• European equity indices and US futures are mixed with the tech-heavy NQ the notable outperformer, +0.7%
• DXY is softer on the session but price action against major counterparts has been contained
• The EU is reportedly expected to block AstraZeneca vaccine and ingredient exports to the UK
• TRY slumped around 15% at the weeks open after Turkish President Erdogan replaced CBRT Governor Agbal; currently, USD/TRY +9.4%
• Looking ahead, highlights include ECB asset purchases, ECB's Schnabel, Fed's Powell, Barkin, Daly, Quarles & Bowman

CORONAVIRUS UPDATE

US CDC reported total COVID-19 cases rose to 29.61mln from 29.55mln the day before and total deaths rose to 539.0k from 538.3k the day before. (Newswires)

UK COVID-19 cases +5,312 (prev. + 5,587) and deaths +33 (prev. +96), France cases +30,581 (prev. +35,327) and deaths +138 (+185), Italy cases +20,159 (prev. +23,832) and deaths +300 (prev. +401). (Newswires)

UK ministers are working on plans to speed up the onshoring of COVID-19 vaccine manufacturing to make the country more self-sufficient amid concerns of increasing vaccine nationalism. There were also separate comments from UK Defence Minister Wallace who responded that we cannot be deaf and blind to what is occurring abroad and cannot put the gains from our vaccination campaign at risk when asked about foreign holidays this summer. (Newswires/Telegraph)

EU is reportedly expected to block AstraZeneca (AZN LN) vaccine and ingredient exports to the UK which could impact 20% of supply and could delay the UK’s COVID-19 vaccine drive by 2 months, while it rejected the claim of contractual right by UK officials who had warned that they must receive the doses it developed and paid for. In other news, the Therapeutic Goods Administration approved CSL’s (CSL AT) Seqirus to manufacture the AstraZeneca vaccine in Australia. (Newswires/MailOnline/Guardian/FT)

EU has not formally blocked AstraZeneca (AZN LN) vaccine shipments from the Dutch plant as no export request has been made, according to an official. (Newswires)

EU Commissioner Breton stated that the EU absolutely does not require the Sputnik V vaccine and will achieve immunity by July 14th. (Newswires)

Germany is reportedly set to extend its lockdown for a 5th month as infection rates remain above levels that would overstretch hospitals, according to a draft proposal. (Newswires)

China administered 74.96mln doses of COVID-19 vaccines as of March 20th and stated that its vaccine production can fulfil the demand of the entire country’s population, while it considers differentiated policies related to visa issuance, flights and numbers of those entering China based on vaccination and virus situation of different countries. (Newswires)

AstraZeneca (AZN LN) US vaccine trial has met its primary endpoint; 79% efficacy at preventing symptomatic cases of COVID-19; 100% efficacy vs severe or critical disease and hospitalisation; 80% efficacy in age 65 years and over. Subsequently, an American official stated that they intend to file in April for EUA and hope to deliver 30mln doses instantly in America, CNBC (Newswires)

ASIA

Asian equity markets began the week mixed as the region took its cue from the indecisive performance last Friday stateside following bitter US-China talks in Alaska and despite an overnight easing of yields. ASX 200 (+0.7%) was kept afloat with M&A news in focus after Blackstone made an offer to acquire Crown Resorts at a 20% premium which lifted shares in the latter by a similar extent although gains in Australia were capped amid heavy rain and floods in New South Wales which resulted in evacuation orders and pressured insurers. Nikkei 225 (-2.1%) suffered intraday losses of as much as 2% in the aftermath of the BoJ policy tweaks, ban on foreign spectators at the Tokyo Olympics and with auto stocks spooked due to a recent fire at the Renesas chip plant in Naka which the Co. stated could have a very large impact on its supply to automakers, while a firmer JPY also provided headwinds for Japanese markets. Hang Seng (-0.4%) and Shanghai Comp. (+1.1%) were mixed after the Alaska summit failed to reset relations between the world’s two largest economies and with Hong Kong tentative as it braces for IPO activity with Baidu to debut tomorrow, although the mainland was positive amid updates from the PBoC which kept the 1yr and 5yr Loan Prime Rates unchanged for an 11th consecutive month as expected, while there were also recent comments from PBoC Governor Yi that China has ample monetary policy tools and relatively large room for monetary policy adjustments. Finally, 10yr JGBs were higher as they tracked the rebound in USTs and decline in yields, with prices also supported by underperformance in Japanese stocks and the BoJ's presence in the market for over JPY 1.2tln of JGBs heavily concentrated in 1yr-10yr maturities.

