• European indices have been choppy but contained throughout the morning, with US futures mixed but similarly rangebound, ahead of key risk events this week
• The USD remains pressured to the modest benefit of major peers though EUR fails to derive support hindered by GBP while JPY is steady ahead of the BoJ
• Core debt is softer as earlier rebounds fizzled out ahead of 2 & 5yr issuance due stateside today while the US yield curve is marginally steeper
• US President Biden will reportedly urge allies at the G7 meeting in June to increase the pressure on China regarding forced labour
• Looking ahead, highlights include US durables, ECB's Panetta, Lane, 2yr and 5yr supply from the US. Aftermarket earnings from Tesla

CORONAVIRUS UPDATE

US CDC reported COVID-19 cases rose to around 31.85mln from around 31.80mln the prior day and total deaths rose to nearly 569.0k from 568.2k the day before. (Newswires)

UK COVID-19 cases +1,712 (prev. +2,061) and deaths +11 (prev. +32), France cases +24,465 (prev. +32,633) and deaths +145 (prev. +217), Italy cases +13,158 (prev. +13,817) and deaths +217 (prev. +322). (Newswires)

UK officials are reportedly close to finalizing a deal to purchase tens of millions of Pfizer (PFE) vaccines in time for a 3rd booster for the elderly, with the government said to be hoping to roughly double the UK’s original order of 40mln doses. (Sunday Times)

EU is reportedly set to allow vaccinated US tourists to visit this summer, according to NYT. In relevant news, German Vice Chancellor Scholz said the government could be in a position next month to set a binding timetable for the re-opening of the economy. (Newswires/New York Times)

Health Canada issued a statement regarding vaccines produced at the Emergent Biosolutions Baltimore facility in which it stated that 1.5mln doses of AstraZeneca vaccines imported to Canada that were produced at the site met quality inspections and are safe. Furthermore, it is aware of the recent FDA inspection of the Baltimore facility which noted multiple areas of concern but added that the Johnson & Johnson (JNJ) vaccines produced at the site have not entered Canada and the ones expected to enter Canada next week do not come from the Baltimore site. (Newswires)

US will immediately make available specific raw materials needed by India to produce COVID-19 vaccines and will provide India with supplies of therapeutics, rapid diagnostic test kits and personal protective equipment. It was also reported that France will send oxygen equipment to India to help with the COVID-19 crisis and Netherlands is to ban flights from India until May 1st due to concerns regarding a new variant, while the Delhi Chief Minister announced a 1-week extension of the lockdown to May 3rd. (Newswires)

Hong Kong and Singapore will begin their travel bubble on May 26th, while Hong Kong residents are required to be fully vaccinated to travel. (Newswires)

Moderna (MRNA) COVID-19 vaccine is being reviewed today for a potential emergency use listing, according to The WHO. (Newswires)

ASIA

Asia-Pac equity markets traded tentatively albeit with a positive tilt as the major bourses in the region and US equity futures lacked firm commitment heading into month-end, as well as this week’s key events including the BoJ and FOMC meetings, as well as US GDP and Chinese PMI data. ASX 200 (-0.2%) was rangebound as strength in mining names and the top-weighted financials sector helped offset the headwinds from a snap 3-day lockdown in Perth and neighbouring Peel region, while Nikkei 225 (+0.4%) shrugged off early jitters from the reinstatement of the state of emergency for four areas including Tokyo and following the ruling LDP’s failure to win in three by-elections which is seen as a blow to PM Suga ahead of the general election later this year. Hang Seng (-0.4%) and Shanghai Comp. (-0.9%) traded with mild gains initially as participants digested earnings and with China to begin a month-long campaign promoting consumption in May, with the initial advances led by outperformance in health care and strength in mining stocks as mainland commodity prices hit fresh record levels; however, as the session progressed and European participants entered the fray the indices came under pressure. Finally, 10yr JGBs were subdued and broke beneath Friday’s tight ranges to test the 151.50 levels amid a similar subdued trade in T-note futures and with demand sapped as participants await the BoJ which kick started their 2-day policy meeting 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 6.4913 vs exp. 6.4886 (prev. 6.4934)

