• Asian equity markets began the week with mostly cautious gains and US equity futures marginally pulled back from record highs
• In FX, DXY was in a tight range, EUR/USD traded on either side of 1.1950, GBP/USD held onto recent upside, USD/JPY was pressured
• Iran’s government stated that drafting the text for reviving the JCPOA can begin; discussions are said to have made further progress
• Russia is reportedly bolstering its warship presence in the Black Sea, amid ongoing tensions with Ukraine
• US Senate Democrats are reportedly likely to settle on a corporate tax rate of 25%, according to Axios sources
• Highlights today include ECB asset purchases and earnings from IBM, Coca-Cola and United Airlines

CORONAVIRUS UPDATE

US CDC reported total COVID-19 cases rose by 60,947 to a total 31.44mln and total deaths rose by 694 to 563,980, while the number of people that received at least one vaccine dose rose to 131.25mln from 129.49mln the day before which means over half of all US adults have received a vaccine dose. (Newswires/Politico)

NIH's Dr Fauci stated that a decision on whether to resume administering the Johnson & Johnson (JNJ) COVID-19 vaccine could occur as soon as Friday and that he would not be surprised if it is resumed in some form. In relevant news, US health officials were reportedly on the verge of issuing a warning on the JNJ vaccine but then opted to suggest a pause and sources stated that limiting the use of the vaccine to older adults or incorporating warning language are options for the resumption of the vaccine use, while there were reports on Friday that Johnson & Johnson researchers stated that no causal link has yet been found between the Co’s vaccine and blood clots. (Newswires)

Canadian PM Trudeau said on Friday that Toronto is struggling to cope with the third COVID wave and the Federal Government will do whatever it takes to help. In relevant news, the Ontario Premier announced they are closing all non-essential construction to slow the spread of COVID-19 and that a stay-at-home order has been extended to a total of six weeks, while it was also reported that Ontario will begin offering the AstraZeneca (AZN LN) vaccine on Tuesday to anyone turning 40 and above this year. (Newswires)

UK COVID-19 cases +1,882 (prev. +2,206) and deaths +10 (prev. +35), France cases +29,344 (prev. +35,861) and deaths +140 (prev. +189), Italy cases +12,694 (prev. +15,370) and deaths +251 (prev. +310). (Newswires/Worldometer)

Italy is reportedly seeking domestic output of mRNA vaccines and is said to have discussed this with Moderna (MRNA), Novartis (NOVN SW) and ReiThera, according to sources. (FT)

Osaka Governor said that they will ask the Japanese government to declare a state of emergency for Osaka and other reports noted that Tokyo could ask restaurants to shut during the next emergency. (Newswires/Twitter)

Australia opened a travel bubble with New Zealand which means visitors no longer need to quarantine on arrival. (BBC)

The University of Oxford is to start its first study whereby individuals who have recovered from COVID-19 will be deliberately reinfected in a bid to develop more effective vaccines. (Newswires)

ASIA

Asian equity markets began the week with mostly cautious gains and US equity futures marginally pulled back from record highs with participants tentative ahead of further earning updates this week, and as COVID-19 uncertainty lingered after the number of global cases last week increased by over 5.2mln, which was a record despite the ongoing vaccination drive. However, there were comments from NIH's Dr Fauci that a decision on whether to resume administering the Johnson & Johnson COVID-19 vaccine could occur as soon as Friday and that he would not be surprised if it is resumed in some form. ASX 200 (+0.2%) was positive with the kept afloat by outperformance in mining-related sectors and with M&A developments providing encouragement following news of a merger between Galaxy Resources and Orocobre, as well as reports that Crown Resorts received an unsolicited proposal on behalf of funds managed by Oaktree Capital. Nikkei 225 (+0.2%) initially swung between gains and losses as pressure from currency inflows was offset by stronger than expected trade data - including the largest increase in exports since November 2017 - and although Japanese stocks eventually improved, Toshiba shares were left in the lurch after CVC was said to plan a delay in submitting a formal proposal to acquire the Co. Hang Seng (+0.8%) and Shanghai Comp. (+1.3%) shrugged off the flat open and the continued US-China verbal jousting, to outperform their regional peers with the Hang Seng extending above the 29k level and strength seen in Chinese automakers after Huawei unveiled its intelligent driving system. There were also constructive comments regarding China Huarong Asset Management in which the CBIRC Vice Head stated the Co. is currently operating normally with ample liquidity and Chinese regulators were also said to have asked some banks not to withhold loans to the Co., while India's NIFTY (-2.4%) was heavily pressured amid ongoing rampant COVID-19 cases which hit a fresh record high and with the capital of New Delhi said to have less than 100 ICU beds available in the entire city. Finally, 10yr JGBs were slightly higher amid the mild gains in T-notes and a relatively tepid BoJ purchase announcement totalling JPY 500bln mostly concentrated in 3yr-5yr maturities, while Aussie yields were also relatively unmoved after the RBA announcement to purchase AUD 2bln of government bonds.

