• Equities meander in relative proximity to the unchanged mark with little conviction or fresh drivers present ahead of today's risk events; ES +0.1%, Euro Stoxx 50 +0.3%
• The USD is firmer but contained with peers mixed and rangebound while fixed falls with auction concession factoring and yields firmer and focused around the 5yr Stateside
• Crude remains underpinned given growing geopolitical tensions and the OPEC MOMR due at 13:00BST/08:00EDT today
• Chinese March trade figures saw exports and the trade balance miss expectations whilst imports topped estimates
• Looking ahead, highlights include US CPI, OPEC MOMR, Fed's George, Daly, Harker, Barkin, Bostic and a US 30yr auction

CORONAVIRUS UPDATE

US COVID-19 cases +49,409 (prev. +68,012), deaths +328 (prev. +750), first vaccine dose administered 190mln (prev. 187mln), those fully vaccinated 74mln (prev. 72.6mln). (Newswires)

NIH’s Fauci said the recent Israeli study is misleading and suggested to be careful in reaching conclusions on the Pfizer (PFE) vaccine effectiveness against the South African variant. Furthermore, Fox's Lawrence tweeted that 50% of US adults will have at least one dose of a vaccine for coronavirus by the end of this week and that Dr Fauci stated the US does not need the AstraZeneca (AZN LN) vaccine for herd immunity. (Newswires/Twitter)

Gilead (GILD) said it decided to stop the Phase 3 Remdesivir intravenous study in high-risk non-hospitalized patients with COVID-19 although this was not due to efficacy or safety concerns, while patients enrolled in the study will continue to be followed and the Co. continues to develop investigational inhaled dosage forms of Remdesivir and novel oral antivirals. (Newswires)

UK PM Johnson said the UK has passed a significant milestone of offering jabs to everyone in the 9 highest risk groups and will now push ahead towards the goal of offering all adults a vaccine dose by end-July. In relevant news, a COVID-19 study published in the Lancet found that the B.1.1.7 variant which was first seen in the UK and is now the dominant strain in US, was not as dangerous as thought with the variant not linked to serious disease, but was found to spread faster than other strains. (Newswires)

The German Cabinet has approved a new set of national rules, as expected, to combat the pandemic which would override state-level measures, sources. (Newswires)

Ireland limited the AstraZeneca (AZN LN) vaccine to people aged over 60-years old. (Guardian)

ASIA

Asian equity markets mostly shrugged off the subdued handover from Wall St peers but with gains capped ahead of this week’s risk events including US earnings and as participants digested the latest mixed Chinese trade data. ASX 200 (Unch.) and Nikkei 225 (+0.8%) were lifted from early trade with Australia initially led higher by outperformance in tech although upside was later capped by a subdued commodities complex and ongoing vaccine delay concerns after Australia abandoned plans to purchase Johnson & Johnson's (JNJ) one-dose COVID-19 vaccine due to AstraZeneca (AZN LN) similarities, while Tokyo sentiment was underpinned as exporters found relief from a reversal of some of the recent currency inflows. Hang Seng (+1.0%) and Shanghai Comp. (Unch.) were varied with outperformance in Hong Kong as Alibaba shares extended on the prior day’s post-penalty gains and after affiliate Ant Group kowtowed to Beijing via an overhaul in which it will become a financial holding company, although the mainland was indecisive as participants digested the March trade figures in which Exports and Trade Balance missed expectations but Imports topped estimates and which also followed mixed loans and aggregate financing data from China. Finally, 10yr JGBs were flat with demand sapped amid the gains in Japanese stocks and after the results of the enhanced liquidity auction for long to super-long end JGBs showed the b/c printed unchanged from the previous, while yields across the Tasman were higher with the Australian 10yr up around 6bps after the inflation-indexed bond auction and 2032 bond sale through syndication in Australia, as well as a slightly reduced RBNZ QE operation.

