• European bourses are firmer across the board, Euro Stoxx 50 +0.8%, as the region returns from the Easter break and reacts to US data; Stateside, futures are a touch softer
• US Senate Parliamentarian ruled in favour of Democrats efforts and stated that a revised budget resolution may contain budget reconciliation instructions
• DXY has been grinding higher throughout the session to the detriment of peers across the board with GBP also hindered via EUR/GBP action; RBA maintained all measures
• The debt complex has been drifting somewhat but USTs are faring relatively better than EZ peers thus far as the yield curve marginally flattens
• Looking ahead, highlights include ECB asset purchases, US JOLTS & EIA STEO

CORONAVIRUS UPDATE

European Medicines Agency sees a potential link between the AstraZeneca (AZN LN) COVID vaccine and blood clots, according to Messaggero. (Newswires) The European Drug Safety Panel is expected to update on the matter this week

WHO is now expecting to review the Sinopharm and Sinovac vaccines at the end of the month as more data is required. (Newswires)

New Zealand PM Ardern announced a quarantine-free travel bubble with Australia will begin on April 19th which she stated will give the economic recovery a boost but noted that passengers will not be able to travel if they have cold or flu symptoms. (Newswires)

ASIA

Asian equity markets traded mixed as the regional bourses failed to fully sustain the momentum from their counterparts on Wall St where the S&P 500 and the DJIA extended on fresh record highs in their first opportunity to react to last week’s blockbuster NFP jobs report and which was followed up by stronger-than-expected ISM Services PMI data. ASX 200 (+0.8%) rallied on return from the long weekend with gains spearheaded by tech after similar outperformance stateside, while shares in Cleanaway Waste Management surged by double-digit percentages on M&A news in which the Co. is to buy Suez’s Australian unit for around AUD 2.5bln. Nikkei 225 (-1.3%) retraced opening advances with sentiment clouded by a mixed currency and disappointing Household Spending data which contracted by 6.6% Y/Y. Shanghai Comp. (U/C) was also lacklustre despite stronger than expected Chinese Caixin Services PMI data which alongside Caixin Composite PMI, printed at their highest readings YTD, with the mainland subdued after the PBoC drained liquidity and amid reports China is said to have asked banks to curtail credit until year-end, while Hong Kong markets remained closed for holiday. Finally, 10yr JGBs were higher with prices supported amid weak domestic data and as Japanese stocks gave back initial gains, while prices also tracked the upside in T-note futures amid easing of yields and with improved results from the 30yr JGB auction.

PBoC injected CNY 10bln via 7-day reverse repos at a rate of 2.20% for a net daily drain of CNY 10bln. (Newswires) PBoC set USD/CNY mid-point at 6.5527 vs exp. 6.5532 (prev. 6.5649)

China is said to have asked banks to reduce credit until year-end during a meeting with the PBoC on March 22nd where banks were told to keep total advances in 2021 at around the same level last year, while some foreign banks were urged to rein in new lending after ramping up their balance sheets last year. (Newswires)

China should create a Yuan FX rate futures market at an appropriate time, according to a PBoC working paper; guiding domestic entities to use the offshore FX futures market to hedge such risks. (Newswires)

S&P Dow Jones Indices said China domiciled securities that were removed due to sanctions will be re-eligible for inclusion to some fixed income indices from July 1st rebalancing, while it added that some regional China fixed income indices will shift from a US/UK/EU investor perspective to a China-based investor perspective. (Newswires)

• Chinese Caixin Services PMI (Mar) 54.3 vs. Exp. 52.1 (Prev. 51.5)
• Chinese Caixin Composite PMI (Mar) 53.1 (Prev. 51.6)
• Japanese All Household Spending (Feb) M/M 2.4% vs Exp. 2.8% (Prev. -7.3%)
• Japanese All Household Spending (Feb) Y/Y -6.6% vs Exp. -5.3% (Prev. -6.1%)

