• Asian equity markets traded mixed with risk appetite dampened following the losses on Wall Street
• US majors retreated from their recent record highs with the declines led by tech and growth
• In FX, the DXY languished beneath 91.00, EUR/USD sits north of 1.2050 and GBP/USD hovers around 1.40
• Chinese President Xi cautioned against nations meddling in other nations internal affairs
• Looking ahead, highlights include UK labour market report, ECB's de Cos, supply from the UK & Germany, earnings from Netflix, Johnson & Johnson, Phillip Morris, P&G & Lockheed Martin

CORONAVIRUS UPDATE

US CDC reports COVID-19 total cases rose by 39,442 to 31.48mln and total deaths rose by 312 to 564.3k. (Newswires)

US State Department stated it will update its travel advisories this week to better reflect US public health guidance on COVID and that an update will result in a large rise of the number of countries at the 'do not travel' level which will be roughly 80% of all nations. (Newswires)

New York Governor Cuomo said the state has its lowest COVID positivity rate since pre-Thanksgiving and that movie theatre capacity will be raised to 33% with other safety precautions in place, while Museum and Zoo capacity will be raised to 50% on April 26th. (Newswires)

Japan is reportedly seeking blood clot data to assess the AstraZeneca (AZN LN) COVID-19 vaccine, while it was separately reported that Philippines approved EUA for the Johnson & Johnson (JNJ) COVID-19 vaccine and a vaccine developed by India's Bharat Biotech. (Newswires)

ASIA

Asian equity markets traded mixed with risk appetite dampened following the losses on Wall Street where most majors retreated from their recent record highs with the declines led by tech and growth amid a rise in yields and bond selling. ASX 200 (-0.7%) was subdued with nearly all sectors in the red following the headwinds from US peers and as participants digested quarterly updates including Rio Tinto which posted lower iron ore production although its shipments increased Y/Y. Nikkei 225 (-2.0%) underperformed as the recent detrimental currency flows reverberated across Japanese stocks in which exporters took the brunt after USD/JPY briefly gave up the 108.00 handle. Hang Seng (+0.1%) and Shanghai Comp. (+0.3%) were indecisive after a lack of surprises from the PBoC which maintained the status quo on rates for a 12th consecutive month as expected with the 1-year and 5-year Loan Prime Rates kept at 3.85% and 4.65%, respectively. Focus was also on Chinese President Xi’s keynote speech at the Boao Forum where he stated that China has continued deepening reform and opening up, as well as called for countries to join hands in dealing with the pandemic but also reiterated the view for countries to not meddle in the internal affairs of others. Finally, 10yr JGBs were lacklustre after the recent weakness in USTs and slightly lower demand at the 20yr JGB auction, while 10yr yields in Australia and New Zealand were higher by around 4-5bps as they tracked the upside in global counterparts.

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 6.5103 vs exp. 6.5080 (prev. 6.5233)

Chinese President Xi stated that China has continued deepening reform and opening up, as well as called for countries to join hands in coping with the pandemic. President Xi added that a multilateral trading structure with WTO at the heart must be maintained and suggested that building barriers and pushing for decoupling will harm others without benefits, while he added that they must reject a cold war and zero-sum mentality. Furthermore, he said China will not participate in an arms race nor seek hegemony but stated that rules set by a country or some countries cannot be imposed on others and that meddling in others' internal affairs will not get anyone support. (Newswires)

US House passed House Resolution 130 which condemns the continued violation of rights and freedoms of the people of Hong Kong by the People's Republic of China and the Government of the Hong Kong Special Administrative Region, while the House Foreign Affairs Committee stated that we must stand with Hong Kong as they fight for the rights and freedoms promised to them under Hong Kong and international law. (Twitter)

China reportedly conducted an aerial bombing drill following recent US-Japan statements on Taiwan, while other reports noted that the Chinese military was seen to be linked to multiple cyber-attacks in Japan. (SCMP/NHK)

• PBoC 1-Year Loan Prime Rate (Apr) 3.85% vs. Exp. 3.85% (Prev. 3.85%)
• PBoC 5-Year Loan Prime Rate (Apr) 4.65% vs. Exp. 4.65% (Prev. 4.65%)

UK/EU

Germany CDU party executive committee supported Laschet as Chancellor candidate for the Federal Election in which Laschet was reported to have won the vote in the CDU party leadership committee by votes of 31 to 9. (Newswires/Twitter)

UK PM Johnson will, prior to Thursday’s US climate summit, unveil a pledge to reduce emissions by 78% by 2035 vs 1990 levels from the prior goal of 68% by 2030, according to sources. (FT)

FX

In FX markets, the DXY languished after the prior day’s heavy selling pressure and breached the 91.00 level to the downside despite the rise in yields and broad negative risk tone during Wall Street trade, with the greenback hampered by the recent advances across its major counterparts. EUR/USD remained extended at its best levels in more than a month above the 1.2050 level and nearby 100-DMA with the single currency encouraged by the improved economic outlook as some of the previous vaccination concerns eased, while GBP/USD reclaimed the 1.4000 handle as it benefited from the USD woes and continued pullback in EUR/GBP, in the absence of any major news catalysts. USD/JPY briefly slipped beneath its 50DMA for the first time in nearly 3 months to test the prior session’s lows at 108.00 where it then found some support and JPY-crosses were boosted on base currency strength, while antipodeans also benefitted from the USD weakness, coupled with a firmer reference rate setting by the PBoC and after the uneventful RBA minutes in which the central bank reiterated it will not raise the cash rate until inflation is sustainably within 2%-3% target and noted that preliminary data suggests March quarter GDP was likely to have recovered further to around pre-pandemic levels earlier than expected.

