• European equity indices are negative across the board whereas US futures are positive with the tech-heavy NQ the mild outperformer, +0.5%
• Dollar has traded choppy in early morning trade but currently resides in the green
• Crude is attempting to make up lost ground on the week as the complex resides in firmer territory
• The BoJ stood pat on rates but widened the yield target band to +/-25bps and scrapped the ETF target as speculated
• Talks in Alaska have so far underscored the icy US-China relations with plenty of rebukes from both side
• Looking ahead, highlights include Canadian retail sales, US-China meeting in Alaska, ECB's Panetta & Vasle, BoE’s Cunliffe, WHO COVID-19 AstraZeneca update & Quadruple Witching

CORONAVIRUS UPDATE

US President Biden tweeted that the US will reach the goal of 100mln doses in his first 100 days in office on Friday which will be just 58 days in. (Newswires)

European Commission President Von der Leyen is "extremely confident" that the EU will reach the target of vaccinating 70% of the bloc's adults by summer. (Newswires)

German Health Minister Spahn said there is not enough vaccine supply in Europe to prevent the third wave alone. and It is likely that at Easter, we could be in a similar situation as we were at Christmas. (Newswires)

German Health Minister says that Germany is expecting to receive 15mln doses of the AstraZeneca (AZN LN) vaccine in Q2 but this would be a few million doses fewer than expected. (Newswires)

ASIA

Asian equity markets traded negatively following the tech sell-off in the US where the Nasdaq dropped 3% amid a jump in yields and energy underperformed as oil prices declined by around 8% for its largest decline in 6 months, while talks in Alaska have so far underscored the icy US-China relations with plenty of rebukes from both sides. ASX 200 (-0.6%) was dragged lower by commodity-related stocks including oil names following the overnight drop in crude prices which saw WTI briefly slip beneath the USD 60/bbl level and with a surprise contraction in domestic retail sales adding to the glum mood, but with losses in the index stemmed as the top-weighted financials sector marginally benefitted from the rise in yields. Nikkei 225 (-1.4%) gave back the 30K status with participants cautious amid the BoJ announcement where the central bank widened the yield target band to +/-25bps and scrapped the ETF target as speculated, while it also announced that it will now only purchase ETFs linked to the TOPIX (+0.2%) which saw the respective index eventually pare earlier losses. Hang Seng (-1.4%) and Shanghai Comp. (-1.7%) were weaker following the blunt rhetoric between US and China at their meeting in Alaska where US Secretary of State Blinken said that Chinese actions threaten rules-based order and that the US will raise issues of Xinjiang, Hong Kong, Taiwan and cyber-attacks, while a senior US administration official later said the Chinese delegation seems to have arrived intent on grandstanding and are focused on public theatrics, as well as dramatics instead of substance. This was after China’s top diplomat Yang responded to Blinken’s comments with a tirade in which he stated the US has many problems regarding human rights and uses military strength, as well as financial supremacy to pressure countries, while he also alleged that US is the champion of cyber-attacks. Finally, 10yr JGBs weakened with price action choppy amid the BoJ announcement whereby there was an initial knee-jerk reaction to the upside as a major newswire reported that the yield target band was kept unchanged, but then pared the move on clarification that the band had in fact been widened which dragged prices back below the 151.00 level but with the downside stemmed given that the adjustment was previously flagged by sources.

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 6.5098 vs. exp. 6.5074 (prev. 6.4859)

US Secretary of State Blinken told Chinese officials that US is committed to strengthening rules-based order and that US will raise issues of Xinjiang, Hong Kong, Taiwan and cyber-attacks, while he added that Chinese actions threaten rules-based order that maintains global stability. There were also comments from White House National Security Adviser Sullivan that the US will speak frankly about its concerns and does not seek conflict but will stand up for its principles and allies. Furthermore, a US Senior Administration Official said the Chinese delegation in Alaska talks seems to have arrived intent on grandstanding and are focused on public theatrics, as well as dramatics instead of substance, while it was later reported that they will also hold talks from 09:00 local time (13:00EDT/17:00GMT) on Friday. (Newswires)