US

US Senate Parliamentarian ruled in favour of Democrats efforts and stated that a revised budget resolution may contain budget reconciliation instructions, which paves the way for the Democrats to approve additional measures along party lines at the Senate. There were also comments from Senate Democrat Leader Schumer's spokesman that the Senate Parliamentarian's opinion is important but no decisions have been made on the legislative path ahead. (Newswires)

Germany expects a deal on the global corporate minimum tax rate by summer, and expects a deal this week on the new IMF reserves to aid the poorest countries while a French Official says that a digital and minimum tax could be possible at the end of H1. (Newswires) Follows the call from US Treasury Secretary Yellen for such a rate in-light of the US' plan to increase the domestic corporate tax level

UK/EU

UK will launch a government-backed loan scheme today which seeks to help companies access finance as the economy reopens from a strict lockdown in which government will provide an 80% guarantee on loans to companies of as much GBP 10mln with the scheme to last until year-end and with interest rates to be capped at 14.99%. (Newswires)

UK government is reportedly taking a firm stance regarding requests for a Eurostar bailout with ministers stating that the Co. should instead look to its shareholders for support. (FT)

EU Sentix Index (Apr) 13.1 vs. Exp. 7.5 (Prev. 5.0)

GEOPOLITICAL

An Iranian Government spokesperson says they have received several proposals on removing US sanctions, but the US will need to return to the nuclear deal before putting forward any negotiating proposal; prior to this a US State Department spokesperson said they will not entertain unilateral gestures to get Iran to a better place in talks, while the US will be thorough and not cut corners in talks. (Newswires)

Russia's Kremlin says the situation in Eastern Ukraine remains very tense and any statement can further fuel tensions; follows on from the Ukraine President, following a call with NATO's Secretary General Stoltenberg, says a NATO membership plan will be a real signal for Russia with NATO being the only way to end the war in the Donbass region. (Newswires)

EQUITIES

European equities kicked off the holiday-shortened trading week with gains across the board (Euro Stoxx 50 +0.8%) as the region plays catch-up to the fresh record levels seen on Wall St yesterday whereby the S&P 500 and the DJIA extended to record highs with impetus derived from the strong US jobs and ISM metrics. US equity futures, however, have diverged from the firmer performance across the pond and trade with incremental losses - with the cyclically-driven RTY (-0.4%) narrowly lagging peers. Sectors in Europe maintain the same picture seen at the cash open - with most sectors in the green, led by Basic Resources amid the rebound in base metals. European sectors see more of a pro-cyclical bias as the region mimics the sentiment seen state-side yesterday - with Autos, Banks, Travel & Leisure, and Oil & Gas among the top performers, while the more defensive Healthcare and Telecoms reside at the other end of the spectrum, with the latter also in negative territory. In terms of movers, the aforementioned rally in base metals sees miners driving the FTSE 100 (+1.2%), with Antofagasta (+3.8%), Rio Tinto (+3.6%), Glencore (+3.3%), and BHP (+3.2%) all among the top gainers. The miners in the index are closely followed by BP (+3.2%), who holds onto gains despite the recent fall in oil prices as the Co. now expects proceeds in 2021 to be at the top of the previously guided range of USD 4-6bln. BP also expects to have reached its net debt target of USD 35bln ahead of schedule in Q1, and on reaching this target, the oil giant is committed to returning at least 60% of surplus cash flow to shareholders by way of share buybacks. Away from the UK, SAP (+2.0%) is bolstered amid CNBC reports yesterday that Google is to stop using Oracle's finance software and use SAP's instead. Telefonica (+0.7%) bucks the downbeat Telecoms trend as it is to begin the bidding process for its submarine cable unit in a deal that could be valued around EUR 2bln. Air France-KLM (-0.7%) was choppy at the open after the EU Commission approved the EUR 4bln rescue plan - whereby opening gains were short-lived, potentially due to some of the strings attached to the package. Finally, Credit Suisse (+0.3%) trimmed earlier gains which were cited to the board overhaul as the group sees a CHF 4.4bln charge related to hedge fund liquidation. In terms of commentary, analysts at RBC note a slightly less optimistic mood across the markets, with its survey identifying six key issues: 1) expectations surrounding the total return to normality being pushed back. 2) The spread of COVID variants across the US. 3) A split among investors surrounding inflation - with a negative tilt - "in total, 42% say the ramp in inflation will be negative or very negative for stocks, and 30% say it will be positive or very positive". 4) Fewer investors backing the bearish USD narrative. 5) Fed tapering expectations nudging forward. 6) Downside risks from President Biden's policies - "Tax generally is a major focus, with 93% saying it’s likely or very likely Biden will get something significant done on corporate taxes, along with 75% who expect significant action on individual taxes and 59% who expect significant action on capital gains taxes", the analysts say.