RBA April meeting minutes reiterated that the board remains committed to doing what it reasonably can to support the Australian economy and would maintain highly supportive conditions until goals were achieved, while it does not expect inflation and employment goals to be reached until 2024 at the earliest. The minutes stated the Board will maintain the Cash Rate at 0.10% for as long as necessary and will not raise the Cash Rate until inflation is sustainably within 2%-3% target. Furthermore, the Board is prepared to conduct further bond purchases beyond the AUD 200bln already announced if it would assist in achieving goals and would consider extending low-cost funding facility for banks if there were a deterioration in funding and credit conditions, although there are currently no signs of that and the central bank also stated that preliminary data suggests March quarter GDP was likely to have recovered further to around pre-pandemic levels earlier than expected.

COMMODITIES

Commodities were positive overnight with prices supported amid a weaker greenback and ongoing geopolitical concerns which helped WTI crude future just about reclaim the USD 64.00/bbl level to the upside. In terms of the pertinent stories, OPEC+ was said to be mulling downgrading the April 28th meeting to just a JMMC meeting instead of a full ministerial meeting and Libya's National Oil Corporation announced a force majeure at the Hariga oil port, while focus turns to the latest inventory reports beginning with the private stockpile data scheduled later today. Elsewhere, gold prices were rangebound after pulling back from a 7-week high, while copper prices benefitted from the softer greenback and there was also a quarterly update from Vale which sees copper output at the lower end of guidance for this year.

Exxon Mobil executive proposed a US-backed carbon capture and storage project for Gulf Coast refineries and industrial plants which would require a minimum of USD 100bln in public and private funding. (Newswires)

Brazil's Vale reported Q1 iron ore output 68.0mln vs exp. 72.0mln tons, nickel output at 48.5k tons and it expects 2021 copper output at the lower end of guidance. (Newswires)

GEOPOLITICAL

Deputy Foreign Ministers of countries concerned with the Iranian nuclear deal talks will hold a meeting in Vienna today. (Al Jazeera)

White House said National Security Adviser Sullivan spoke with Russian Security Council Secretary Patrushev and the Russian Security Council told the US National Security Adviser about readiness to continue talks to normalise US/Russia relations. (Newswires)

US State Department said the US expresses deep concerns regarding Russia's plans to block foreign naval ships and state vessels in parts of the Black Sea, while it called for Russia to stop harassment of vessels and reverse the build-up of troops at the Ukraine border. In related news, experts reportedly fear that Russia will seize Ukraine's water supply facilities amid a build-up of warships near Ukraine, as well as 150k troops on the border and in Crimea. (Newswires/Mirror)

US

Treasuries were better offered on Monday, reversing overnight strength, as fresh EGB shorts saw spillover effects, while supply factors also weigh. By settlement, 2s -0.2bps at 0.161%, 5s +0.8bps at 0.831%, 10s +2.8bps at 1.601%, 30s +2.9bps at 2.292%; TYM1 volumes were low. Inflation breakevens were narrower amid real yields leading the sell-off. NY Fed RRP op demand at USD 53.8bln across 23 bidders (prev. USD 39.94bln across 8 bidders), the highest this month. SOFR unch. at 1bps. Fed buys USD 8.8801bln 2.25-4.5yr Treasuries, O/C 3.2x (prev. 2.79x). US sells USD 64bln of 3-month bills at 2.5bps, covered 2.64x; USD 60bln of 6-month bills at 4bps, covered 3.23x. Bonds caught a modest bid overnight on subdued volumes amid a lack of fresh catalysts. Bunds began leading the selling pressures however in the late Europe morning on seemingly nothing too incremental (some wires had attributed the move to the noise around Germany's leadership race in lack of greater catalysts). It's worth noting that chants around higher EGB yields have been growing, with Goldman's strats recently calling for duration shorts on improving outlook, bearish supply developments (extension of fiscal support programmes), with expectations the ECB will upgrade its outlook, and therefore is unlikely to pick up the pace of its PEPP purchases. That narrative, alongside a pullback in US yields, has seen the US10yr/Bund spread fall from its cycle highs of 210bps in early April to beneath 190bps currently, where it hasn't been since early March. Back to Treasuries, aside from spillover from Bunds, another busy supply slate, including deals from Morgan Stanley, BNY Mellon and EIB, supported the defensive stance seeing yields flip cheaper. Note, analysts expect corporate issuance - which has been predominantly banks post-earnings - to cool this week, ahead of the 20-year Treasury auction on Wednesday and 5-year TIPS on Thursday. There was some strength for USTs in the NY morning amid the pressure in stocks, with VIX moving firmer, although that rally faded back into the settlement, with corporate deals likely adding pressure in otherwise quiet trade. T-note (M1) futures settled 4+ ticks lower at 132-07+.

White House said the meeting on the infrastructure bill was productive in which President Biden and Transportation Secretary Buttigieg shared their vision in the American Jobs Plan to create millions of good jobs, while Members of Congress engaged in productive exchanges of ideas including parts of the plan and how to fund it, while President Biden asked for their feedback and follow up on proposals, as well as underscored that inaction was not an option. Furthermore, other reports noted that President Biden and the bipartisan group of lawmakers discussed alternative ways to pay for the infrastructure bill including a smaller increase to corporate taxes. (White House/WSJ)

White House was reportedly homing in on a ‘families plan’ spending proposal which will be focused on childcare, pre-K and paid leave, according to The Washington Post. (Washington Post)