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 reference rate at 6.5454 vs. Exp. 6.5460 (Prev. 6.5578)

The US is expected to designate Taiwan as a currency manipulator as it satisfies the three criteria used by the Treasury Department although analysts have warned that any tariffs imposed could hamper the strengthening ties between US and Taiwan. (Newswires/FT)

PBoC policy adviser Wang said China should avert a credit contraction and prevent inflation expectations from intensifying, while the adviser suggested that they should make contingency plans to cope with possible policy shifts by the US Fed. In other news, it was also reported that China is said to be investing CNY 1.8tln in new infrastructure this year. (Newswires/China Daily)

• Chinese Trade Balance (CNY)(Mar) 89.98B vs. Exp. 327.80B (Prev. 675.90B)
• Chinese Exports (CNY)(Mar) Y/Y 20.7% vs. Exp. 28.6% (Prev. 50.1%)
• Chinese Imports (CNY)(Mar) Y/Y 27.7% vs. Exp. 17.6% (Prev. 14.5%)
• Chinese Trade Balance (USD)(Mar) 13.80B vs. Exp. 52.05B (Prev. 103.25B)
• Chinese Exports (USD)(Mar) Y/Y 30.6% vs. Exp. 35.5% (Prev. 60.6%)
• Chinese Imports (USD)(Mar) Y/Y 38.1% vs. Exp. 23.3% (Prev. 22.2%)

China's Customs spokesman said steady domestic growth boosted trade, while Customs also stated the nation's foreign commerce improved and is increasing but noted the international economic landscape remains grim with foreign trade hampered by instability and uncertainties. (Newswires)

US

Fed's Rosengren (non-voter) said monetary policy is currently appropriate for the state of the economy and expects rapid growth in the economy but noted that a full recovery may take longer than anticipated, while he added that reducing slack and an increase in inflation sustainably to 2% would kick start the rate hike discussion and that he sees risks on both sides of the inflation outlook. (WSJ/Newswires)

US President Biden reportedly brought up the idea of a USD 0.05 increase in gas tax during a meeting yesterday, according to Democratic Rep. Payne and President Biden was also said to be open to a user fee on EVs. However, the White House later stated that President Biden is not in favour of raising the gas tax and mentioned the idea to suggest there is not a lot of money to be raised from it. (Newswires)

US Republican Senator Wicker told President Biden that GOP will not support tax hikes in the infrastructure package, while President Biden said there are 58 corporations not paying taxed and Wicker is willing to work on that issue but not undo tax law. Furthermore, Wicker stated that President Biden is inviting another group of bipartisan lawmakers next week. (Newswires)

US NFIB Business Optimism Idx (Mar) 98.2 (Prev. 95.8)

UK/EU

UK GDP Estimate MM (Feb) 0.4% vs. Exp. 0.6% (Prev. -2.9%, Rev. -2.2%); YY (Feb) -7.8% vs. Exp. -8.3% (Prev. -9.2%, Rev. -8.5%)

• 3M/3M (Feb) -1.6% vs. Exp. -1.9% (Prev. -1.7%, Rev. -1.4%)
• UK Goods Trade Balance GBP* (Feb) -16.442B GB vs. Exp. -10.4B GB (Prev. -9.826B GB, Rev. -12.592B GB)
• UK BRC Retail Sales (Mar) Y/Y 20.3% (Prev. 9.5%)

German ZEW Economic Sentiment (Apr) 70.7 vs. Exp. 79.0 (Prev. 76.6); Current Conditions (Apr) -48.8 vs. Exp. -53.0 (Prev. -61.0)

• EU ZEW Survey Expectations (Apr) 66.3 (Prev. 74.0)

The EU Commission has, in contrast to some expectations, said the UK should be left out of the Lugano convention due to the UK not being a member of either the EEA or EFTA, Commission’s view is subject to approval from member states. (FT) Lugano convention determines which countries courts have jurisdiction in cross-border disputes

