• Equities are essentially unchanged following a largely range-bound EU session; ES +0.1%, Euro Stoxx 50 +0.1%
• The USD has been marginally softer as antipodeans outperform and other peers are flat; debt is similarly contained with long-end US pressure dissipating
• Kremlin says it is premature to talk in tangible terms about a potential meeting with US President Biden and Russian President Putin; Navy commencing Black Sea drills ahead of US ship arrivals, IFX
• Pfizer will complete 300mln vaccines to the US by end-July which is two weeks early
• Looking ahead, highlights include US import/export prices, DoEs, ECB's Panetta, Lagarde, Schnabel, Fed's Kaplan, Powell, Williams, Clarida, Bostic, BoE's Haskel; earnings from JP Morgan, Wells Fargo and Goldman Sachs

CORONAVIRUS UPDATE

US COVID-19 cases +61,526 (prev. +49,409), deaths +569 (prev. +328), first vaccine dose administered 192mln (prev. 190mln), those fully vaccinated 75.32mln (prev. 74mln). (Newswires)

Johnson & Johnson said it made a decision to proactively delay the rollout of its COVID-19 vaccine in Europe and will pause vaccinations in all Janssen COVID-19 clinical trials in Europe while it updates guidance for investigators and participants. On this, the EMA is likely to issue new guidance around the Johnson & Johnson (JNJ) COVID-19 vaccine on Wednesday, according to French European Affairs Minister Beaune. (Newswires)

Moderna (MRNA) said new pre-clinical data demonstrated variant-specific booster vaccine candidates raised neutralizing titers against variants of concern, while cases from its Phase 3 study showed strong efficacy of more than 90% after 6 months from the 2nd dose. (Newswires)

EU Commission is not going to renew the COVID-19 vaccine contracts with AstraZeneca (AZN LN) and Johnson & Johnson (JNJ) when they expire at year-end, according to a paper. (Newswires)

Pfizer (PFE) CEO stated the Co. increased production of its COVID-19 vaccine and can deliver 10% more doses to the US by end-May than previously agreed, while the CEO added the Co. will supply the complete 300mln vaccines to the US by end-July which is two weeks early. Furthermore, Pfizer later stated that it found no evidence of a risk of arterial or venous thromboembolic events from the use of its vaccine. (Newswires)

ASIA

Asian equity markets traded with a mild positive bias following the similar performance stateside where the S&P 500 and Nasdaq 100 notched fresh record highs although the DJIA and financials lagged alongside a decline in yields as participants digested firmer but not runaway inflation. Furthermore, the early pressure from the JNJ vaccine pause due to rare blood clots, gradually dissipated in late Wall St trade after White House COVID Coordinator Zients noted the US has more than enough Pfizer and Moderna vaccines to maintain the current pace of vaccinations and the FDA also suggested the pause is only expected to be a matter of days. ASX 200 (+0.7%) reclaimed the 7,000 level with gold miners front-running the advances after a rebound in the precious metal towards the USD 1750/oz level and with tech inspired by strength in US counterparts, while strong data added to the constructive tone after Westpac Consumer Confidence rose to its highest in more than a decade. Nikkei 225 (-0.4%) was negative with sentiment dampened by a firmer currency and after a surprise contraction in Machinery Orders which declined by the fastest pace M/M since April last year, although Toshiba shares continued to rally in Japan on interest from private equity with KKR reportedly planning to outbid CVC’s JPY 5,000 offer and Brookfield is also said to be eyeing making a formal approach for the Co. Hang Seng (+1.4%) and Shanghai Comp. (+0.6%) were positive amid strength in the blue chip tech names following the recent talks with China’s market regulator whereby internet platform companies pledged to avoid anti-competitive behaviour, while Geely Auto was the biggest gainer in the Hang Seng as it explores several SPAC deals to float EV maker Polestar and is said to be considering raising USD 1bln to help expand its Lotus Cars into China’s EV market. Finally, 10yr JGBs were higher as they tracked the upside in T-notes and with the Japanese benchmark yields slightly lower, while weak Machinery Orders data and the BoJ presence in the market for nearly JPY 1.4tln in 1yr-10yr maturities contributed to the tailwinds for JGB 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 6.5362 vs exp. 6.5366 (prev. 6.5454)