US President Biden will reportedly urge allies at the G7 meeting in June to increase the pressure on China regarding forced labour in Xinjiang, according to a senior White House official. (Newswires)

Chinese groups' fundraising on US equity markets rose 440% during the beginning months of 2021 with a record USD 11bln raised on the NYSE and Nasdaq through IPOs, share sales and convertible bond issuances, according to reports citing Dealogic data. (FT)

Japan's ruling Liberal Democratic Party failed to win any of the three parliamentary by-elections held on Sunday which reportedly weakens PM Suga's standing in the party ahead this year’s general election. There were later comments from PM Suga that they will take the results of Sunday's elections with humility and analyse them, while he responded that he will keep making the COVID response top priority when asked about a possible snap election. (Newswires/Nikkei)

US

White House responded to criticism regarding plans to hike the capital gains tax in which it stated that the increase will only hit the richest 0.3%. (FT)

US Senator Manchin (Democrat) said that he would not support a circa USD 2.5trl infrastructure bill via reconciliation and would instead prefer a more targeted bipartisan measure. (Newswires)

US Senator Graham (R) has suggested that Republican support potentially exists for a USD 800-900bln stimulus measure. (Fox)

UK/EU

BoE Deputy Governor Broadbent suggested to get ready for a 'very rapid' recovery as he forecasts consecutive quarters of speedy growth although he warned that inflation will prove less predictable. (Telegraph)

UK PM Johnson is reportedly being pressed by the EU to align UK food standards to the bloc's food and safety rules in return for easing import and exports checks between Britain and Northern Ireland. (The Times)

Italian PM Draghi announced that a deal was reached with the European Commission over the Recovery Plan which paves the way for it to be submitted to Brussels by the end of April. (Newswires)

Germany’s opposition Green Party overtook Chancellor Merkel’s CDU in an opinion poll after the party nominated Annalena Baerbock as its top candidate for the national election, with an opinion poll by Kantar showing support for the Greens rose 6ppts to 28% and support for the CDU/CSU fell 2ppts to 27%. (Bild)

European Commission is to propose a bolder approach to dealing with foreign and market distorting subsidies on May 5th, according to Trade Commissioner Dombrovskis, adding that we need to remain open to global trade but more assertive re. unfair practices. Separately, Commission President von der Leyen, in an unpublished progress report, uses unusually tough language on China and says that the EU will move quickly to combat the unfair trade practices from China. (Politico)

German Ifo Business Climate New (Apr) 96.8 vs. Exp. 97.7 (Prev. 96.6); Expectations New (Apr) 99.5 vs. Exp. 101.4 (Prev. 100.4, rev. 100.3)

• Current Conditions New (Apr) 94.1 vs. Exp. 94.5 (Prev. 93.0, rev. 93.1)

German government raises 2021 GDP growth forecast to 3.5% (vs 3.0% in Jan); 2022 forecast at 3.6%; citing better-than-expected growth dynamics in Q4 2020 as the reason to upward revisions, sources state. (Newswires)

S&P affirmed UK at AA; Outlook Stable although stated that narrower access to the EU is likely to weigh on the recovery. S&P also affirmed Italy at BBB; Outlook Stable and upgraded Greece to BB; Outlook Positive on improved government effectiveness, while Fitch affirmed Netherlands at AAA; Outlook Stable. (Newswires)

GEOPOLITICAL

Russia's Kremlin, when asked about a potential meeting between the US and Russian presidents, said that dates and place for a meeting are yet to be set and many factors have to be analysed before a meeting a finalised. Follows weekend reports suggesting such a meeting could occur June 15th-16th. (Newswires)

US President Biden officially recognized the killing of 1.5mln Armenians by the Ottoman Empire in 1915 as genocide, while it was also reported that Turkey summoned the US Ambassador to Ankara to convey a strong reaction regarding the genocide acknowledgement. (Newswires)

Iranian Foreign Minister Zarif says Vienna negotiations positive so far, but are not engaged in direct talks with Washington. (Newswires)

