• Asian equity markets traded positively amid a busy slate of data releases and US President Biden’s announcement of his two-part spending proposal
• Measures include capital investment of around USD 2tln with spending spread over 8 years, while he also suggested increasing the corporate tax rate to 28%
• French President Macron announced new measures including a national lockdown which will take place from Saturday and last for at least one month
• In FX, the DXY sits firmly on a 93.00 handle, EUR/USD maintains 1.17 status and GBP/USD ran out of steam ahead of 1.38
• OPEC JMMC ended with no signs of a recommendation and it was said to not be a very upbeat JMMC
• Looking ahead, highlights include final EZ, UK, US manufacturing PMIs, US IJC, ISM manufacturing, OPEC+, Fed's Harker, Kaplan

CORONAVIRUS UPDATE

US COVID-19 cases +62,726 (prev. +60,699), deaths +807 (prev. +592), total doses of vaccines administered 150mln (prev. 148mln), those fully vaccinated 54.607mln (prev. 53.423mln), while White House COVID adviser Slavitt called on Governors to reinstate mask mandates. (Newswires)

Johnson & Johnson's (JNJ) vaccine has reportedly been delayed due to a factory mix up in US which ruined about 15mln doses, according to NYT. Co. later stated that it continues to expect to deliver COVID-19 vaccine at a rate of over 1bln doses by year-end, while it added that identified one batch of drug substance that did not meet quality standards which was never advanced to filling and finishing stages. (Newswires/NYT)

French President Macron announced new measures including a national lockdown which will take place from Saturday and last for at least one month with the curfew to be maintained, while he announced more domestic travel restrictions although some will be allowed for Easter holiday and stated that schools will close temporarily for three weeks. Furthermore, the French Finance Ministry estimates COVID measures will cost EUR 11bln per month and the French Parliament will vote today regarding the COVID measures, while it was separately reported that the Italy's cabinet approved to extend their COVID curbs. (Newswires)

President of Brazil's Butantan Biomedical Institute said they have detected a COVID variant in Sao Paulo state which is similar to the South African variant. (Newswires)

ASIA

Asian equity markets traded positively as participants reflected on the busy slate of data releases and US President Biden’s announcement of his two-part spending proposal consisting of the American Jobs Plan and American Family Plan whereby he only provided details of the former which will modernize, repair and upgrade the transportation network, boost the US edge on chips and which will create millions of jobs. Furthermore, President Biden stated that they will make sure to buy American with contracts only to be awarded to US firms and that the capital investment is to be around USD 2tln with spending spread over 8 years, while he also suggested increasing the corporate tax rate to 28% and that they will dramatically raise IRS tax compliance. ASX 200 (+0.4%) was kept afloat with gold miners underpinned after the recent rebound in the precious metal and with tech inspired by outperformance of the sector stateside, although financials were indecisive with CBA and Macquarie pressured from disciplinary actions by regulatory agencies and AMP was boosted after it named ANZ Bank’s Deputy CEO as its next chief. Nikkei 225 (+0.7%) and KOSPI (+0.7%) benefitted from encouraging data including a strong BoJ Tankan report which showed large manufacturers sentiment index at its highest since September 2019 and large non-manufacturers sentiment at its best levels in a year, while South Korea cheered a continued surge in exports. Hang Seng (+1.1%) and Shanghai Comp. (+0.3%) conformed to the upbeat mood following reports that China’s cabinet is to further cut taxes for smaller companies and after China approved the long-planned mega-merger between state-owned SinoChem and ChemChina, although gains were capped following a miss on Chinese Caixin Manufacturing PMI data. Finally, 10yr JGBs were lower after the fluctuations in USTs and the BoJ announcement of its purchase intentions for April in which it upped the amount but lowered the frequency which would effectively result to a decline of total purchases from March, although improved results from the 10yr JGB auction helped pare some 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 6.5584 vs exp. 6.5597 (prev. 6.5713)