PBoC is to conduct stress tests on more than 4,000 banks in China this year to prevent risks and will conduct stress tests on climate change-related financial risks at an appropriate time, according to a central bank publication. (Newswires)

The unofficial US delegation visiting Taiwan will meet with President Tsai. There were also comments from China's Taiwan Affairs Office which urged the US to adhere to the One China principle and properly handle the Taiwan issue, while China added that the US visit will only add to cross-strait tension and that Chinese military exercises in the Taiwan Strait are necessary to address the current situation and safeguard national security. (Newswires)

Monetary Authority of Singapore kept its FX-based policy settings unchanged as expected with 0% per annum rate of appreciation maintained, while the width and centre of the currency band was also unchanged. MAS assessed an accommodative policy stance remains appropriate as core inflation is expected to remain low this year but revised forecast for 2021 CPI all items to 0.5%-1.5% from -0.5%-0.5% and stated that GDP growth is likely to surpass the upper end of the official 4%-6% forecast. (Newswires)

• Singapore GDP (Q1) Q/Q 2.0% vs. Exp. 1.7% (Prev. 15.9%)
• Singapore GDP (Q1) Y/Y 0.2% vs. Exp. -0.2% (Prev. -0.4%)
• Japanese Machinery Orders (Feb) M/M -8.5% vs. Exp. 2.8% (Prev. -4.5%)
• Japanese Machinery Orders (Feb) Y/Y -7.1% vs. Exp. 2.3% (Prev. 1.5%)

US

US Labour Secretary Walsh says Amazon (AMZN) and others should expect to see additional labour-organising measures, via WSJ; on Biden's plans says he is less flexible on changing plans to increase the minimum wage to USD 15/hr. Too early to determine if labour support should be removed to gather additional Republican support re. the infrastructure package. (WSJ)

Top officials from the White House are set to meet today with a bipartisan coalition of House lawmakers as the administration attempts to get moderates on board with President Biden's infrastructure plan. (Axios)

UK/EU

ECB's Villeroy says the policy toolkit could evolve, but policy should remain accommodative for years to come, should affirm a symmetrical inflation target, with 2% as a target not a ceiling. PEPP will run until at least March 2022, any end to purchases will not be abrupt as reinvestments will continue; APP could be adjusted/used instead and it is too early to determine what, if any, changes would be needed for APP when PEPP concludes. (Newswires)

ECB's de Guindos says they stand ready to adjust all instruments as necessary; risks from the early policy withdrawal are greater than those associated with maintaining measures. (Newswires)

EU will raise up to EUR 800bln in debt until 2026 as part of the EU Recovery Fund; parameters updated every 6-months, circa EUR 150bln per year. All borrowing to be repaid by 2058. (EU Commission)

UK has asked for more time to respond to the legal action taken by the EU over it’s unilateral decision to ease the requirements of the Northern Ireland Protocol, according to RTE sources; Lord Frost has asked for an extra month to respond. (Twitter)

GEOPOLITICAL

Britain is reportedly to remove almost all troops from Afghanistan. (Times)

The White House stated the US takes Iran's announcement to begin enriching uranium seriously and it is definitely concerned about Iran's 'provocative' announcement but expects negotiations to continue. (Newswires)

Russian Foreign Minister Lavrov and US Special Climate Envoy Kerry reportedly discussed a meeting between Russian President Putin and US President Biden, according to Ria. Subsequently, the Kremlin says it is premature to talk in tangible terms about a potential meeting with US President Biden and Russian President Putin, but the US proposal will be studied (Newswires)