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 6.5191 vs exp. 6.5177 (prev. 6.5098)

• PBoC 1-Year Loan Prime Rate (Mar) 3.85% vs exp. 3.85% (prev. 3.85%)
• PBoC 5-Year Loan Prime Rate (Mar) 4.65% vs exp. 4.65% (prev. 4.65%)

PBoC Governor Yi stated that China has ample monetary policy tools and relatively large room for monetary policy adjustments but also noted that interest rates are appropriate, while he added that China will maintain policy continuity, stability and sustainability. Furthermore, Yi stated that monetary policy will strengthen targeted support for key sectors and weak parts of the economy. (Newswires)

China’s Vice Premier Han stated that China’s economy continues steady recovery this year and is planning to raise its high-quality imports as the economy rebounds, while China will strengthen intellectual property protection and will participate in the global anti-virus drive. (Newswires)

China’s state planner head said the foundation of the nation’s economic recovery is not solid and that China will avoid a sudden policy turn, while it will keep the share of manufacturing in the economy stable. (Newswires)

China’s top diplomat Yang stated that dialogue with the US was candid, constructive and helpful but of course there are differences which remain and he added that the sides should follow the policy of ‘no conflict’ to guide a path towards a healthy and stable trajectory moving ahead. (Newswires)

Philippines Defence Minister said the presence of Chinese boats in the South China Sea is a clear provocative action of militarizing the area and called on China to recall the boats which are violating the maritime rights of the Philippines and encroaching into its sovereign territory. (Newswires)

South Korean March 1st-20th Exports rose 12.5% Y/Y and Imports rose 16.3% Y/Y, while Trade Balance was at a provisional surplus of USD 820mln. (Newswires)

The Japanese government should closely monitor the impact on financial and capital markets from increases in US interest rates and avoid sharp fluctuations, according to the Japanese Government Council's private-sector members. (Newswires)

Japan Economy Minister Nishimura says he is committed to prevent Japan from falling into deflation again. (Newswires)

US

Fed's Barkin (voter) said he expects the US will have a strong spring and summer, as well as for strong demand to be met by some supply chain issues and anticipated price pressures this year, while he also stated that yields are reflecting good news concerning vaccines and fiscal support. Barkin also suggested that the economy is on the brink of a full recovery and that it is a straightforward time for the Fed to put the foot on the gas. (Newswires)

US & China Climate Officials Kerry and Zhenhua respectively are to meet this week for formal discussions, via WSJ; in-spite of the recent tense Alaska discussions between the nations. (Newswires)

UK/EU

UK Chancellor Sunak is to postpone the decision regarding online sales tax until Autumn which seeks to level the playing field between high street shops and online retailers. (FT)

EU Financial Services Commissioner McGuinness said we are in a difficult place regarding Northern Ireland and need to reduce the temperature, as well as find solutions. (Newswires)

Slovak PM Matovic is reportedly prepared to step down regarding the Russian vaccines dispute after he decided to purchase the Sputnik V vaccine without consulting partners. (FT)

S&P affirmed Spain at A-; Outlook Negative and Fitch affirmed Poland at A-; Outlook Stable. (Newswires)

SNB says it has sufficient scope to further expand its balance sheet if this is deemed to be necessary for monetary policy; 2020 currency interventions CHF 110bln vs CHF 13.2bln in 2019. (Newswires)

The Italian Government is reportedly planning up to EUR 30bln in additional aid for businesses, via Il Messaggero. (Newswires)

The EU imposes sanctions against Chinese individuals, according to DPA. Subsequently, UK Foreign and Commonwealth Office is reportedly not denying magnitsky sanctions on Chinese officials re. Uighurs today, Sun's Cole, with expectation around this growing in Government. (Newswires/Twitter)

GEOPOLITICAL

Iranian Supreme Leader Khamenei said Iran is in no rush regarding the nuclear deal and that the US should remove sanctions first, while he added that promises by the US have no credibility for Iran. (Newswires)

Russian jets conducted strikes in areas close to heavily populated towns and camps in north-western Syria, which reportedly hit a gas facility, as well as a hospital and killed 7 civilians. (Newswires/SCMP)

Two of Taiwan's F5 craft have reportedly crashed in a friendly-training incident, subsequently all F5 craft in Taiwan have been grounded. (Newswires)

US did not support the proposal for talks between US President Biden and Russian President Putin, according to the Russian Foreign Ministry. (Newswires)