GEOPOLITICAL

Russian Foreign Minister says Russian and Iran have signed a security cooperation agreement. Additionally, Russia is warning the US to stay away from Russia and the Crimea as the risk of incidence is very high and Russia will do everything it can to ensure its security in the event of escalation with Ukraine, Ria citing a Russian Deputy Minister. However, the US Navy reportedly stated that there are no ships in the Black Sea now and none heading there, though request for passage has been made, according to NPR. On the matter, G7 Foreign Ministers say they are deeply concerned by the build up of Russian military on the Ukraine border and in Crimea. Separately, the Ukrainian presidential office director calls for Patriot anti-aircraft missiles to be installed on Ukrainian territory, according to Al Jazeera. (Newswires/Twitter)

US Secretary of Defence Austin says no longer planning a troop withdrawal from Germany, to deploy an additional 500 troops. (Newswires)

EQUITIES

In a similar vein to yesterday, European equities (Eurostoxx 50 +0.3%) trade with little in the way of firm direction amid a lack of fresh macro impulses for the region. More broadly for European performance, the Stoxx 600 currently remains just shy of its 437.65 all-time high printed on April 9th with Goldman Sachs in a recent note stating a 3-month target of 450, 6-month target of 460 and 12-month target of 470. Europe continues to be subject to regional lockdowns as COVID cases remain stubbornly high with Germany a notable example. However, in a recent note, ABN AMRO highlights that vaccinations over the past week in Germany have exceeded those of the UK (0.6% of the population per day receiving a dose compared with 0.5% in the UK). Furthermore, the Dutch bank noted that in May, vaccine doses delivered will be triple the March levels, and on recent trends EU countries look now to be on track to meet the EU target of 70% of the population being fully vaccinated by September. In terms of sectoral performance, sectors are broadly firmer with outperformance in retail, technology and chemicals, whilst downside laggards include telecoms, health care and oil & gas. In terms of individual movers, Hays (+2.6%) sit near the top of the Stoxx 600 amid the Co. forecasting FY21 operating profit to be ahead of market expectations. Other gainers include Givaudan (+2.5%) and JD Sports (+3.0%) after respective Q1 and FY20 results. To the downside, one of the main standouts is Air France (-2.3%) after the Co. launched a EUR 988mln capital increase with individual stock-specific newsflow otherwise relatively light.

FX

DXY: Again, a choppy session thus far within a relatively tight 92.092-302 range despite US yields erring higher as participants remain on standby for the US CPI print later today with the M/M forecast at 0.5% and the Y/Y at 2.4%. Analysts at ING argue that such an outcome could add to the narrative that US inflation is starting to overheat. However, policymakers at the Fed will likely continue to attribute upside in price pressures to transitory factors in the near-term. On this note, the rest of the week sees a plethora of Fed speak (including Powell, Williams and Clarida tomorrow). From a technical standpoint, DXY briefly topped its 200 DMA (92.282) in early European trade with upside levels, including Monday’s 92.331 high and the 20 DMA at 92.396. To the downside, the 92.000 mark has proved to be formidable support as the index tested but failed to convincingly breach the level for three consecutive sessions.

GBP, EUR, JPY: Another Deja-vu session for Sterling thus far as it encountered early unexplained strength. However, some of this strength coincided with EUR/GBP accelerating its losses as it dipped below 0.8650, which subsequently gave Cable a leg above 1.3750. The February UK GDP figures were overlooked as the economy continues to reopen and the vaccination drive remains in gear. Elsewhere, EUR/USD remains pinned around the 1.1900 mark (1.1884-1916 range), awaiting further direction/influence, with the softer-than-expected ZEW prompting some modest unstained downticks. JPY meanwhile encountered some more pronounced strength in early hours as upticks in US Treasury yields failed to keep the lower-yielding JPY under pressure, with some citing a technical downside breach of the 21 DMA around 109.50 as a potential driver of recent action.

NZD, AUD: The antipodeans see mixed trade with the Aussie somewhat subdued following the sub-par Chinese trade data whilst the Kiwi reaps modest benefit from the AUZ/NZD cross drifting below 1.0850. AUD/USD briefly dipped below 0.7600 (0.7596-7630) whilst NZD/USD reside around the top end of its current 0.7005-37 band ahead of tonight’s RBNZ which isn’t expected to spur much action.