USTR office vowed continued efforts to combat "significant foreign trade barriers" to US exports and commerce, while it singled out China as the "world's leading offender" in creating overcapacities in several sectors. Furthermore, it will engage with foreign governments on various issues that threaten US exporters including digital policies, agricultural trade barriers and technical barriers, while it vowed to work to address Chinese subsidies that have created excess capacities in the steel, aluminium, and solar sectors which could soon affect other industries. (Newswires)

US National Security Adviser Sullivan spoke with Philippines' counterpart Esperon regarding concerns surrounding Chinese activities in Whitsun Reef and they reaffirmed applicability of the US-Philippines Mutual Defense Treaty in the South China Sea. (Newswires)

US State Department spokesman said the US continues to call on China to use its influence to hold to account those responsible for the military coup in Myanmar. (Newswires)

• Chinese Caixin Manufacturing PMI (Mar) 50.6 vs Exp. 51.3 (Prev. 50.9)
• Japanese Tankan Large Manufacturers Index (Q1) 5 vs. Exp. 0 (Prev. -10)
• Japanese Tankan Large Manufacturers Outlook (Q1) 4 vs. Exp. 4 (Prev. -8)
• Japanese Tankan Large Non-Manufacturers Index (Q1) -1 vs. Exp. -5 (Prev. -5)
• Japanese Tankan Large Non-Manufacturers Outlook (Q1) -1 vs. Exp. -2 (Prev. -6)
• Japanese Tankan Large All Industry Capex (Q1) 3.0% vs. Exp. 1.4% (Prev. -1.2%)
• South Korean Trade Balance (USD)(Mar P) 4.17B (Prev. 2.62B)
• South Korean Exports (Mar P) Y/Y 16.6% (Prev. 9.5%)
• South Korean Imports (Mar P) Y/Y 18.8% (Prev. 14.1%)

UK/EU

FX

In FX markets, the DXY maintained 93.00 status with the greenback indecisive overnight following recent choppy price action in yields, as well as mixed data releases stateside. Focus then turned to President Biden’s infrastructure plan although this failed to spur any material reaction for asset classes as plenty of the details had been divulged beforehand and his plans received a mixed reception with both the US Business Roundtable and Chamber of Commerce not fully supportive of the plans due to the tax increases. EUR/USD was rangebound with the single currency restricted after soft inflation data, as well as yesterday's comments from ECB’s Lagarde and after French PM Macron announced a fresh 1-month national lockdown, while GBP/USD was steady after meeting resistance ahead of 1.3800. USD/JPY and JPY-crosses traded choppy with price action mostly driven by their base currencies and antipodeans were lacklustre with underperformance in AUD/USD following mixed Retail Sales and Trade Data.

• Australian Retail Sales (Feb) M/M -0.8% vs. Exp. -1.1% (Prev. -1.1%)
• Australian Trade Balance (AUD)(Feb) 7.5B vs. Exp. 9.7B (Prev. 10.1B)
• Australian Exports (Feb) M/M -1% (Prev. 6%)
• Australian Imports (Feb) M/M 5% (Prev. -2%)

COMMODITIES

WTI crude futures attempted to nurse some losses following its brief slip beneath the USD 59.00/bbl level with prices subdued amid demand concerns after OPEC+ revised this year's global oil demand growth lower by 300k bpd to 5.6mln bpd. On the supply side, OPEC output last month reportedly increased by 180kbpd according to a Reuters survey and it was also reported the JMMC meeting was said to not be very upbeat where concerns were expressed regarding compliance and compensation cuts. Elsewhere, gold traded steady after having reclaimed the USD 1700/oz level and as the greenback consolidated overnight, while copper prices failed to benefit from the constructive mood in which prices pulled back from resistance around the USD 4/lb level.