EQUITIES

European equities initially opened the first session of the week mixed across the board (Euro Stoxx 50 -0.1%), but briefly experienced some negative bias in early trade. The mixed lead followed Asia’s similar handover whilst US equity futures similarly vary with the tech-laden NQ (+0.8%) outperforming as yields wane off last week's highs. Back to Europe, sectors opened firmly in the red with Travel & Leisure (-1.2%) the laggard due to the rising COVID infection rates across Europe. Paris has entered a new 4-week lockdown and Germany is reportedly set to extend its lockdown for a 5th month meaning the economic outlook and holiday prosperity has dwindled resulting in the travel & leisure sector being severely impacted this morning. Add to that, the UK's Defence Secretary refrained from ruling out an extension to the ban on foreign holidays in order to control the spread of coronavirus. Meanwhile, Banks (-0.3%) have also seen downside amid a lower yield environment and follow-through from banks with historical exposure to Turkey, such as BBVA (-6.1%) and ING (-1.7%), who have been considerably affected by the surprise sacking of the CBRT governor by the Turkish President. On the upside, Autos (+1.6%) is the notable outperformer which may be in turn due to Porsche (+5.5%) and Volkswagen’s (+5.4%) firmer openings. Elsewhere on the individual movers front, Infineon (+3.3%) trades higher after the Co. announced it expects to reach pre-shut down levels in June 2021 and sees no negative impact on FY revenues amid strong global demand after the Texan deep freeze. AstraZeneca (+1.4%) has shrugged off negative headlines after the positive US COVID vaccine trial findings where it met its endpoint and illustrated a 79% efficacy at preventing symptomatic cases and 100% efficacy vs severe or critical disease and hospitalisation. Residing to the downside is the aforementioned travel names, Ryanair (-3.8%) and Lufthansa (-3.3%) are the distinct underperformers and are feeling the full force of the potentially dampened recovery outlook this summer. Lastly, heading into month-end and following last week moves in equities and bonds, the Goldman Sachs pension model estimates USD 58bln of equities to sell for month & quarter end (vs prev. view USD 65bln). Additionally, despite the revised forecast it would still rank as the 4th largest estimate in absolute USD value over the past three years.

Two US Californian Senators are said to be calling on President Biden to set an end date for the use of US gas-powered passenger vehicles, according to a letter. (Newswires)

FX

TRY - Having extended its post-200 bp rate hike recovery rally to around 7.1867 vs the Dollar, the Lira has been struggling to keep its head above 8.0000 and depreciated to lows circa 8.1745 at one stage following the latest removal of a CBRT Governor under the Presidency of Erdogan who is renowned for his unorthodox beliefs that tightening monetary policy merely heightens price pressures rather than helping to combat above target inflation. As such, Agbal becomes the 2nd Central Bank head to be sacked and after just 5 months in the role in wake of last Thursday’s front-loaded 1 week repo rate increase to 19% from 17% vs 18% almost universally forecast.

DXY - Usd/Try aside, currency markets are relatively sedate and orderly as evidenced by the index hugging a tight line either side of 92.000 amidst relative calm in bond land after recent antics and last Thursday’s particularly aggressive bear-steepening that propelled benchmark yields to and through psychological levels. Indeed, the DXY is meandering between 92.155-91.872 and most of the Greenback’s G10 rivals are rangebound awaiting a catalyst to break one way or the other that could come from data, events and/or speakers today, but may be more likely later in the week given up to date and forward looking surveys like the preliminary Markit PMIs and Ifo.

JPY/CHF - The Yen and Franc could conceivably be firmer on safe-haven grounds given the aforementioned angst in Turkey that has rekindled investor angst due to credibility concerns, as the former has another look at offers and supply ahead of 108.50, while the latter is back above 0.9300 and 1.1050 against the Buck and Euro respectively in the ongoing absence of any visible intervention via weekly Swiss bank sight deposits. However, the SNB looms and the Bank has reiterated that there is more room on the balance sheet for monetary policy purposes even though currency interventions in 2020 totalled Chf 100 bn vs only Chf 13.2 bn the year before.

CAD/GBP/NZD/EUR - All pivoting their US counterpart in narrow confines, with the Loonie eyeing oil prices to see if WTI and Brent form a base and Sterling monitoring the vaccine situation following reports that the EU might block exports of AZN and ingredients to the UK. Elsewhere, the Kiwi appears to be benefiting from relative underperformance in the Aussie via the Aud/Nzd cross rather than anything NZ specific in advance of trade data and PMIs on Tuesday respectively, while the Euro awaits ECB QE updates and speakers for some independent impetus. Usd/Cad is currently straddling 1.2500, Cable 1.3850, Nzd/Usd 0.7150 as Aud/Nzd retreats through 1.0800 and Eur/Usd is rotating around 1.1900.

AUD - As noted above, the Aussie is lagging and not really helped by a weaker PBoC midpoint fix for the CNY overnight, but Aud/Usd has bounced from sub-7700 lows alongside Usd/CNH easing back towards 6.5000.

EM - The Rub and Mxn are still trying to get over last week’s capitulation in crude and the former is still feeling the squeeze from Russia’s rift with the US and EU that shows little sign of healing given reports from the Russian Foreign Ministry noting that the US is not backing a proposed meeting between Presidents Putin and Biden.

