• Asia-Pac stocks just about shrugged off the early indecision following the negative bias stateside
• Most US indices declined as sentiment was dampened amid the fallout from the USD 20bln Archegos liquidation and rising yields
• Additionally, the White House warned that infections are increasing again and President Biden has even called on states to pause re-opening efforts
• In FX, the DXY consolidated near yesterday's highs, EUR/USD was rangebound below 1.18 and GBP/USD sits on a 1.37 handle
• Saudi Arabia is reportedly ready to support an OPEC+ oil cut extension into May and June and is prepared to extend voluntary cuts
• Looking ahead, highlights include German regional & national CPI, US consumer confidence, Fed's Quarles, Bostic, Williams, supply from Italy

CORONAVIRUS UPDATE

US COVID-19 cases +47,464 (prev. +62,184), deaths +560 (prev. +181), first dose of vaccine administered 146mln (prev. 143mln), those fully vaccinated 52.614mln (prev. 51.593mln). (Newswires)

US President Biden reportedly thinks that states should pause re-opening efforts and warned we could still see a setback in the US vaccination program, while he called on all local leaders to reinstate mask mandates. It was also earlier reported that President Biden will say that 90% of the US will be eligible for vaccination by April 19th and that he is set to double the number of pharmacies where vaccinations are available. (Newswires)

Canadian panel said there is substantial uncertainty about benefits of providing AstraZeneca (AZN) COVID vaccine to adults under 55 due to the risks of clotting and that the case fatality caused by rare vaccine induced clotting is roughly 40%, while the Deputy Chief Medical Officer announced that they are to pause the use of the AstraZeneca vaccine on anyone under the age of 55. (Newswires)

GlaxoSmithKline (GSK LN) has agreed in principle to handle the final part of the manufacturing process for up to 60mln doses of Novavax's (NVAX) COVID-19 vaccine for use in Britain, while it was separately reported that Johnson & Johnson (JNJ) said it is to start delivering Covid vaccines to Europe on April 19th. (Newswires)

UK PM Johnson said we can rule out another lockdown if guidance is obeyed and vaccine rollout continues and is effective. It was also reported that UK PM Johnson, French President Macron and German Chancellor Merkel called for a pandemic treaty to put vaccine nationalism aside and ensure the pandemic remains defeated in which they suggested that nobody is safe until everyone is safe. (Newswires/Telegraph/Daily Mail)

ASIA

Asia-Pac stocks just about shrugged off the early indecision following the negative bias stateside where the DJIA posted fresh record levels but most indices declined as sentiment was dampened due to the fallout from the USD 20bln Archegos liquidation and with a rise in yields, as well as ongoing COVID-19 concerns adding to the glum mood. ASX 200 (-0.7%) and Nikkei 225 (+0.1%) swung between gains and losses with the former eventually dragged lower by weakness across commodity-related sectors and reports of further virus cases in Queensland where there is an ongoing 3-day lockdown in the state capital, while the Japanese benchmark lacked firm direction as Nomura shares extended on the prior day’s largest decline on record, triggered by the losses related to the recent Archegos margin call but with losses in the index cushioned by currency weakness and mostly better than expected Unemployment and Retail Sales data. Hang Seng (+1.2%) and Shanghai Comp. (+0.6%) were initially choppy amid a deluge of earnings releases and heading into quarter-end, although Chinese markets eventually gained as participants digested the FTSE Russell announcement for the inclusion of Chinese government bonds to its FTSE World Government Bond Index at a weight of 5.25% which will occur over 36 months from the effective date of 29th October 2021 which HSBC estimated could result to around USD 130bln of inflows to Chinese bonds. Finally, 10yr JGBs were lacklustre amid the spillover selling from USTs and with demand also sapped amid the 2yr JGB auction later which resulted into a lower b/c despite a decline in accepted prices.