Amazon (AMZN) - Merchant groups are said to be forming a national coalition to call for stricter antitrust laws, which could include measures forcing the Co. to spin-off some business lines. Separately, Co's share of the US digital advertising market increased to 10.3% in 2020 vs 7.8% in 2019, WSJ citing eMarketer. (WSJ)

Foxconn (2317 TT) - March sales +26.9% Y/Y. (Newswires)

FX

USD - The Dollar is on a firmer footing vs most G10 and EM counterparts having lost momentum over the Easter break against the backdrop of buoyant risk sentiment in wake of a stellar US jobs report and non-manufacturing ISM that hit an all time high. However, the bounce is partly due to weakness in several peers on technical grounds and repositioning as many centres return from extended holiday weekends, while the DXY may also have benefited from the fact that 92.500 held and contained declines within a 92.527-790 range ahead of Redbook weekly updates and JOLTS.

NZD/AUD/GBP - Cross headwinds rather than bearish independent factors appear to be undermining the Kiwi and Pound as Nzd/Usd fades from circa 0.7069 to sub-0.7020 and Aud/Nzd hovers near the top of a 1.0858-30 range following no change in policy guidance whatsoever from the RBA, but Aud/Usd underpinned by another healthy rise in Aussie job ads and an above forecast Chinese Caixin services PMI that is also supporting the YUAN. Indeed, Aud/Usd is maintaining 0.7600+ status and Usd/Cnh is back on the 6.5500 handle vs a high of 6.5650, albeit not quite as low as the overnight Usd/Cny midpoint fix 6.5527 or sub-6.5500 base for the onshore unit. Back to Sterling, Cable has recoiled from circa 2 week highs above 1.3900 to test bids and underlying support around 1.3825, while Eur/Gbp is probing twin peaks either side of month end at 0.8534 and 0.8537 to touch 0.8545 having failed to sustain downside thrust through 0.8475 only yesterday.

EUR - Bucking the overall trend, as the Euro attempts to keep afloat of 1.1800 vs the Greenback with assistance from the aforementioned Eur/Gbp cross rebound, corrective convergence in EGB/UST yield differentials and perhaps even a much better than expected EZ Sentix index. However, news that between 51.7-61% of the population in Germany, France and Italy may have been vaccinated by the end of H1 may also be helping the single currency resist Buck advances.

CHF/CAD/JPY - All softer vs their US rival, with the Franc pivoting 0.9375 and aware if not actually acknowledging the fact that sight deposits fell at Swiss domestic banks in the latest week, while the Loonie is not getting much impetus from firm oil prices inside a 1.2554-16 band and the Yen is trying to keep its head beyond 110.50 following somewhat mixed and disappointing Japanese household spending data.

SCANDI/EM - The Nok has not gleaned much from crude or a pick up Norway’s manufacturing PMI, but the Sek has unwound some of its recent underperformance vs the Euro and Norwegian Crown irrespective of a slowdown in Sweden’s services PMI. Elsewhere, general depreciation in EMs vs the Usd, but the Try lagging again after another worrying rise in Turkish CPI.