EQUITIES

As has been a consistent theme throughout the week, European equities (Eurostoxx 50 +0.1%) have begun the session with little in the way of firm direction as initial gains were trimmed shortly after the open. Incremental macro newsflow is relatively sparse once again as market participants continue to weigh regional lockdown measures/rising case counts against hopes for a marked pickup in the EU’s vaccine campaign. That said, one looming risk that remains is if accommodative monetary support is not accompanied by fiscal measures in the form of the EU’s Recovery Fund, which is still yet to be ratified. From a strategic standpoint, analysts at Citi note that whilst the economic recovery might drive European equities higher in the near term, they prefer to “wait for the dips” with analysts at the bank holding a flat end-2021 target for the Stoxx 600. In terms of regional preferences, Citi prefers core markets over peripherals within continental Europe, whilst the UK remains the bank’s favourite value trade on a global basis. Currently, sectoral performance in Europe is broadly mixed with basic resource names top of the pile with Glencore (+2.6%) a notable gainer following a broker upgrade at Goldman Sachs. Elsewhere, technology names have been supported by upside in SAP (+4.7%) after prelim Q1 results, whilst luxury names gain in the wake of LVMH’s (+3%) Q1 revenue update. To the downside, telecom names lag amid weakness in some of the regional names and alongside losses in BT (-1.5%) with some concerns emanating from the UK CMA’s clearing of the Virgin Media and O2 merger which will act as a threat to the Co. Finally, Tesco (-2.7%) sit near the foot of the Stoxx 600 after reporting a 20% decline in FY pretax profits as COVID-19-related costs negated strong sales performance.

FX

DXY: Overall a relatively contained session thus far as the broad Dollar and Index consolidate following yesterday’s yield-induced losses. The DXY is currently inside a narrow 91.62-81 parameter with the 50 DMA (91.574) in close proximity to session lows. Fresh fundamental catalysts have been light thus far but the action, all things equal, will likely reside later in the session with a plethora of Fed speakers to look forward to including Fed Chair Powell, Vice Chair Williams, and the FOMC “thought-leader” Clarida – although members are likely to stick to the dovish script and pass off yesterday’s CPI metrics as transitory.

NZD, AUD CAD: The antipodeans stand as the G10 outperformers, more so the Kiwi in the aftermath of the RBNZ – which did not spur action with the central bank conforming to expectations. Desks suggest the central bank is simply biding time after releasing a substantial amount of stimulus and see the next move as policy normalisation after a long period of hold. NZD/USD found an intraday floor at its 21 DMA (0.7050) before extending gains above 0.7100 ahead of its 100 DMA (0.7146) and 50 DMA (0.7156). The Loonie bucks the trend despite favourable commodity prices, with some citing the worsening COVID situation in the country as infection rates edge closer to the US, whilst the JNJ blood clot news yesterday acts as a potential challenge for an inoculation effort that is already dragging. USD/CAD has dipped back below its 21 DMA (1.2550) with the 50 DMA seen around 1.2600.

GBP, EUR: Both on a modestly firmer footing as the Buck resides around session lows with the Sterling narrowly outperforming its EUR counterpart, potentially due to its high-beta properties and as EUR/GBP failed to gain a foothold above 0.8700 overnight. News flow and data for the region have remained on the lighter side thus far, with little action seen on reports that UK has asked for additional time to respond to the EU’s legal proceedings over the unilateral decision taken by Britain on the North Irish protocol, whilst ECB’s Villeroy and de Guindos rehashed recent commentary. GBP/USD meanders around its 21 DMA (1.3794) within a current 1.3745-3808 band with the next upside level the 50 DMA at 1.3859. EUR/USD trades near its 50 DMA (1.1962) and sees some notable OpEx for today’s NY cut including at 1.1925 (EUR 1.3bln) and 1.1950-60 (EUR 1.1bln) strikes. Looking ahead on Europe’s docket, ECB’s Panetta, Lagarde and BoE’s Haskel are all scheduled to make appearances before the European cash close.

JPY, CHF: Modest gains are seen across the traditional safe-haven FX, but seemingly due to Dollar action with USD/JPY back below around 109.00 having had printed a current 108.754-109.07 range as it inches closer towards touted support at the Mar 23 low (108.39). USD/CHF meanwhile lost 0.9200-status and sees interim support at its 50 DMA (0.9186).