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 6.5641 vs exp. 6.5625 (prev. 6.5416)

China's Parliament unanimously approved the Hong Kong electoral system reform plan which cuts the number of seats in the legislature which are democratically elected and establishes a vetting committee to pre-approve potential candidates. (Hong Kong Free Press)

The US is to make it easier for diplomats to meet with Taiwanese officials through looser restrictions which is likely to provoke China. In relevant news, US and Japan plan to affirm the importance of stability in the Taiwan Strait when Japanese PM Suga visits Washington next month for a summit with President Biden, while the two sides are reportedly in discussions to include the passage on Taiwan in a joint statement after the summit and both countries also intend to take a unified stance opposing China's new law empowering its coast guard. (Newswires/Nikkei/FT)

FTSE Russell says China government bond will account for 5.25% of index, while Malaysia is removed from the watchlist and will remain in the FTSE World Government Bond Index. China's inclusion will occur over 36 months commencing from the effective date of 29th October 2021. India and Saudi Arabia have been added to the watchlist for inclusion in FTSE Emerging Government Bond Index. Russia and Vietnam remain on watchlist for global equity market reclassification. (Newswires)

• Japanese Retail Sales (Feb) M/M 3.1% vs. Exp.0.8% (Prev. -0.5%)
• Japanese Retail Sales (Feb) Y/Y -1.5% vs. Exp. -2.8% (Prev. -2.4%)
• Japanese Unemployment Rate (Feb) 2.9% vs. Exp. 3.0% (Prev. 2.9%)

UK/EU

UK Trade Secretary Truss urged US President Biden to back away from a tit-for-tat tariff war over the UK's imposition of a digital services tax that will hit Silicon Valley tech companies. (FT)

ECB's Vasiliauskas warned that the ECB must be cautious when pivoting away from its emergency stimulus even if the economy recovers as expected, while he noted that the central bank has tightened prematurely in the past. (Newswires)

US Treasury Secretary Yellen spoke with French Finance Minister Le Maire on the importance of working towards a solution in OECD tax discussions, while Yellen also expressed support for multilateral action to promote global rebound and help low-income nations. (Newswires)

USTR Tai told EU's Vestager that she has the desire to develop "more positive and productive" trade ties with the EU and both agreed to strengthen cooperation on non-market economies including China. (Newswires)

• UK Lloyds Business Barometer (Mar) 15 (Prev. 2)

FX

In FX markets, the DXY consolidated near the prior day’s highs after its approach closer towards the 93.00 level amid the flimsy risk appetite in US and continued upside in yields which lifted the US 5-year treasury yield to its highest level in a year, while the latest Fed commentary continued to point to a lack of urgency regarding the increase in yields in which Fed's Waller suggested that the current moves in yields show the US economy is improving and that they do not appear to be going up in a bad fashion. Conversely, there were increasing concerns on the COVID front as the White House warned that infections are increasing again and President Biden has even called on states to pause re-opening efforts. EUR/USD was lacklustre beneath 1.1800 due to the recent USD strength and as the bloc contends with its 3rd virus wave, while ECB's Vasiliauskas warned that the ECB must be cautious when pivoting away from its emergency stimulus and noted that the central bank had tightened prematurely in the past. GBP/USD was rangebound as it took a breather from yesterday’s incursion into the 1.3800 territory where momentum was then reversed after hitting resistance at 1.3850. Elsewhere, USD/JPY and JPY-crosses were mostly higher on the session but with gains limited by the initial indecisive risk mood and antipodeans were also underpinned as rising yields in Australia and New Zealand provided a tailwind for their respective currencies. Elsewhere, TRY weakened overnight after Turkish President Erdogan decided on another shift at the CBRT in which he replaced Central Bank Deputy Governor Cetinkaya with Mustafa Duman.

Turkish President Erdogan fired Turkish Central Bank Deputy Governor Cetinkaya and Mustafa Duman has been appointed as his replacement. (Newswires)

COMMODITIES

WTI crude futures were indecisive after the prior day's whipsawing and brief reclaim of the USD 62.00/bbl level, while there were reports that Saudi is ready to support an extension of the OPEC+ agreement for May and June, as well as extend voluntary cuts, although this only provided brief tailwinds for prices amid ongoing COVID-19 concerns and following the unblocking of the Suez Canal. Gold prices traded subdued as the DXY held on to recent gains near the 93.00 level and copper traded marginally higher as the Asia-Pac region attempted to shrug off the early indecision.

