• Asian equity markets traded cautiously after the mild tailwinds from the US; Chinese markets saw a choppy session
• Chinese GDP and Industrial Production disappointed although still showed a double-digit percentage surge Y/Y and Retail Sales surpassed estimates
• White House said the infrastructure package could be passed in smaller pieces and congress will work out a path forward, according to reports
• Russia's Foreign Ministry said US sanctions raise doubts about the wisdom of using US Dollar and Western Payment systems
• A coronavirus variant with potentially worrying mutations that was first detected in India has been found in the UK, whilst testing accuracy has raised urgent concerns
• Looking ahead, highlights include EZ CPI (Final), US University of Michigan (Prelim.), Fed's Kaplan, BoE's Cunliffe and earnings from Morgan Stanley

CORONAVIRUS UPDATE

US COVID-19 cases +73,622 (prev. +76,120), deaths +831 (prev. +769), total vaccine dose administered 198mln (prev. 195mln), those fully vaccinated 78.5mln (prev. 76.68mln). (Newswires)

US CDC panel tentatively set a meeting for late next week on either Thursday or Friday to discuss Johnson & Johnson's (JNJ) vaccine safety, while the CDC advisory panel head said a hold on the use of JNJ's vaccine in the US could stretch out for several weeks. There were also separate comments from NIH's Fauci that he believes the Johnson & Johnson COVID-19 vaccine will be back on track soon. (Newswires)

US COVID-19 Response official Kessler said it is possible that boosters could be needed at 9 or 12 months after COVID-19 vaccine, while there were also comments from Pfizer's (PFE) CEO who suggested that a third COVID vaccine dose is likely needed within 12 months. (Newswires)

A coronavirus variant with potentially worrying mutations that was first detected in India has been found in the UK, according to the reports citing Public Health England. Separately, Senior UK Government Officials have raised urgent concerns regarding the mass expansion of rapid testing, saying as few as 2-10% of positive results may be accurate in low-COVID areas; as such, considering a scaling back of the programme given false-positives, according to leaked emails. (Guardian)

ASIA

Asian equity markets traded cautiously after the mild tailwinds from US, where most major indices notched fresh record highs and tech outperformed amid a decline in yields and surge in Retail Sales, gradually dissipated as the region digested a miss on Chinese GDP and Industrial Production data. ASX 200 (Unch.) was subdued after the disappointing data from Australia’s largest trading partner with sentiment also dampened by underperformance in energy and the top-weighted financials sector, while Nikkei 225 (+0.1%) was indecisive with concerns of widening COVID-19 measures counterbalanced by a more favourable currency. Hang Seng (+0.2%) and Shanghai Comp. (+0.5%) were choppy following the latest economic growth and activity data from China in which GDP and Industrial Production disappointed although still showed a double-digit percentage surge Y/Y and Retail Sales surpassed estimates to suggest a strong domestic consumer profile, while the stats bureau also suggested the economy got off to a good start with continued improvement to production and demand. Finally, 10yr JGBs retraced some of yesterday’s after hours gains as the recent bull flattening and short-covering in USTs lost steam, while the indecisive risk tone and lack of purchases by the BoJ in the market today also constrained price action.

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 6.5288 vs exp. 6.5322 (prev. 6.5297)

US expects President Biden and Japanese PM Suga to issue a formal statement on Taiwan in line with recent dialogue, while they will likely discuss Xinjiang and Hong Kong although the US will not insist Japan agrees to all dimension of the US approach, according to a senior US administration official. The official added that the US recognizes the deep commercial and economic ties between Japan and China, as well as respects PM Suga's desire to proceed on a careful path, while the summit will produce initiatives and funding for their countries to diversify supply chains by supporting alternative 5G networks outside of Huawei. Furthermore, it was reported that US President Biden and Japanese PM Suga will meet today at 13:30EDT/18:30BDT in the White House. (Newswires)

US Senate Finance Panel will conduct hearing on China trade on April 22nd. (Newswires)

IMF's China mission chief Berger noted concern regarding balance of China growth and stated that vaccination is vital for China to return to normal capacity, while he added that there is danger of technology decoupling between US, China and others which would impact the global economy more than a trade war. (Newswires)

China stats bureau spokeswoman said based on Q1 indicators, the economy has got off to a good start and there has been continued improvement to production and demand, while she added that Q/Q growth still showed an increase of major indicators in Q1. (Newswires)

• Chinese GDP (Q1) Q/Q 0.6% vs. Exp. 1.5% (Prev. 2.6%)
• Chinese GDP (Q1) Y/Y 18.3% vs. Exp. 19.0% (Prev. 6.5%)
• Chinese Industrial Production (Mar) Y/Y 14.1% vs. Exp. 17.2% (Prev. 35.1%)
• Chinese Retail Sales (Mar) Y/Y 34.2% vs. Exp. 28.0% (Prev. 33.8%)
• Chinese House Prices (Mar) Y/Y 4.6% (Prev. 4.3%)

UK/EU

UK PM Johnson is reportedly hoping to use his visit to India this month to begin talks on reducing tariffs and will urge Indian PM Modi to cut tariffs on imports of whisky and autos from the UK. (FT)

FX

In FX markets, DXY marginally gained overnight after it shrugged off the flat performance during the prior US session, where the impact from a 10-month-high surge in Retail Sales and lower than expected Initial Jobless Claims data was suppressed by the decline in yields, as well as the record highs on Wall Street and with US Industrial Production less encouraging. Nonetheless, the Greenback has since eked mild gains which coincided with a rebound in yields and after the latest Fed commentary did little to shift the dial, whereby Fed's Mester noted the outlook is improving but added that they are still far from employment and price stability goals, while Fed’s Daly expects a big rebound in the economy in H2 and suggested that the frequency and scale of Fed interventions are concerning. EUR/USD mildly softened due to the Greenback making headway but with downside in the Single Currency stemmed by a floor around 1.1950, while GBP/USD also retreated to beneath yesterday’s range to test 1.3750 with a lack of pertinent newsflow for the pair making the USD price action the only game in town. Elsewhere, USD/JPY was underpinned due to a firmer base currency and antipodeans slightly pulled back amid the indecisive risk tone and following the somewhat disappointing Chinese data.