Chinese top diplomat Yang said the US has many problems regarding human rights and that many Americans don't have confidence in the US, while he claimed US uses military strength and financial supremacy to pressure countries, as well as abuses concepts of national security to threaten future of international trade and incites some countries to attack China. Yang also said Xinjiang, Hong Kong and Taiwan are inseparable Chinese territory with China firmly opposing US interference in its internal affairs and stated the US does not represent the western world nor global opinion and is the champion of cyber-attacks. (Newswires)

Chinese Foreign Minister Wang said US and China shouldn't let relations continue to deteriorate and should stop the trend of difficulties, while he added the US should abandon the practice of interfering with China's internal affairs and that announcing sanctions is not the way to welcome guests. Furthermore, Chinese officials in Alaska said the US made groundless attacks on China's policies which provoked disputes and that the US exceeded time in opening remarks which violated protocol. Further comments from China's Foreign Ministry stated that in the US-China discussions there was a lot of confrontation which was not what we aspired for. (Newswires)

BoJ maintained its rate at -0.1% and kept the 10yr JGB yield target at 0.0% but raised the target band to allow yields to fluctuate +/-25bps from target. BoJ also maintained the annual ETF purchase a ceiling at JPY 12tln and J-REITS at ceiling of JPY 180bln although removed annual ETF and J-REITS purchase targets and will now only buy ETFs linked to the TOPIX. Furthermore, the BoJ stated it will buy the necessary amount of JGBs without setting an upper limit and will not respond rigidly to interest rates temporarily deviating from the downside limit, while it will continue buying certain amounts of commercial paper and corporate bonds even after the September deadline and tweaked the tiered deposit reserve system in which it will modify the method to calculate macro add-on balances under the complementary deposit facility. (Newswires)

BoJ Governor Kuroda says the BoJ did not enhance the yield target range, long-term rates can be allowed to fluctuate without diminishing the impact of easing, which will help in enhancing market function. Kuroda added this is a clarification of the number of the yield range, not a change. Whilst he does not think it is impossible to deepen negative rates and the steps taken today will allow them to more flexibly deepen negative rates. Further remarks from the Governor stated he will not hesitate to lower long/short terms rates if it is necessary and they are not thinking of expanding the band at which they will allow long-term yields to fluctuate around the target level. Further, Kuroda says the domestic economy remains in a severe state, but the trend is picking up. He later stated, they will not reduce bond purchases to prevent long-term rates from falling below the BoJ's new band. Furthermore, Kuroda said they have no plan to take steps to support super-long yields and do not have plans to take steps to steepen the yield curve and lift super-long yields. (Newswires)

BoJ is to provide JGB purchase amount instead of a range from April, plan will be disclosed on March 31st; may adjust the size of bond buying in exceptional case, if yield curve levels fluctuate sharply and the 10yr risks deviating from its range. (Newswires)

• Japanese National CPI (Feb) Y/Y -0.4% vs. Exp. -0.4% (Prev. -0.6%)
• Japanese National CPI Ex. Fresh Food (Feb) Y/Y -0.4% vs. Exp. -0.4% (Prev. -0.6%)
• Japanese National CPI Ex. Fresh Food & Energy (Feb) Y/Y 0.2% vs. Exp. 0.2% (Prev. 0.1%)

US

US Treasury plans to issue rules within 60 days to allow COVID-19 relief payments to be sent to states, municipalities and territories, while IRS aims to open a portal for low-income families to register for tax credits by late spring or early summer. (Newswires)

US Secretary of State Blinken is to travel to Brussels next week for a NATO ministerial meeting and meet with European leaders, according to a statement. (Newswires)

UK/EU

• UK GfK Consumer Confidence (Mar) -16 vs. Exp. -20.0 (Prev. -23.0)

ECB's Panetta says that the ECB at the earliest, could launch a digital EUR in 5 years. (Newswires)

Germany plans to take an additional EUR 70bln in debt this year, according to Spiegel. (Newswires)

GEOPOLITICAL

Russian Kremlin says that President Putin's offer for live online talks with US President Biden remains open; it is impossible to ignore US President Biden's comments. (Newswires)

