M), 1.2000 (1.3BLN)
• EUR/GBP: 0.8500 (720M), 0.8600 (1.7BLN), 0.8625 (1.2BLN)
• AUD/USD: 0.7750 (1.9BLN), 0.7850 (1.3BLN)
• AUD/NZD: 1.0770 (1.2BLN)

Brazil Central Bank raised the Selic Rate to 2.75% vs. Exp. 2.50% (Prev. 2.00%) through unanimous decision, while it stated the committee forecasts another 75bps hike at the next meeting unless there is a significant change in inflation projections or balance of risks. Furthermore, it stated that it initiated a partial normalization process in reducing the extraordinary extent of monetary stimulus and that persevering with economic reforms is essential for a sustainable rebound, while it added that current inflation shocks are temporary but will continue to observe how they evolve and that uncertainty regarding economic growth remains larger than usual especially for Q1 and Q2 this year. (Newswires)

• Australian Employment (Feb) 88.7k vs. Exp. 30.0k (Prev. 29.1k)
• Australian Full Time Employment (Feb) 89.1k (Prev. 59.0k)
• Australian Participation Rate (Feb) 66.1% vs. Exp. 66.2% (Prev. 66.1%)
• Australian Unemployment Rate (Feb) 5.8% vs. Exp. 6.3% (Prev. 6.4%)
• New Zealand GDP (Q4) Q/Q -1.0% vs. Exp. 0.1% (Prev. 14.0%, Rev. 13.9%)
• New Zealand GDP (Q4) Y/Y -0.9% vs. Exp. 0.5% (Prev. 0.4%, Rev. 0.2%)

FIXED

Bears remain on the prowl and eager to pounce on bounces as Bunds, Gilts and US Treasuries hover precariously over intraday lows at 170.62, 126.82 and 131-05+ for the 10 year T-note respectively, and it feels like the next leg lower is almost inevitable alongside even more pronounced steepening unless the Central Bank cavalry arrive with a concerted effort to turn the tide in debt futures.

COMMODITIES

WTI and Brent front month futures were initially subdued in early European trade as an early spike in yields prompted downside in stocks and a firmer Buck, albeit crude-specific news flow has remained light throughout the session thus far. From a more fundamental standpoint, eyes continue to remain on the OECD inoculation, namely in some of the larger Eurozone countries, amid the temporary halt of the rollout of the AstraZeneca jab due to reports of blood clots, thus providing some headwind to the recovery momentum of the continent. Focus will reside in the European Medicines Agency’s (EMA) report on the matter, slated for around 1500GMT/1100EDT. The EMA could indicate potential groups at risk from the AstraZeneca COVID-19 vaccine, according to the Italian Medicines Agency. Aside from that and barring any major macro headlines, prices are likely to follow the overall risk tone and the Dollar. That being said, energy contracts nursed those earlier losses as US participants entered the fray, with no direct newsflow to influence the rise. WTI May now trades on above of USD 64.50/bbl (vs low USD 63.79/bbl) while its Brent counterpart meanders around USD 68/bbl (vs low 67.07/bbl). Elsewhere, spot gold and silver track the post-FOMC revival of the Dollar, with the former back below USD 1,750/oz (vs high USD 1,755.50/oz), whilst silver holds its head just above USD 26/oz (vs high 26.631/oz). Elsewhere, Chinese ferrous metals were bolstered by the post-FOMC risk sentiment, whereby Dalian iron ore saw a firm performance alongside coking coal, steel rebar, hot rolled coil and shanghai stainless steel futures. However, the base metal complex has been feeling the weight of the yield-related jittery sentiment, with LME copper trading just off session lows after briefly dipping below USD 9,000/t.

Glencore (GLEN LN) has entered into an agreement with Mitsubishi in a Bauxite project JV, mine proposal will begin public consultation in mid-2021; site is in Queensland. (Newswires)