• Asia-Pac stocks traded mixed as the region struggled to maintain the momentum from the US
• Major US indices snapped a 2-day losing streak led by advances in small caps which resulted in the Russell 2000 finishing higher by more than 2%
• In FX, the DXY was indecisive overnight and briefly eyed a retest of the 91.00 level to the downside
• Indian COVID-19 cases increased by a global single-day record of 314,835
• US President Biden’s administration signalled that it is considering Iranian sanctions relief
• Looking ahead, highlights include ECB policy announcement & press conference, US IJC, existing home sales, EZ consumer confidence, supply from Spain and France. Earnings from AT&T, Intel

CORONAVIRUS UPDATE

US COVID-19 cases +61,229 (prev. +60,000), deaths +800 (prev. +456), total vaccine dose administered 215.95mln (prev. 213.38mln), those fully vaccinated 87.59mln (prev. 86.22mln). (Newswires)

US President Biden said 80% of Americans over 65 will have had at least one vaccine by Thursday and the US remains on track for the July 4th goal, while he added we will try to help Canada and Central America with more vaccines but don't have enough to send to other countries yet. There were also separate reports that US President Biden is to announce new tax credits to businesses providing some paid time off for COVID vaccine shots, while the State Department added around 100 countries to its Level 4 'do not travel' advisory. (Newswires)

Johnson & Johnson (JNJ) published its single-shot COVID-19 vaccine Phase 3 data and stated that it remains confident in the positive benefit-risk profile of the vaccine. JNJ said the vaccine was 85% effective against severe and critical disease, while the trial met its co-primary endpoints of protecting against moderate to severe COVID-19 at 14 and 28 days after vaccination, achieving 67% efficacy at 14 days after vaccination and 66% efficacy at 28 days after vaccination, with prevention against COVID-19-related hospitalization and death across all participants. (Newswires)

UK COVID-19 vaccine passports are to be released as early as next month with UK Department of Transport wanting an official certification scheme in place by May 17th, while the report added that the European Medical Agency recommended fully vaccinated travellers should be able to avoid tests and quarantines. (Telegraph)

Japanese government will reportedly decide on Friday regarding imposing a state of emergency for 4 prefectures, while there were also comments from Tokyo Governor Koike that she has asked the central government to declare a state of emergency. (Newswires)

Indian COVID-19 cases increased by a global single-day record of 314,835 to a total of 15.9mln and deaths rose by a record 2,104 to 184,657. (Newswires)

ASIA

Asia-Pac stocks traded mixed as the region struggled to maintain the momentum from the US where the major indices snapped a 2-day losing streak led by advances in small caps which resulted in the Russell 2000 finishing higher by more than 2%, and cyclicals were also favoured with materials, energy, financials and industrials the outperformers in the S&P 500. ASX 200 (+0.6%) was marginally higher with the index kept afloat by strength in gold miners and real estate although gains were capped amid China-related tensions after Australia cancelled the Victoria State MOU and framework agreement with China regarding the Silk Road economic belt that was signed in 2018, while China was said to strongly oppose the cancellation and warned that the action is bound to further deteriorate bilateral relations. Nikkei 225 (+2.1%) outperformed and reclaimed the 29k level with the index largely unfazed by a mixed currency and potential state of emergency declarations for four prefectures which the government will reportedly decide on this Friday. Hang Seng (+0.3%) and Shanghai Comp. (-0.1%) both initially opened higher but then briefly pared all their gains amid ongoing concerns of tighter regulation and continued overhang from US-China tension after the US Senate Foreign Relations Committee backed the Strategic Competition Act of 2021 to send the bill to a full vote at the Senate, while a bipartisan group of lawmakers also proposed legislation calling for USD 100bln in science funding to keep US competitive with China and other nations. Finally, 10yr JGBs were higher and resumed its gradual approach towards a 2-month high amid the eventual upside in T-note futures in the aftermath of a solid 20yr auction stateside, although the gains were only marginal amid the outperformance of Japanese stocks and lack of BoJ purchases in the market today.

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 6.4902 vs exp. 6.4896 (prev. 6.5046)

US Senate Foreign Relations Committee backed the "Strategic Competition Act of 2021" by 21-1 to send the bill for a vote in the Senate. (Newswires)

UK/EU

UK trade groups stated that the UK government is boosting its efforts to make the implementation of the Northern Ireland protocol work, despite UK PM Johnson's criticism regarding some of the requirements and calls for further measures to mitigate the impact of the post-Brexit deal on Northern Ireland. (FT)The number of UK companies in financial distress reportedly increased by the fastest pace in 7 years during Q1 as there were nearly 100k more businesses significantly distressed compared with Q4 2020, according to data from insolvency firm Begbies Traynor. (FT)

Italian PM Draghi is to unveil a EUR 221bln recovery plan next week to overhaul Italy’s economy. (FT)

FX

In FX markets, the DXY was indecisive overnight following yesterday’s price swings and briefly eyed a retest of the 91.00 level to the downside with the recent pressure owing to the gains in its major counterparts including CAD which strengthened following a hawkish BoC meeting. The greenback was also contained by early strength in its transatlantic counterparts as EUR/USD initially homed in on the 1.2050 level and nearby 100DMA ahead of today’s ECB meeting, while GBP/USD touched an intraday high of 1.3950, but then met resistance as the greenback nursed losses. USD/JPY was indecisive in which price action oscillated around 108.00 and antipodeans were restricted as the risk appetite somewhat moderated in Asia and with better-than-expected Australian Quarterly Business Survey largely ignored by the domestic currency.