Saudi Arabia is reportedly ready to support OPEC+ oil cut extension into May and June, while it is also prepared to extend its voluntary cuts as it sees global demand as not yet strong enough to bring back additional supply, according to a source. (Newswires)

GEOPOLITICAL

US is reportedly attempting to break Iran nuclear deadlock with a new proposal for Tehran in which the proposal would include some sanctions relief for Iran and comes as Iranian elections loom, while the proposal asks for Iran to halt some of its nuclear activities, such as work on advanced centrifuges and the enrichment of uranium to 20% purity in exchange for some relief from US economic sanctions, according to a source report which stressed that the details are still being worked out and that it is not at all certain that Iran will accept the terms. (Politico)

North Korea Leader Kim's sister criticized South Korean President Moon for recent remarks regarding North Korea's missile launches, while it was also reported that the US is considering additional measures in response to the recent missile tests by North Korea, according to reports citing comments from the US Ambassador to the UN Linda Thomas-Greenfield. In other news, China and North Korea are set to resume trade mid-April amid the opening of a new bridge between the two nations. (KCNA/SCMP/Nikkei)

US

Duration got sold on Monday as ambitious stimulus plans and supply offset overnight Archegos jitters, while no-show of noticeable month-end inflows. By settlement 2s +0.4bps at 0.145%, 5s +3.6bps at 0.893%, 10s +6.2bps at 1.722%, 30s +6.2bps at 2.429%; TYM1 volumes were average. US sold 3- and 6-month bills at 2bps and 4bps. SOFR for March 26th unch. at 1bps. NY Fed accepted USD 40.354bln (highest volume this year) at its RRP operation. Sovereigns had been bid out of Asia, with jitters over the latest Archegos liquidations supporting the haven bid, with month-end (bond-buying expected) likely providing some tail-winds. It's hard to gauge if and how-much rebalancing flows have taken place, but they seemingly weren't strong enough to prevent a bout of bond selling as US players arrived. Some desks had attributed the back-up in yields to the latest stimulus proposals out of Washington, with the White House looking to raise the infrastructure price tag to USD 4trln from 3trln. There were then several hours of sideways trade before USTs had another leg lower into the latter part of the session, coming amid a handful of corporate issuers stepping into the dollar market; Lowe's, BMW, and Kohl's were all raising capital in the long-end. Aside from month-end flows, with no coupon Treasury issuance this week, Friday's NFP will be the key data point for the rates market (although it is a market holiday, it will be a key catalyst on the reopen of trade next week); Biden's economic plan reveal on Wednesday could also create (or diminish) some Treasury supply concerns. Any further selling pressure, at least from these levels, could see the US 10-year yield eclipse its cycle peak just above 1.75%. T-note (M1) futures settled 13 ticks lower at 131-11+.

Fed's Waller (voter) said yields are not rising in a bad fashion but the Fed would respond if markets became disorderly, while he added Yield Curve Control is an available tool but there are lot of tools you don't need to pull out. Waller also stated that current moves in yields show the US economy is improving and they don't appear to be going up in a 'bad fashion’ and that we are a long way from raising rates at this point. (Newswires)

White House said the infrastructure package is an opportunity to address the tax code, while reports added that the White House "has a plan to pay for it" but noted they're open to negotiations with Congress on specifics. (Washington Post)

US Transportation Secretary Buttigieg stated that tax on miles driven and increase in gasoline tax are not being considered as sources of funding for President Biden's infrastructure plan. (Newswires)

Wall Street banks were summoned by US regulators following the Archegos sell down in which the SEC and FINRA were said to have consulted with banks, while other reports also stated that banks reportedly discussed cooperation to avert a selling frenzy and had met last week to consider an orderly unwinding of Hwang's leveraged equity positions. (Newswires/FT)