• European bourses are firmer, Euro Stoxx 50 +0.5%, in a continuation of APAC action while US futures are essentially flat
• DXY is downbeat this morning to the slim benefit of peers particularly the CHF and EUR, while core debt is pressure and the US yield-curve is bear-steepening
• Chinese GDP and Industrial Production disappointed although still showed a double-digit percentage surge Y/Y and Retail Sales surpassed estimates
• China has reportedly permitted banks to import large amounts of gold, around 150 tonnes of gold worth some USD 8.5bln in April and May, sources say.
• Looking ahead, highlights include US University of Michigan (Prelim.), Fed's Kaplan & 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)

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 (+0.6%) and Shanghai Comp. (+0.8%) 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 regulators are said to have asked some banks not to withhold loans to Huarong asset management, aiming to contain the contagion, sources state. (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%)

US

Fed's Daly (2021 voter) said 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)

UK/EU

EU's Sefcovic says the ongoing legal actions against the UK for breaching the Northern Ireland protocol will be continued for as long as is necessary. Insisted in meeting on full compliance which includes clear end-points and deadlines; UK's Frost says some positive momentum following meeting with EU's Sefcovic, but difficult issues do remain. (Newswires)

EU HICP Final YY (Mar) 1.3% vs. Exp. 1.3% (Prev. 1.3%); X F&E Final YY (Mar) 1.0% vs. Exp. 1.0% (Prev. 1.0%)

• X F,E,A&T Final YY (Mar) 0.9% vs. Exp. 0.9% (Prev. 0.9%)

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)

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)

Russian military jet has escorted a US spy plane which was operating near the Russian Pacific-coast, via Tass. (Newswires)

EQUITIES

European equities trade somewhat mixed with an upside bias as the core bourses edge higher in early European trade (Euro Stoxx 50 +0.5%) following somewhat of a lukewarm cash open, with newsflow again on the lighter side. Stateside, US equity futures see sideways trade as participants look ahead to another wave of earnings, with Morgan Stanley among the bunch. Back to Europe, The FTSE 100 (+0.5%) was initially the leader amid favourable Sterling dynamics, but Germany’s DAX (+0.7%) now outpaces peers as Daimler (+2.5%) leads the gains following a significant beat in Q1 EBIT - led by favourable sales momentum by all major regions and particularly in China. Separately, Co. unveiled the electric version of its Mercedes-Benz S-Class sedan poised for sale from August and billed as a competitor to Tesla. This, alongside an almost 90% Y/Y increase in EZ New Car Registrations, sees the Auto sector as the clear outperformer closely followed by financials amid the higher yield environment. The other end of the spectrum sees Consumer Staples, Healthcare and Tech. Overall, sectors are mixed with no clear overarching theme. In terms of individual movers, L’Oreal (-2.0%) shares are pressure post-earnings amid a Q1 revenue miss.

FX

GBP - Sterling has pared some losses, but remains under pressure amidst the ongoing dispute between the UK and EU over NI protocol compliance, with some progress made at a meeting between Frost and Sefcovic, but difficult issues still to be resolved according to the former. Meanwhile, Cable succumbed to sell orders when a key pivot point was breached at 1.3760 and more following the loss of 1.3750 before finding some underlying bids ahead of 1.3700 and Eur/Gbp climbed to a fresh April peak after crossing 0.8700 and is now eyeing a late February apex at 0.8731 vs 0.8719, thus far.

USD - Aside from Pound weakness, the Dollar has regained some yield attraction, though not across the board by any means as the DXY straddles its own former technical axis around 91.740 within a 91.813-574 range against the backdrop of buoyant risk sentiment that has seen certain EU stock indices emulate their Wall Street peers to trade at record levels, like the Dax. Ahead, US housing data and another regional survey, but this time in the form of prelim Michigan sentiment.

CHF/CAD/EUR - The Franc is outperforming through 0.9200 vs the Greenback and closer to 1.1000 against the Euro than 1.1050 in wake of Swiss producer/import price data showing a 0.6% m/m rise that pushed the y/y rate up to -0.2% from -1.1% previously, while the Loonie seems to be latching on to mostly firmer oil prices following yesterday’s weaker than expected Canadian manufacturing sales as it rebounds from sub-1.2550 lows towards 1.2500 in the run up to securities purchases and wholesale trade. Elsewhere, the Euro continues to hold above 1.1950 and stay capped beneath 1.2000 where bids and offers presumably lie in decent size, though without anything of note in terms of option expiries today.

JPY/AUD/NZD - All softer vs their US counterpart, or handing back some gains to be more precise with the Yen now nearer 109.00 following a 2nd unsuccessful attempt to pierce 108.60, Aussie back below 0.7750 after even more efforts to break above and Kiwi hovering just over 0.7150 vs a circa double top around 0.7180. Note, Aud/Usd failed to derive momentum from a raft of Chinese data as GDP and IP missed admittedly lofty expectations in contrast to retail sales, while Nzd/Usd also gleaned little lasting benefit from an acceleration in NZ’s manufacturing PMI and Usd/Jpy shrugged off strength in Reuters’ Japanese Tankan Manufacturing Index.

EM - A seemingly conciliatory tone from US President Biden in the context of strained relations with Russia and Brent peering over Usd 67/brl has helped the ravaged Rub recover losses to 75.3340 at one stage from 76.4800+, but the Try remains beneath 8.0000 irrespective of Turkey raising corporate tax to 25% from 20% and the Cnh is flat on the day around 6.5200, though not far from w-t-d highs on the back of a firmer PBoC Cny midpoint fix overnight.

FIXED

Debt continues to retreat approaching the end of a volatile week that has seen futures bounce quite firmly and yields recoil sharply regardless of strength in data and surveys or the almost unrelenting equity rally with many benchmark indices notching new all time peaks and others breaching psychological levels. However, pre-weekend consolidation and a loss of momentum or lack of willingness to push the recovery rally too far and beyond symbolic marks such as 1.5% in the 10 year US T-note has culminated in a pull back to 170.81 in Bunds, 128.35 in Gilts and 132-08+ in the benchmark Treasury contract before picking up some underlying bids. Ahead, US housing data and prelim Michigan sentiment plus more earnings.

COMMODITIES

WTI and Brent front month futures yet again experience a choppy European morning, as the contract fails to clinch onto a narrative amid slow news flow. Meanwhile, participants attempt to gauge the supply/demand scales as COVID cases remain elevated, some vaccines are halted, and the geopolitical landscape tense on several fronts. However, supportive omens have emanated from the bullish inventory data and constructive oil market reports throughout the week. WTI Jun around the 63.75/bbl mark (63.30-63.94 range) and its Brent counterpart just north of USD 67/bbl (66.75-67.36 range). Elsewhere, spot gold and silver were rangebound for a large part of the session amid after rising in unison with the recent drop in yields, although upside was seen in wake of reports that China has reportedly permitted banks to import large amounts of gold, around 150 tonnes of gold worth some USD 8.5bln in April and May, sources said, with spot gold around USD 1,770/oz and spot silver eyeing USD 26/oz to the upside. In terms of base metals, LME copper is waning off best levels with the miss in Chinese GDP and IP not supportive for sentiment surrounding the red metal, albeit prices reside comfortable north of USD 9,000/t. Meanwhile, the APAC session saw Dalian coking coal futures surge as safety inspections sparked supply concerns.

China has reportedly permitted banks to import large amounts of gold, around 150 tonnes of gold worth some USD 8.5bln in April and May, sources say. (Newswires)

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)