• Australian NAB Quarterly Business Confidence (Q1) 17 (Prev. 14)

COMMODITIES

Commodities were lacklustre in which WTI crude futures briefly dipped below the USD 61.00/bbl level after yesterday's eventual declines amid a surprise build in the latest DoE crude inventories and optimistic reports related to the nuclear deal talks as the Biden’s administration signalled that it is considering Iran sanctions relief including for the oil and financial sector. However, an official later stated that sides were not near a conclusion with the outcome still uncertain and that some important differences remained such as which sanctions need to be removed and what actions are needed to resume obligations. Gold prices were contained amid an indecisive greenback and copper marginally weakened as the risk appetite somewhat moderated overnight as US-China tensions lingered.

US President Biden administration's environmental council head said the White House is considering an aggressive push on renewable energy. (Newswires)

GEOPOLITICAL

US President Biden’s administration signalled that it is considering Iran sanctions relief including oil and the financial sector, although Tehran wants to see specifics. Furthermore, the report noted that despite the progress, senior diplomats warned that weeks of difficult negotiations over the 2015 nuclear agreement lie ahead and progress remains fragile, while talks in Vienna are said to be complicated by domestic politics in Washington and Tehran, as well as Iran’s refusal to meet directly with the US. (WSJ)

US official said the second round of talks in Vienna provided a better idea for what the US and Iran need to do to return to compliance on a nuclear deal, while the talks will likely be multiple rounds and we are not near a conclusion with the outcome still uncertain. The official also stated there are still disagreements and in some cases, they are important ones, with differences over which sanctions are needed to be removed and what actions Iran needs to take to resume obligations. Furthermore, the official stated there is no guarantee a future US administration would stick to any agreement and that the US will not rush to meet a deadline on the deal but believes it can remove sanctions quickly if an agreement is made. (Newswires)

White House stated high level discussions are ongoing over any possible Biden-Putin summit, while there were also comments from the State Department that US embassy officials in Moscow met with Russian officials yesterday and discussed topics including Russian response to US sanctions. (Newswires)

Ukraine Foreign Minister Kuleba that international partners need to follow words with deeds to deter Russian use of force and that have no information that Russia has taken a decision to conduct a new military operation in Ukraine, while they have asked EU members to ban Russia from the SWIFT financial system as part of new sanctions and asked US Secretary of State Blinken for help to acquire electronic warfare system to counter Russia. Furthermore, the Foreign Minister said that they have not received a response from Moscow regarding the offer for a Zelenskiy-Putin meeting and he stated that Putin is sending a message that Russia can cross other countries’ red lines but not the other way around. (Newswires)

There was an explosion and rocket alert near Israel's Dimona nuclear facility which the Israeli Army stated was caused by a Syrian anti-aircraft missile which overflew its target. Furthermore, an Israeli military spokesman said the Dimona reactor was not hit and that it wasn't even close, while there was no casualties nor damage reported from the errant Syrian missile strike and it was also reported that Israel conducted an airstrike near Damascus which Syrian air defenses engaged. (Newswires/Twitter)

Saudi-led coalition said it intercepted an armed drone launched by Houthis at Khamis Mushait. (Newswires)

US

Treasuries were flat amid a solid 20yr auction, BoC tapering and risk asset recovery. Post settlement, 2s -0.2bps at 0.151%, 5s +0.5bps at 0.800%, 10s +0.2bps at 1.564%, +20s +0.1bps at 2.148%, and 30s +0.3bps at 2.263%; TYM1 volumes were low. TIPS curve bull-flattened by a few bps, seeing long-end BEIs widen. Fed bought USD 6.001bln 4.5-7yr Treasuries, O/C 3.09x (prev. 3.22x). US sold USD 24bln 20-year bonds, stops through 0.9bps, covered 2.42x. US sold 119-day CMBs at 2.5bps, covered 3.55x. NY Fed RRP op saw a MTD high demand of USD 81.329bln across 33 bidders (prev. USD 67.747bln across 28 bidders). SOFR unch. at 1bps. Choppy and thin ranges throughout the session for T-Notes. Desks noted two-way flows out of Europe, with yields failing to find traction in any given direction overnight. There was a slow bid as US players arrived, with reports of a 10k USM1 lift by a bond fund. However, the strength was short-lived amid dealers hedging for the 20-year auction later, additionally, the BoC tapering its QE programme to CAD 3bln per week from 4bln saw some spill-over pressure on volume sales. But, as Europe began to depart, the earlier auction concession faded, taking yields to flat on the session into the auction. There was little movement in the TPLEX after the solid 20yr auction, which was likely part a result of the concession being pared beforehand, but also perhaps a sign of short-covering exhaustion, perhaps even some nerves to initiate fresh longs ahead of ECB and PMIs. It's also worth noting that Glencore and P&G had just launched some corporate deals, which included duration, so there could be some hedging flows keeping the T-bid muted. T-note (M1) futures settled 1 tick lower at 132-17.

US SEC is reportedly examining disclosure rules following the Archegos blowup, while other reports noted that Credit Suisse's (CSGN SW) exposure to Archegos investments had increased to above USD 20bln. (Newswires/WSJ)