EQUITIES

Cash bourses in Europe trade lower across the board (Euro Stoxx 50 -0.5%) following a similarly negative APAC lead as the regions react to the sell-off seen on Wall Street in the prior session and the US-China meeting. US equity futures however have gleaned some support from yields coming off highs, with the tech-laden NQ (+0.5%) the slight beneficiary vs the more cyclically-influenced RTY (+0.5%). Macro newsflow has remained light with participants on yield-watch after the US 10yr notched a Thursday peak of 1.7540%. Meanwhile, the first day of the high-level US-China meeting did not in any breakthrough as expected, but rather resulted in the two sides publicly rebuking each other, with the meeting set to continue today as the sides size each other up. Also note today is quadruple witching - a full schedule of the major expiries has been published on the Newsquawk website. Back to Europe, the cash open was mixed with heavy underperformance initially experienced in the FTSE 100 (-0.6%) which was seemingly a function of a firmer sterling coupled with firm losses across oil major amid yesterday's slump in prices - with Shell (-1.5%) and BP (-1.3%) both opening with losses in excess of 2.5% apiece. However, since then, the crude complex has recovered off worst levels and Sterling has waned off highs, thus the FTSE 100 trades relatively in-line with European peers. Sectors in Europe kicked off the session wholly in the red, but have since seen some sectors nursing losses and moving into the green - albeit these comprise of the defensive Staples, Healthcare and Utilities. The downside meanwhile consists of some of the more cyclical names with Banks also hurt as yields pull back, but Oil & Gas does not reside as the clear underperformer anymore. The tech sector meanwhile is somewhat cushioned, with losses modest in what is seemingly a consolidation from yesterday's declines. Elsewhere, French-listed stocks, namely travel & leisure sectors, as Paris is among 16 regions of France facing new lockdowns from midnight tonight. In terms of individual movers, Telecom Italia (-5.6%) resides at the foot of the Stoxx 600 with traders citing uncertainty over the single broadband network project after comments in past days by ministers in the Draghi government.

Foxconn (2317 TT) is reportedly in early-stage discussions with VinFast around an electric vehicle partnership, according to sources. Also, Foxconn has reportedly proposed acquiring their EV production lines but VinFast is instead pushing for a partnership. There were later reports that the Co. has begun making servers and other 5G networking gear for a handful of clients, including Cisco (CSCO), at its manufacturing complex in the US, according to sources. (Newswires)

Tesla (TSLA) - Geely is reportedly intending to unveil electric vehicles under a new marque using different premium branding to take on Tesla, according to sources; will be named 'Zeekr'. Tesla cars have been banned by China military on interior camera concerns, cars are not allowed on China military and housing complexes. (Newswires)

FX

USD - Friday fatigue could well be a factor following an exhausting week in the financial markets, but beleaguered bonds are getting some welcome respite on a combination of short covering and corrective trade ahead of the weekend to the detriment of the Dollar, or at least sapping its recovery momentum from post-FOMC lows. Indeed, the DXY has topped out again just ahead of 92.000 within a 91.963-655 range as most index components and G10 counterparts regain a degree of composure after yesterday’s concessions to the Greenback’s renewed and greater attraction.

NZD/AUD/CAD/GBP/JPY - The tables have also turned somewhat down under, as the Kiwi unwinds declines vs the Aussie, or vice-versa to test 1.0800 in wake of an unexpected fall in retail sales to offset some of the shine from outstanding jobs data and counterbalance the surprise contraction in NZ Q4 GDP. Hence, Nzd/Usd is sitting a bit more comfortably above 0.7150 than Aud/Usd over 0.7750, while Usd/Cad has drifted back down from an oil-induced spike beyond 1.2500 ahead of Canadian retail sales for January that may be rather stale, but still garner attention in the absence of any scheduled US releases today and as the Loonie keeps tabs on crude prices. Elsewhere, Sterling retains grip of the 1.3900 handle and the Pound looks ripe for another attempt post fresh 2021 lows against the Euro towards 0.8500 on bearish technical impulses, contrasting COVID-19 factors and comparatively divergent BoE/ECB policy stances. Last of this group, but not least, the Yen is back above 109.00 and gleaning encouragement from confirmation of a little more flexibility around the BoJ’s zero percent central target for the 10 year JGB yield, but also conscious of purported early RHS interest in Usd/Jpy around 109.30 for month end, as March also culminated with the end of fy 2020/21.

