• European equity indices and US equity futures are firmer across the board, with the tech-heavy NQ the outperformer, +0.9%
• DXY has been somewhat choppy but within contained ranges for the session with major peers largely flat/mixed at present
• US President Biden proposed a USD 2trln plan with spending spread over 8 years, and noted that the corporation tax rate will increase to 28%
• OPEC+ will reportedly discuss options that include a rollover and gradual oil output increase; gradual oil output increase would be a maximum of 500,000 BPD
• Looking ahead, highlights include final US manufacturing PMIs, US IJC, ISM manufacturing, OPEC+, Fed's Harker, Kaplan

CORONAVIRUS UPDATE

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 Health Minister Veran states the peak of the epidemic could be reached in 7-10 days. (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 (+0.6%) 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 (+0.9%) 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 (+2.0%) and Shanghai Comp. (+0.7%) 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)

PBoC official Sun Guofeng states they will keep CNY exchange rate basically stable at a reasonable level and the PBoC will test the digital Renminbi at the forthcoming Winter Olympics. Furthermore, he added the impact of the Fed policies were limited on China's financial markets. (Newswires)

PBoC Vice Governor states they will closely control investment in new overseas coal and fired-power plant projects. (Newswires)

China's MOFCOM is expected to release an e-commerce 5-year plan in H2 '21. (Newswires)

BoJ's Noguchi welcomes current BoJ monetary policy as it has pulled Japan out of its state of deflation. (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)

• 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%)

US

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)

US President Biden is considering a joint-session address to Congress around April 30th the 100-day mark of his Presidency. (Punchbowl News)

UK/EU

ECB's Lane says the near-term economic situation continues to be dominated by uncertainty whilst inflation can be largely attributed to pandemic shock. Additionally, he stated there is no basis for the shift in inflation dynamics and the pandemic shock continues to pose ongoing risks to the projected path of inflation. (Newswires)

ECB's Weidmann says EZ 2021 growth forecast may be missed if anti-COVID curbs are extended, measurers of financing costs for households/companies may not yet fully reflect changes in bond yields. (Newswires)

EU Markit Manufacturing Final PMI (Mar) 62.5 vs. Exp. 62.4 (Prev. 62.4) UK Markit/CIPS Manufacturing PMI Final (Mar) 58.9 vs. Exp. 57.9 (Prev. 57.9)

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)

UN panel report warned that North Korea has likely developed capability of arming its ballistic missiles with nuclear warheads. (Nikkei)

Yemen's Houthis attacked Riyadh, the Saudi Capital, with 4-drones, according to a spokesperson; attacked important targets in Riyadh with drones, no confirmation from the Saudi side. (Newswires)

EQUITIES

European equities (Eurostoxx 50 +0.2%) have seen a steady grind higher since the open as markets head towards the end of the holiday-shortened week. In terms of broader macro impulses, a bulk of the news cycle has centred around President Biden’s two-part spending proposal, consisting of the American Jobs Plan and American Family Plan. That said, little follow-through has been observed in Europe as many of the specifics of the release were announced during yesterday’s session. Closer to home, the narrative is somewhat less upbeat after French President Macron announced new measures, including a national lockdown, which will take place from Saturday and last for at least one month. Nonetheless, the CAC 40 (+0.3%) has still managed to eke out mild gains throughout trade, in-fitting with broader sentiment in the region. From a sectoral standpoint, they are broadly firmer with Technology names leading the charge higher. This can also be observed in the US with the e-mini Nasdaq outperforming US peers with gains of 0.9% as the US 10yr yield continues to retreat. Elsewhere, outperformers include Financial Services, Basic Resources and Retail with the latter aided by gains in Next (+2.3%) post-FY earnings. To the downside, Autos is the only sector in the red with Daimler (-2.1%) and Volkswagen (-1.3%) at the bottom of the DAX with market participants still bemused over the latter’s Voltswagen “April fools joke”. Atos (-14.2%) sit firmly at the foot of the Stoxx 600 after announcing that auditors found issues that prompted accounting errors at two of its US subsidiaries.

EU antitrust regulators have cleared the Analog Devices (ADI) bid for Maxim (MXIM) without conditions. (Newswires)

Mizuho (8411 JP) could face a JPY 10bln loss in relation to the Archegos blow up, according to the Nikkei. (Newswires)

FX

AUD - The Aussie is still underperforming, but some way off overnight lows vs the Greenback within a 0.7601-0.7532 range in wake of trade data revealing a 1% fall in exports due mainly to iron ore, though the partial recovery to 0.7550+ is mainly down to another pull-back in its US counterpart rather than anything else. However, retail sales were not quite as weak as forecast and some are touting a hawkish shift from the RBA next week given tangible evidence of a rapid recovery in the domestic economy via the labour market and booming building permits.