Major FX Option Expiries, NY Cut:

• EUR/USD: 1.1800 (587mln), 1.1900 (1.1bln), 1.1925 (1.3bln) 1.1950-60 (1.1bln)
• EUR/GBP: 0.8600-10 (919mln)
• USD/CAD: 1.2465 (750mln), 1.2500 (1.2bln)

RBNZ maintained the OCR at 0.25%, LSAP at NZD 100bln and kept the Funding for Lending Programme unchanged as expected, while it reiterated it is prepared to lower the OCR if required and that it maintain current policy settings until it is confident inflation and employment targets are achieved. Furthermore, it noted that economic activity slowed over the summer months in New Zealand and that the outlook remains highly uncertain but stated that the planned trans-Tasman bubble should support incomes and employment. (Newswires)

Brazilian Central Bank Governor Campos Neto said the long end of the yield curve reflects fiscal risk although BCB focus is on inflation and they remain vigilant on sources of inflation expectations being contaminated. Furthermore, he stated that stimulative conditions are still required and that they need to move rates but will remain on stimulative ground, while he still sees a 75bps increase at the next meeting although nothing is written in stone. (Newswires)

• Australian Westpac Consumer Confidence Index (Apr) 118.8 (Prev. 111.8)
• Australian Westpac Consumer Confidence (Apr) 6.2% (Prev. 2.6%)

FIXED

Overall, a relatively contained and somewhat uneventful session for EGBs which are in very close proximity to unchanged levels given newsflow has been sparse. Initially, the lead from the US session saw a continuation of underperformance in long-end bonds after the NY Fed monthly purchase schedule was unaltered against some expectation for an increase in the 20yr bucket – pressure that pared back the support emanating from a strong 30yr outing Stateside. However, this underperformance has passed with US notes marginally pressured across maturities, as we now await a hefty docket of Fed speak with Powell, Williams and Clarida all due to give remarks; as such, the yield curve is elevated with only a very modest steepening bias. Returning to the EZ, the day’s 2048 German issuance was a touch softer than previously but perhaps not too surprising given the week’s hefty EZ slate not to mention US supply factoring as well. Nonetheless, Bunds have shrugged this off and remain flat with 171.91 the next resistance mark and 170.98 to the downside. Out of the bloc, the UK’s linker was largely uneventful and Gilts are slightly pressured at present but again within touching distance of the unchanged mark, if the very slight downward pressure does continue and 128.00 is lost then the next support level lies some way below at 127.32, the April 1st low. Newsflow for the UK specifically has picked up slightly and we await the EU’s response to requests by the UK to extend the response period re. Northern Ireland protocol breaches by a one-month period, Sefcovic and Frost are already scheduled to speak tomorrow which could well serve as the logical point for an update on the matter.

COMMODITIES

WTI and Brent front month futures trade on a firmer footing with the former just north of USD 61/bbl (vs low 60.38/bbl) and the latter around USD 64.75bbl (vs low 63.88/bbl). The softer Dollar has underpinned the complex, whilst geopolitical risks keep prices elevated. Additionally, yesterday’s Private Inventory release provided some positive omens for the complex amid a larger-than-expected draw in the headline crude metric (-3.6mln bbls vs exp. -2.9mln bbl) – with the EIA numbers eyed for the next scheduled complex-specific catalyst. Further, the IEA raised its 2021 global demand growth forecast by 230k BPD and state that the market does not face an impending supply crunch. The agency remarked that the recovery is fragile, but almost 2mln BPD of extra supply may be required to meet H2 demand. The report somewhat chimes with the OPEC release in the sense both raise their respective global demand growth forecasts whilst expecting a stronger recovery in H2. The release however could be perceived as stale given the fluidity of the COVID situation with JNJ's blood clot news yesterday also likely to provide headwinds to the recovery momentum. Aside from this, news flow for the complex has been on the lighter side throughout the European morning. Elsewhere, spot gold and silver trade sideways with the former in a USD 10 band and the latter on either side of USD 25.50/oz. Turning to base metals, LME copper is firmer and trades around the USD 9,000/t mark amid the softer Buck, whilst some potential tailwinds could also emanate from Nornickel boosting its output of nickel products for the EV battery market. Finally, Shanghai aluminium rose to near-decade highs amid supply woes with some citing China’s green targets.

US Private Inventory Data (w/e April 9th): Crude -3.6mln (exp. -2.9mln), Cushing +0.9mln, Gasoline +5.6mln (exp. +0.8mln), Distillate -3.0mln (exp. +1.0mln)

IEA raises 2021 global demand growth forecast by 230k BPD; market does not face an impending supply crunch; recovery is fragile; almost 2mln BPD of extra supply may be required to meet H2 demand. (IEA)