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 6.5233 vs exp. 6.5234 (prev. 6.5288)

PBoC Vice Governor Li Bo stated that they will widen digital CNY experiments and noted there is no specific timetable for a digital CNY launch, while Li added that they want proper reforms for fintech firms. (Newswires)

US called for China to implement measures to boost domestic demand and shift away from exports amid concerns that China’s recovery has been highly imbalanced and growth cannot be sustained without greater official support for household consumption. (Newswires)

US Secretary of State Blinken tweeted that sentences of Hong Kong's democracy activists on politically motivated charges are unacceptable and incompatible with the non-violent nature of their actions, while he added that we call for the release of those detained and imprisoned for exercising fundamental freedoms. This prompted a response from the Global Times Editor Hu Xijin who tweeted that those whom the US claims it stands with will be in trouble and a statement like this means the US is instigating those people to stand with the US, help it confront a country it doesn’t like and become cannon fodder for American interests. (Twitter)

Japanese PM Suga said US and Japan agreed to military base realignments and that he had serious discussions with US President Biden regarding China and North Korea, while they also discussed the situation in Taiwan and affirmed the importance of US-Japan alliance in the region. It was also reported that the Chinese Embassy in US said that China strongly opposes the remarks in the US-Japan joint statement regarding China’s internal affairs of East and South China Sea, Taiwan, Hong Kong & Xinjiang, while it added that the statements have gone beyond scope of bilateral relations and undermines peace & stability in the region. (Newswires/Global Times)

• Japanese Trade Balance (JPY)(Mar) 663.7B vs. Exp. 490.0B (Prev. 215.9B)
• Japanese Exports (JPY)Mar) 16.1% vs. Exp. 11.6% (Prev. -4.5%)
• Japanese Imports (JPY)(Mar) 5.7% vs. Exp. 4.7% (Prev. 11.8%)

UK/EU

• UK Rightmove House Price Index (Apr) M/M 2.1% (Prev. 0.8%)
• UK Rightmove House Price Index (Apr) Y/Y 5.1% (Prev. 2.7%)

EU Commission VP Sefcovic called for a good faith approach in implementing trade rules to lessen tensions and believes solutions can be found to minimise the disruption of Brexit on Northern Ireland. (FT)

Italy is said to be at risk of missing the deadline at the end of the month for submitting its finalised Recovery Plan to the European Commission as Brussels is not satisfied with several aspects of the drafts presented so far, according to sources. However, this was refuted by a spokesman for Italian PM Draghi who stated that the plan will be presented on the last day of the month. (Newswires)

FX

In FX, the DXY traded steadily with mild gains amid mixed price action across its major peers and with a lack of pertinent newsflow to drive the currency. In addition, the Fed’s blackout period took effect over the weekend ahead of its April 27th-28th meeting, although there were comments last Friday from Fed's Waller who suggested markets are getting ahead of themselves in terms of expecting rate hikes. EUR/USD trickled lower from the reopen despite no obvious catalysts for the weakness, which saw the Single Currency briefly breach through Friday’s support at around the 1.1950 level where there are some key MA levels including its 50DMA and 100-Hour MA. GBP/USD held on to recent gains after an encouraging tone from EU Commission VP Sefcovic who called for a good faith approach in implementing trade rules to lessen tensions and believes solutions can be found to minimise the disruption of Brexit on Northern Ireland. USD/JPY and JPY-crosses were pressured with flows into the JPY after stronger than expected trade data, while Antipodeans were kept flat amid a light overnight calendar and cautious gains for most the region.

Canada's Budget is said to propose a sales tax for online platforms and e-commerce warehouses from July 1st and digital services tax from 2022, while it will not include a wealth tax but will have a luxury tax for cars, yachts and private planes from 2022. Furthermore, the budget will include a tax on residential property owned by non-resident and non-Canadian owners beginning next year, according to government sources. (Newswires)

COMMODITIES

WTI crude futures slightly weakened overnight to beneath the USD 63.00/bbl level amid the ongoing COVID-19 concerns after last week's record increase in global cases, while supply-side factors were also bearish including an increase in the latest Baker Hughes Rig Count and with Iran nuclear deal talks said to have made further progress with a "new understanding" said to be developing. Gold prices were rangebound amid a steady greenback and after the precious metal plateaued at around 7-week highs, while copper prices mirrored the outperformance of its largest purchaser China.