Turkish President Erdogan replaced CBRT Governor Naci Agbal less than five months after his appointment following the recent interest rate hikes, while the new central bank Chief Sahap Kavcioglu had previously been critical of the prior governor’s policy although suggested in a call with bankers that there would be no immediate policy changes. In other news, Turkey withdrew from a European treaty protecting women from violence which prompted comments from US President Biden who stated that Turkey’s withdrawal from the Istanbul convention is deeply disappointing and a disheartening step backwards for the movement to stop violence against women around the world. (Newswires)

Societe Generale expects USD/TRY to be at 9.70 by end-Q2 and 9.30 by year-end; one-week repo rate at 17% by end-Q2 and 20% by year-end. Recommend exiting any long positions on TRY assets; Agbal's dismissal puts Turkey beyond the point of no return. While Barclays maintains its CBRT forecast for rates at 19.0% until October, then cut to 15.5% in Q4-2021 with Rabobank now abandoning their cautiously optimistic TRY view. (Newswires)

FIXED

The early flurry in debt futures and buying activity has petered out across the board, but to varying degrees as USTs stay closer to overnight highs and the curve retains a clearer flattening bias in contrast to Gilts that have pared more gains to just 11 ticks at a new 127.64 Liffe low and BTPs that recently ducked a few ticks under par vs +40 ticks at best. Ahead, some US data and more central bank speakers on tap including Fed chair Powell at the BIS.

COMMODITIES

WTI and Brent front month futures trade choppy within relatively tight ranges following last week’s notable decline in prices, as traders weigh the demand impact from the renewed lockdown measures in the Eurozone with the fiscal stimulus effects in the run up to next week’s key OPEC+ meeting. In terms of the latest on the demand side, Germany is reportedly set to extend its lockdown for a 5th month as infection rates remain above levels that would overstretch hospitals, according to a draft proposal, whilst reports also state that the EU is said to expected to block the AstraZeneca vaccine and ingredient exports to the UK which could impact 20% of supply. Energy agencies and analysts have previously voiced concern over the fragility of the OECD demand outlook given the risks of intermittent lockdowns. Furthermore, the UK Defence Secretary over the weekend refused to rule out an extension to the ban on foreign travel, which again could hinder the recovery prospects for jet fuel demand. On the flip side, it remains to be seen how OPEC+ could react to these developments, having carefully manoeuvred away from a market disappointment at the prior meeting. On that noting, relatively stale data but nonetheless, OPEC+ February compliance reached a record 113% (OPEC 124% and Non-OPEC 94%) due to Saudi's unilateral cut, according to sources cited by Argus. Saudi Aramco also reported earnings over the weekend which highlighted the impact of last year’s oil rout, albeit again this is backward looking and cannot provide much in the way of an outlook in this every-changing environment. Futures have gained some traction in recent trade - WTI trades on either side of USD 61.50/bbl (USD 60.35-61.85/bbl intraday range) while its Brent counterpart sees itself just above USD 64.50/bbl (USD 63.45-64.85/bbl intraday range), with risk events ahead including a slew of central bank speakers and a potentially interesting ECB PEPP release. Elsewhere, spot gold and silver are softer as yields pull back. Spot gold in the grander scheme remains within tight ranges and still influenced by the recent USD 1720-1730/oz support zone. In terms of base metals, LME copper trades on either side of USD 9,000/t and modestly softer amid the risk tone across Europe. Overnight, attention was on iron ore futures as the Dalian contract slumped over 6% and coking coal also slipping some 7% amid reports of a pollution notice doing the rounds in China’s steel industry regarding its steel-making city Tangshan, which could threaten 30-50% of output. Goldman Sachs expects iron ore prices to contract 15-20% in H1 2022, with the 3-month, 6-month and 12-month forecasts at USD 135/t, USD 115/t and USD 100/t.

Saudi Aramco CEO said there are signs of a recovery which is expected to continue and that demand for energy will rebound as economies recover, while he sees higher oil demand this year. Furthermore, he stated that they have all the right to conduct contingency plans to respond to any attack and stated that the Riyadh refinery began to come on stream hours after an attack on Friday. In relevant news, the Saudi-led coalition conducted an air strike on Houthi targets in Yemen’s capital. (Newswires)

Mexico's Pemex CEO says the group is looking for irregularities in every contract with Vitol and is looking to renegotiate some contracts with Vitol following the bribery scandal, sources state. (Newswires)

OPEC+ February compliance reached a record 113% (OPEC 124% and Non-OPEC 94%) due to Saudi's unilateral cut, according to sources cited by Argus. (Argus)