CNH/CHF/TWD: Remain contained within recent ranges despite source reports suggesting that US Treasury Secretary Yellen will not label China a currency manipulator in the Treasury's FX report due Thursday. Source added that there were also discussions to raise the threshold at which an economy is deemed a currency manipulator that could take the heat off the Swiss Franc and subsequently the SNB. Reports also suggested that Taiwan could be labelled a manipulator as it fits the criteria, but this could hamper the US and Taiwan's strategic ties, according to analysts.

• Australian NAB Business Confidence (Mar) 15 (Prev. 16)
• Australian NAB Business Conditions (Mar) 25 (Prev. 15); record high.
• New Zealand NZIER Confidence (Q1) -13 (Prev. -6.0)
• New Zealand NZIER QSBO Capacity (Q1) 93.3% (Prev. 95.1%)

FIXED

A softer start to the session with EGBs continuing to surrender the respite seen in yesterday’s EU morning, which was predominantly a retracement of Friday’s pressure and relatively short-lived given concession coming modestly into play ahead of 3 & 10yr US issuance - the 3yr was uneventful while the 10yr outing did prompt some slight pressure. The theme of concession appears to be in-play this morning once more with participants eying the 30yr US auction but before that a substantial amount of EGB debt has been taken down; separately, out of the UK, the long-end 2071 sale sparked further pressure given a reduced b/c in-spite of a heightened average yield. On a more supportive note, even given the hefty supply books for Spain’s 2037 issuance is in excess of EUR 62bln, indicating demand conditions remain healthy though it is impossible to determine how much of this indicative interest will transfer into actual demand on the day. Currently, core debt counterparts are at the lower-end of the sessions range but holding above, for instance, 171.00 and 128.00 for Bunds and Gilts respectively below which support lies at 170.71 and 127.69. Post supply, including the US 30yr, it is possible that this broad-based concession could unwind and perhaps spark a debt bounce, or at least pick-up; however, any such move will also be dependent on the US CPI print where we look for indications of any robust price pressure rather than base-effect driven upside and subsequent Fed commentary for any fresh insight. Ahead of the US’ entrance, Treasuries are in-fitting with their EGB peers and reside towards lows of 131.12 for the 10yr while the yield curve is elevated but only modestly steeper as attention once more is on the 5yr region, which is typically the most sensitive to policy expectation alterations.

COMMODITIES

OPEC MOMR to be released at 13:00BST/08:00EDT. (OPEC)

WTI and Brent front month futures see modest gains as the geopolitical landscape remains tense following yesterday’s Houthi attacks on Saudi Aramco facilities. Further, JCPOA talks are set to continue this week with Tehran sticking to its guns with regards to its demands in return for cooperation. Eyes will remain on whether (if at all) the US manages to ease enough sanctions to get Iran back to the table. Elsewhere, tensions between Russia and Ukraine persist and have seeped into the west as seen via a joint G7 statement and a stern warning from Moscow to Washington regarding the deployment of warship to the Black Sea. Ahead of the US CPI figures, WTI May sees itself above USD 60/bbl while Brent Jun resides around USD 64.00/bbl. Note, the OPEC MOMR is also due today, which could prove to be stale given the monthly OPEC+ meetings and the fluidity of the environment, but markets could focus on the outlook and current risks in the eyes of OPEC. Elsewhere, spot gold and silver vary with the former posting mild losses and dipping sub-1,725/oz briefly (vs high 1,736/oz) whilst the latter continues to edge higher towards USD 25/oz (vs low 24.69/oz). UBS forecasts spot gold at USD 1,600/oz at end-2021 as it expects a further weakening of the metal and a continuation of the slide into 2022. Turning to base metals, LME copper is firmer despite a softer performance in Shanghai. LME prices however remain sub-9,000/t heading into the US inflation figures, with some potential tailwinds emanating from China’s copper imports rising some 25% Y/Y due to firm demand.