Baker Hughes US Rig Count (w/e Apr. 16): Oil +7 at 344, nat gas +1 at 94 and total +7 at 439. (Newswires)

Islamic State has claimed responsibility for an attack on 2 wells at Iraq's Bay Hassan oilfield on Saturday. (Newswires)

GEOPOLITICAL

Iran’s government stated that drafting the text for reviving the JCPOA can begin, while it was later reported that discussions regarding the Iranian nuclear deal are said to have made further progress and Iran suggested that a “new understanding” was developing at the key talks in Vienna. (Newswires)

US National Security Adviser Sullivan warned that there will be consequences if Kremlin critic Navalny dies, while there were separate comments from UK Foreign Office spokesperson that UK is deeply concerned regarding reports of unacceptable treatment of Navalny and deterioration of his health, while the spokesperson stated that Navalny must be given access to independent medical care and reiterated calls to release him. Navalny's doctors say he "will die within the next few days" if not given urgent medical attention for acute back pain and leg numbness. (Newswires/BBC)

Russia is reportedly bolstering its warship presence in the Black Sea amid ongoing tensions with Ukraine, while it was also reported that British warships will be heading to the Black Sea next month. (Sunday Times)

Russia's Foreign Minister Lavrov announced that Moscow will publish a list of eight US officials to be placed on a sanctions list and will end the activity of US funds and NGOs that interfere in Russia's internal affairs. Lavrov also stated the Kremlin advised the US ambassador to Moscow to return to the US for consultations and that Russia will expel US diplomats proportionally to US decision to expel Russian diplomats with Russia's response to US sanctions only a little of what it can do, while he warned of further possible measures if Washington does not change its course and the Russian Foreign Ministry later confirmed that Moscow banned eight former and current US officials and citizens from entering Russia. (Newswires)

The Czech Republic expelled 18 Russian diplomats due to suspicion that Russian security services may have been involved in explosions at a Czech ammunition storage facility that occurred in 2014. Furthermore, Russia retaliated by expelling 20 Czech diplomats and its Foreign Ministry stated that the allegations are invented and not based on evidence, while it instead suggested US involvement. (Newswires)

There was a rocket strike at an Iraqi military base at Balad, Iraq which hosts US contractors, while no casualties were reported although 2 Iraqi soldiers were wounded. (Newswires)

US

Treasuries bear-flattened amid fresh shorts place after Thursday's chunky short unwind, with strong data and approaching issuance supportive of higher yields. By settlement, 2s +0.8bps at 0.1652%, 10s +4.1bps at 1.571%, 30s +5.1bps at 2.2595%; TYM1 volumes were slightly below average; inflation breakevens wider with TIPS yields flat. Fed bought USD 1.199bln in 7.5-30yr TIPS, O/C 1.48x (prev. 2.62x). SOFR unch. at 1bps. NY Fed RRP demand at USD 39.94bln across 8 bidders (prev. USD 28.6bln across 9 bidders). Treasuries were softer overnight, with some decent selling after the close on Thursday evening. Reports noted that big Asian real money accounts were back in booking profits on longs with some block sales (after being better buyers earlier this week), with big sales extending into the London open. There was some strength in sovereigns in the late Europe morning, but that ultimately proved a red herring. BofA announcing a jumbo 6-parter worth USD 15bln (a fresh bank record after JPMorgan's (JPM) record USD 13bln issuance yesterday), with solid US Housing Start data soon after managed to bring USTs back to lows as US players settled in. The bear-steepener was somewhat supported by the pick-up in short-term consumer inflation expectations in the latest UoM survey, although other details of the report were less firm. There was little reaction in later trade on Fed Governor Waller's first TV interview (CNBC) in which he said markets are getting ahead of themselves in pricing rate hikes - Eurodollar futures, which are pricing in an aggressive Fed liftoff within two years, didn't nudge. T-note (M1) futures settled 9 ticks lower at 132-12.

Democratic senators are said to be concerned about raising the corporate tax rate to 28% and the rate is likely to land at 25%, according to sources. (Axios)

US Senator Cornyn suggested that GOP could back a smaller infrastructure bill valued around USD 800bln and are seeking a compromise as President Biden is set to discuss his USD 2.3tln plan with lawmakers on Monday. There were also previous comments on Friday from GOP Senator Blunt that GOP senators are unlikely to support President Biden's infrastructure plan and that USD 600-700bln infrastructure plan could be okay to Republicans. (Newswires/WSJ)

Fed's Kaplan (2023 voter) said on Friday that he sees the unemployment rate nearing 4% by year end and is optimistic U6 measure will also grind down significantly although the 'jury is out' on whether the nearing inflation surge will settle down or continue into next year. Kaplan reiterated the view that the Fed should wean the economy at the earliest opportunity from super-easy Fed policy, while the challenge will be finding the balance between being too pre-emptive and being too late on policy. (Newswires)

US Treasury Secretary Yellen held a call with BoE Governor Bailey on Friday in which they discussed the importance of international financial regulatory cooperation and Yellen pledged to work closely with the BoE. It was also reported that Treasury Secretary Yellen and Deputy Adeyemo discussed President Biden's tax plan with environmental groups, including how to leverage the corporate tax system to address climate change. (Newswires)