EUR/CHF - Aside from the negative impact of Eur/Gbp cross selling, the Euro is also struggling to sustain any real thrust vs the Buck through 1.1900 as the Bund/T-note spread continues to probe 200 bp, while the Franc remains largely contained between 0.9300-0.9200 and 1.1100-1.1000 parameters vs the Dollar and single currency respectively awaiting fresh inspiration from the SNB next week.

SCANDI/EM - Continuing the theme of hawkish moves and defying consensus, the CBR caught some out with a 25 bp hike, albeit comments in the run up may well have given the game away and tempered Rub reaction as 125 bp worth of tightening is being flagged for this year. The Rouble has rebounded nevertheless, but still lagging behind the Lira and Usd/Try is now beneath 7.2500 after the CBRT raised the FX swap rate to 19% from 17% to match the 1 week repo.

• Australian Retail Sales (Feb P) M/M -1.1% vs. Exp. 0.4% (Prev. 0.5%)

CBR Key Rate (Mar) 4.50% vs. Exp. 4.25% (Prev. 4.25%); Holds open the prospect of further rate increases in future meetings and inflation developing above forecast, disinflationary forces have receded - calls for a return to neutral policy. (Newswires)

FIXED

Bunds have extended their recovery rally to 71 ticks at 171.43 alongside fellow Eurozone debt futures, but Gilts look to have run out of gas and USTs have drifted back down from overnight session highs, with the former now just under ½ point ahead vs +69 ticks at best and the 10 year T-note midway between 131-10/21+ extremes. No obvious rationale for the divergence, but perhaps the ECB has stepped up its PEPP activity given the latest shank in yields and marked curve steepening that might be deemed unfavourable in context of financing.

COMMODITIES

WTI and Brent front month futures attempt to regain some of lost ground during early European hours as oil prices continued their slide overnight. On this, fundamental factors for the fall in prices seen could be derived to Europe’s rising infection rates, alongside the suspension of the AstraZeneca vaccine rollout - albeit this was temporary as the verdict from the EMA resulted in Italy and the German region of Rhineland-Palatinate resuming the use of the AZN vaccine, while Sweden said it needs a couple of days to evaluate the ruling. Meanwhile 16 regions in France are poised to enter a four-week lockdown amid higher infection rates and low vaccination levels - note energy agencies have previously highlighted potential demand dents arising from the intermittent lockdowns in the OECD regions. Nonetheless, banks remain bullish on the near-term fundamentals - Goldman Sachs announced that it expects OPEC+ output to increase by 2.8mln bpd by August whilst it sees Brent rising to USD 80/bbl in the summer. UBS meanwhile forecasts the oil market to stay undersupplied and Brent to move to USD 75/bbl in H2 2021. WTI May trades just below the USD 61.00/bbl handle (vs low 59.11/bbl) whilst its Brent counterpart trades marginally above USD 64.00/bbl (vs low 62.33/bbl). Separately, initially spot gold and silver took advantage of the weaker Dollar but now both are seeing choppiness whilst trading in tight parameters. Spot gold remains sub-USD 1,750/oz (vs low USD 1,728/oz) and spot silver is just above USD 26/oz (vs low USD 25.89). Moving onto base metals, Dalian iron ore has fell overnight as traders are worried over the prospect of further production cuts in the top steelmaking city, Tangshan. Elsewhere, China's steelmakers are expecting a strong Q2 on the back of continued high demand and the expectation raw material prices will fall from recent highs as supply constraints reduce. LME copper meanwhile trades on the backfoot on either side of USD 9,000/t as the red metal trades in tandem to the softer risk tone across Europe.

Goldman Sachs expects OPEC+ output to increase by 2.8mln bpd by August and sees Brent rising to USD 80/bbl in summer, while it views recent sell-off as a transient pullback in a large oil price rally and a buying opportunity. (Newswires)

UBS forecasts the oil market to stay undersupplied and Brent to move to USD 75/bbl in H2 2021. (Newswires)

Shanghai copper warehouse stocks +15.578k/T, +9.1%; aluminium +11.642k/T; zinc -798/T. (Newswires)