Saudi Arabia and Iraq will continue to cooperate within the OPEC framework with full commitment to the OPEC+ agreement, compensation mechanism and all decisions agreed to ensure stability of the market, according to a joint statement. Furthermore, they will establish a joint fund with capital estimated about USD 3bln as a contribution from Saudi in promoting investment in Iraq's economic fields. (Newswires)

OPEC JMMC ended with no signs of a recommendation and it was said to not be a very upbeat JMMC, according to Energy Intel. Furthermore, concerns were expressed over compliance and the compensation cuts plans, while the aggregate overproduction from May 2020 till Feb 2021 was said to be a little over 3mln BPD. (Energy Intel)

Chilean mine workers at the CODELCO Radomiro Tomic mine accepted a contract offer which averts the risk of strike action. (Newswires)

GEOPOLITICAL

US Secretary of State Blinken affirmed in a call with Ukraine's Foreign Minister the unwavering support of the US for Ukraine sovereignty amid Russian aggression. (Newswires)

White House said the US review of North Korea policy is in its final stages. In relevant news, a UN panel report warned that North Korea has likely developed capability of arming its ballistic missiles with nuclear warheads. (Newswires/Nikkei)

EU Diplomats said the bloc is set to sanction eight Iranians and 3 state entities over the November 2019 crackdown. (Newswires)

US

Treasuries were choppy after the morning bid failed to sustain amid a bout of selling on volume into futures settlement. Post settlement, 2s +1bps at 0.158%, 5s +1.5bps at 0.925%, 10s +0.6bps at 1.732%, 30s +1.2bps at 2.408%; TYM1 volumes were light for most of the US session before the heavy sales into the close. Inflation breakevens were narrower, though mainly at the front-end with 5yr TIPS rising 10+ bps. Fed bought USD 1.734bln in 20 to 30-year coupons; O/C 2.68x (prev. 2.84x). US sold USD 35bln 119-day CMBs at 3bps. SOFR for March 26th unchanged at 1bps. NY Fed RRP demand at USD 134.307bln across 41 bidders (prev. 104.725bln across 35 bidders; seven-op average rises to 48.91bln from 32.90bln). Bonds were yet again on the downside out of APAC amid losses in Aussie bonds after a disappointing auction, although month-end flows gave some support into the APAC close. There was also some pressure from the JGB space amid speculation that the approaching BoJ debt-purchase plan release for April will see reductions in long-end buying. The soft ADP print out of the US (+517k vs exp. +550k) supported duration, with reports of one account lifting 5k USM1 and 20k TYM1 in a knee-jerk reaction. The trend appeared to support those flows regardless given the Fed buying in the 20-30yr sector and the expected 0.07yr US duration extension for month-end (although lighter than the 12-month average of +0.11yr) - note that index rebalance is done by 16:00 ET now (prev. 15:00). But, those flows failed to sustain USTs as prices began to pare in latter trade, coinciding with stock strength, with yields accelerating to session peaks into futures settlement. Note, IFR reported that 40k TYM1 and 40k FVM1 were sold in the last few minutes (there was ultimately even more than that) pre-settlement by leverage funds and long exits, following on from a hedge fund linked to a 6k TYM1 sale, coinciding with algo sell programmes reportedly being triggered as 10s and 30s rose above 1.72% and 2.40%. T-note (M1) futures settled 8 ticks lower at 130-30.

US President Biden said we need to act to save jobs and that the pandemic made economic divisions worse, whereby the economy has become unfair which we need to change, while he announced his plan has 2 parts which are the American Jobs Plan and American Family Plan. President Biden only outlined the American Jobs Plan which will modernize, repair and upgrade the transportation network, as well as build new rail corridors, ease backlogs at seaports, improve 20k miles of roads and repair 10k bridges. President Biden also stated his plan will ensure they buy American and that contracts will not be awarded to firms that are not American, while his plan will create millions of jobs and proposes capital investment of around USD 2tln with spending spread over 8 years, as well as noted that they will increase the corporate tax rate to 28%. (Newswires)

Fed's Kaplan (non-voter) said the desirable thing about infrastructure spending is that it is a long-term investment and is an investment worth making. Kaplan reiterated that we will see how inflation shakes out and that he expects it to rise this year and moderate in 2022 and 2023, while he added the Fed's desire is to anchor inflation expectations at 2% and reiterated that right now the Fed is more willing to be aggressive and less pre-emptive. (Newswires)