RBA kept its Cash Rate Target and 3yr Yield Target unchanged at 0.10% as expected and maintained the parameters of its QE program. The central bank reiterated that it does not expect inflation and employment goals to be reached until 2024 at the earliest and that it will not raise the cash rate until inflation is sustainably within 2%-3% target. Furthermore, the board remains committed to maintaining highly accommodative policy until goals are met, while it stated the economic recovery is well underway and stronger than expected in which it expects above-trend growth in 2021 and 2022. (Newswires)

FIXED

Recovery highs at 171.89 and 127.95 in Bunds and Gilts respectively were forged in very early EU trade and have never really been seen again as the ensuing price action has been largely on the downside to fresh 171.32 and 127.62 lows on Eurex and Liffe, while Eurozone periphery bonds are nursing even deeper losses awaiting the delayed weekly QE updates from the ECB. However, US Treasuries are holding up a bit better and the curve is marginally flatter having already reacted to the 2 major releases since markets closed for the long Easter holiday weekend in the form of NFP and services ISM. Ahead, relatively minor data.

COMMODITIES

WTI and Brent front-month futures see somewhat of a relief rally following substantial losses yesterday whereby Brent prices settled over 4% lower on the day - with WTI now back around USD 60/bbl (vs low 58.62/bbl) and Brent probing USD 63.50/bbl (vs low USD 62.08/bbl). Newsflow for the complex remains light as participants continue to balance the supply and demand implications with COVID remaining the epicentre as OECD nations observe more stringent COVID cubing measures, whilst OPEC opted to again go against market expectations and decided to gradually increase output as it forecasts higher summer demand - which will pose its own risks if the COVID situation deteriorates further or if the inoculation drive is materially disrupted. Nonetheless, as COVID developments are watched, a more imminent risk event is the JCPOA meeting between the US, Iran, China, Russia, and the EU, whereby the 2015 nuclear deal will be revisited. On this front, the US has reportedly put on the table several proposals - but Tehran remains conservative and has stuck to the script - suggesting economic sanctions need to be lifted before meaningful dialogue. Neither the US nor Iran expects breakthroughs at the meeting, thus eyes remain on the overall tone and for any joint statement which could be perceived as constructive. In terms of commentary, Goldman Sachs notes that with OPEC out of the way, supply concerns shift to the JCPOA agreement - “After the increase in Iran exports so far this year, our base case remains that a full recovery won’t occur until summer 2022, implying an agreement likely early-2022... Even if an agreement occurs earlier, we believe that it wouldn’t derail our constructive oil view relative to market forwards through 2022... We don’t see the potential recovery in Iran exports as an exogenous shock to the oil market", the bank says. Analysts at ING meanwhile warn of the possibility of a significant amount of oil supply returning to the market in the coming months, referring to a concoction of Iranian and OPEC+ supply - "we believe that, even with additional supply from OPEC+ along with higher Iranian output, the market will still be drawing down inventories through the year, so impacting the prospects for higher prices later in the year.", the Dutch bank says. In terms of metals, spot gold and silver trade within tight ranges as the precious metals mirror Dollar action, with the yellow metal residing around USD 1,730/oz (1727-38 intraday range), whilst spot silver trades on either side of USD 25/oz (24.76-25.19 intraday range). Turning to base metals, copper prices are bolstered by the ongoing reflationary hopes, the US infrastructure package, and as top-producer Chile shut its borders amid a resurgence of the virus. Chinese steel prices meanwhile leaped to record highs as traders cite robust demand as low supply as its top steel-making city Tangshan saw pollution curbs.

Goldman Sachs stated that OPEC's decision to raise output suggests the group anticipates summer demand will improve sufficiently and that with OPEC+ appearing to manage its exit for now, supply concerns will shift to a potential return of Iran to the nuclear agreement. Furthermore, Goldman Sachs added that its base case is that a full recovery will not occur until summer 2022 which implies an agreement likely in early-2022. (Newswires)