CHF/NZD/CAD - Also weaker vs their US adversary despite the DXY stalling ahead of yesterday’s high and recoiling into a tighter band between 93.338-122 compared to Wednesday’s 93.437-92.082 extremes. Moreover, the Franc is straddling 0.9450 even though the Swiss manufacturing PMI was considerably firmer than forecast in March to offset mixed CPI and weak retail sales for the prior month, while the Kiwi has not been able to take advantage of Aud/Nzd tailwinds to retest 0.7000. Elsewhere, the Loonie has lost post-Canadian GDP momentum ahead of building permits and the Markit PMI, albeit holding above 1.2600 with the aid of firmer oil prices, as BoC Governor Macklem expresses concern about an unsustainable house price bubble and resultant rising levels of household debt. Nevertheless, Usd/Cad may be capped by decent option expiry interest extending from 1.2600-10 (1.5 bn) through 1.2630-45 (1.2 bn) to 1.2600-75 (1.3 bn) in the event of a bullish reaction to any of the Canadian or US releases that also include Challenger layoffs, jobless claims, Markit’s final manufacturing PMI, construction spending and the ISM before Fed speakers in the form of Harker and Kaplan.

GBP/EUR/JPY - The Pound remains propped near 1.3800 vs the Dollar and 0.8500 against the Euro, but unable to breach either psychological barrier on the back of an upgrade in UK manufacturing PMI, and aside from the obvious swathe of bids in Eur/Gbp just under the current 2021 low, Eur/Usd resilience on the 1.1700 handle is also keeping Sterling at bay. Similarly, the Yen continues to repel offers into 111.00 and an upbeat Japanese Tankan survey may be helping alongside a strong 10 year JGB auction and some bull re-flattening across the US Treasury curve.

SCANDI/EM - Momentum and the pendulum is still swinging away from the Sek towards the Nok, as evident by Eur/Sek remaining elevated around 10.2500 following a considerably better than anticipated Swedish manufacturing PMI in contrast to Eur/Nok continuing to hover over 10.0000. Meanwhile, the Cnh has been ruffled by China’s Caixin manufacturing PMI falling short of expectations and slowing from the previous month, but the Try is paring more losses after a firmer Turkish manufacturing PMI and an extension of the reduction to withholding taxes for bank deposits through the end of May.

• 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%)

FX Expiry Options, NY:

• EUR/USD: 1.1800 (468M), 1.1850 (1.1BLN)
• USD/CAD: 1.2450 (1.5BLN), 1.2600-10 (1.5BLN), 1.2630-45 (1.2BLN), 1.2660-75 (1.3BLN)

FIXED

It seems that those willing to step up to the plate and bet on a bounce were far from being foolish or throwing caution to the wind as Gilts have not looked back since. In fact, the 10 year debt future has gradually caught up with Bunds and US Treasuries before overtaking both to print a 127.86 Liffe high and 27 tick gain on the day vs +23 ticks for the Eurex equivalent at 171.51 and T-note topping out at 131.06+ compared to the 130-30 midweek close. However, plenty still to come in the form of NA data, OPEC+ and Fed speakers, so some way to go before bonds can be sure of a firm start to April, Q2 and the new FY.

COMMODITIES

WTI and Brent front month futures have opened the session on a firmer footing, but off initial highs, following on from Asia’s positive lead. Fundamental support for price action resides around the OPEC+ meeting, where expectations remain that OPEC+ will maintain its output cuts. Following the JMMC, alleged not to be very upbeat, Eurasia Group reported “the most likely outcome is no significant changes in production and any decisions on tapering will likely be delayed to the May meeting.” Moreover, this decision would come amid growing COVID infection rates, in some regions, hindering demand. As such, OPEC+ continuing the supply cuts has had less of an impact on the complexes’ price as usual, due to the growing concerns surrounding the economic outlook and the global recovery. The May WTI contract trades on a mid USD 60.00/bbl handle (vs low USD 59.26/bbl) whilst its Brent counterpart trades marginally north of USD 64.00/bbl (vs low USD 62.81/bbl). Spot gold and spot silver have both benefitted modestly from a pause in USD strength, with the former seeing more pronounced gains on the day and rebounding from its 3-week low while silver is more contained in comparison. At the time of writing, spot gold trades at USD 1,715/oz (vs low USD 1,706/oz) and silver trades just shy of USD 24.40/oz (vs low USD 24.26/oz). Onto base metals, LME copper is softer on the session and nearing 1-month lows after Caixin Manufacturing PMI fell short of expectations.

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)

JMMC has recommended the extension of compensation cuts until end-September 2021, according to Energy Intel's Bakr citing sources; countries that have overproduced have reportedly been asked to submit compensation plans today. There were later reports, OPEC+ JMMC noted that despite ongoing destocking, oil stocks remain above the average 2015-2019 period, according to a document. Additionally, OPEC+ will discuss options that include a rollover and gradual oil output increase; gradual oil output increase would be a maximum of 500,000 BPD, according to sources. (Newswires)

US Energy Secretary Granholm tweets "I had a productive call with Saudi Energy Minister Abdulaziz bin Salman al-Saud today. We reaffirmed the importance of international cooperation to ensure affordable and reliable sources of energy for consumers." (Twitter)

Russian oil product exports from Black Sea Port of Tuapse is noted at 1.425mln tonnes in April vs 1.531mln tonnes scheduled for March, according to traders. (Newswires)

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

Iraq intends to increase the Manjoon oilfield output to 450k BPD from current 130k BPD, in 3-years, according to an executive. (Newswires)