COMMODITIES

WTI crude futures remained around the 63.50/bbl level and highest levels in almost a month as prices plateaued following this week's bullish inventory data, while there was also a lack of progress from the Iran nuclear deal discussions which will be followed by a number of informal meetings and the general impression was said to be positive although Iran was also said to question Europeans' good will in talks. Elsewhere, gold was rangebound with prices restricted as the Greenback marginally gained and copper prices were also flat as participants digested the miss on Chinese GDP and Industrial Production which, nonetheless, printed double digit percentage growth.

China 2021 apparent crude oil demanded is expected to increase 2.8% Y/Y to 756mln tons and China 2021 crude oil output is expected to increase 1.1% Y/Y to 197mln tons, according to CNPC Research. (Newswires)

GEOPOLITICAL

US President Biden said he takes the responsibility as steward of the US-Russia relationship seriously and that the US cannot allow a foreign power to intervene in domestic elections with impunity, while he told Russian President Putin the US concluded Russia had interfered and that the US could have gone further on sanctions but he chose not to, although they are prepared to respond if Russia further interferes in US democracy. President Biden also stated that communication between them is essential and both their teams are discussing a potential summit, while Biden added their countries can address nuclear threats from Iran and North Korea, as well as suggested that now is the time to de-escalate conflict between Russia and Ukraine. (Newswires)

Russia's Foreign Ministry said US sanctions raise doubts about wisdom of using US Dollar and Western Payment systems. In other news, Ukraine said Russia will from next week until October close part of the Black Sea near the Kerch Strait for foreign warships involved in military exercises and called Russia's actions illegal. (Newswires/Tass)

Israel Defense Forces said in response to a rocket fired at Israel from Gaza, its fighter jets and helicopters struck a Hamas weapon manufacturing site, a weapon smuggling tunnel and a military post. (Twitter)

Greek Foreign Minister agreed with Turkish counterpart that there is room to grow bilateral relations and the Turkish Foreign Minister said Turkey is ready to improve ties but will have to respond if Greece accuses Turkey in front of the media. (Newswires)

US

The TPLEX bull-flattened hard on Thursday amid an extension of short-covering as bonds look through solid economic data. By settlement, 2s -0.6bps at 0.157%, 5s -6.5bps at 0.795%, 10s -10bps at 1.536%, 30s -11.1bps at 2.213%; TYM1 volumes (c. 1.7mln) were above recent averages. 5yr TIPS -4bps, 30yr TIPS -10bps, seeing inflation breakevens widen across the curve by a few bps. Fed bought USD 1.732bln 20-30yr Treasuries, O/C 1.95x (prev. 2.71x). SOFR unch. at 1bps. RRP demand almost halves today at USD 28.6bln across 9 bidders (prev. 50.856bln across 19 bidders); auction settlement today so perhaps new collateral is reducing some of the repo pressure. US sold USD 43bln of 1-month bills at 1bp; USD 43bln 2-month bills at 1.5bps. T-note (m1) futures settled 23+ ticks higher at 131-21.

Fed's Bostic (2021 voter) said the Fed will not pre-emptively slow the economy to avoid overheating. (Newswires)

Fed's Daly (2021 voter) said they are far from both the inflation and employment targets, while she responded that they are not there yet when asked about 'substantial further progress' and stated that they will discuss approach to normalisation when they get to a point when it is necessary to discuss it. Daly also stated they are starting to see more normal activity resume citing retail sales and suggested there will be a big rebound in the economy in H2 with jobless numbers falling and spending rising. Furthermore, Daly stated that after a rebound, the hard work will begin and that she expects growth to moderate after H2, while she also commented that the frequency and scale of our interventions is concerning and without changes to our financial infrastructure, the Federal Reserve may regularly be called to step in to stabilize markets during turbulent periods. (Newswires/WSJ)

Fed's Mester (2022 voter) said the increase in inflation expectations is due to better economic outlook and that a modest rise in inflation expectations is not worrisome, nor is she concerned inflation will become too high. Mester also stated that the US economy will grow by 6% or more this year and unemployment rate will decline to 4.5% or less by year-end. Furthermore, she added that economic growth will be strong in H2 but noted the economy has a long way to go and it will take time to get back a broad-based sustainable recovery, while she expects that prices will stabilize or ease as supply chain disruptions are resolved. (Newswires)

NY Fed's Logan said the Fed is confident it has the tools to maintain control over the Federal Funds Rate and that Overnight Reverse Repo facility becomes a more central part of implementation framework in an abundant reserves environment. Furthermore, Logan stated the recent activity with rates below zero in interdealer markets appear to be technical in nature and stated that any changes to the makeup of treasury purchases would be modest and technical adjustments to match outstanding debt. (Newswires)

White House said the infrastructure package could be passed in smaller pieces and congress will work out a path forward. In related news, the GOP is reportedly preparing a USD 650bln counter to Biden's infrastructure plan, while it was separately reported that Democratic Senator Manchin declined to endorse a USD 800bln target for infrastructure package and stated he could support a USD 4trln package if it is needed and paid for. (The Hill/Fox Business)