EQUITIES

Major bourses kicked the week off in another lacklustre fashion and the region remains choppy within a narrow band (Euro Stoxx 50 Unch). US equity futures meanwhile reflect the indecisive tone across the market, with the ES and YM flat whilst the tech-laden NQ (-0.2%) and cyclically-led RTY (+0.5%) see a mild divergence as participants gear up for a risk-packed week - which entails the FOMC and BOJ decisions, President Biden’s American Jobs plan speech to Congress, US Q1 GDP, Chinese official PMIs, the JMMC/OPEC+ meetings, and the peak of US earnings season with some 180 S&P 500 companies reporting. Back to Europe, the below-forecast April Ifo German Survey failed to immediately spur price action with desks suggesting that the data reflects a combination of delayed lockdown impact and reopening hopes – although a strong H2 rebound does remain valid. Sectors in Europe are mixed but it is difficult to discern a particular risk profile or an overall theme. Travel & Leisure sees a firm performance as the vaccination drive in the west remains robust whilst NYT also suggested that the EU is reportedly set to allow vaccinated US tourists to visit this summer – in turn lifting the Spanish IBEX (+0.7%) amidst its heavy exposure to the sector – with its top-performing stocks including IAG (+3.6%), Merlin Properties (+2.5%) and Aena (+2.2%). Banks and Basic Resources also see a solid performance thus far amid the higher intraday yield environment and the surge in base metals, namely copper. The downside meanwhile sees Autos (-0.7%) bearing the brunt of the chip shortages – with Volkswagen (-1.3%) suggesting its Q2 productions are poised to be more affected than in Q1. In terms of individual movers, Tate & Lyle (+6.4%) resides as one of the top Stoxx 600 performers as the Co. has started preparations for a break-up or spin-off of its primary products unit which generated over GBP 1.8bln in revenue last year. Analysts believe the unit could be valued north of GBP 1.2bln. On the flip side, Leonardo (-3%) sits on the other side of the spectrum after purchasing a 25.1% stake in Hensoldt (+4.4%) for EUR 606mln.

Binance is to launch stock tokens for Apple (AAPL), Microsoft (MSFT) and MicroStrategy (MSTR) as of today. (Newswires)

Please see the Daily European Equity Opening News and the Additional European Equity News headlines for the morning's European earnings

FX

AUD/GBP/NZD - The Aussie is forming a stronger base around 0.7750 vs its US counterpart and has bounced firmly against the Kiwi in the absence of many NZ participants due to the ANZAC market holiday. Indeed, Aud/Nzd is back in the high 1.0700 area after a few forays under 1.0750 last week amidst a sharp rally in copper prices to decade highs on the LME and strength in iron ore alongside other Chinese metals overnight. Nevertheless, Nzd/Usd is back on the 0.7200 handle as the Greenback continues to flounder in broad terms, with the DXY unable to reclaim 91.000+ status where 2 MA levels lie in very close proximity (100 day and week at 91.024 and 91.056 respectively) between 90.894-679 extremes ahead of notoriously volatile US durable goods and a double dose of T-note supply (Usd 60 bn 2 year and Usd 61 bn 5 year sales). Hence, Cable has rebounded from sub-1.3900 again, albeit with assistance via the Eur/Gbp cross that is back down around 0.8700 after eclipsing last Friday’s peak by a pip, but effectively forming a near triple top having reached 0.8719 on April 16 as well.

JPY - No clear breach of 107.50 for the Yen has not really altered the overall bearish trend in Usd/Jpy as the subsequent high fell a few pips shy of 108.00 compared to 108.15 on April 23 and 108.84 this time last week. Thus, the headline pair remains offered and a sell into upturns as the clock ticks down to the BoJ and Fed.

CAD/EUR/CHF - A downturn in oil prices awaiting OPEC+ has taken some sapped some of the Loonie’s post-BoC momentum, but Usd/Cad has also bounced following a probe through 1.2450 and a lack of impetus the break beyond the half round number convincingly. Similarly, the Euro popped above 1.2100, though without enough conviction to stay there or build much on the March 3 apex at 1.2113 that prefaced a fall to circa 1.1704 by the end of last month, with a somewhat mixed German Ifo survey hardly helping (business climate, current conditions and expectations all missed consensus, but former 2 readings above previous prints). Elsewhere, the Franc marginally softer between 0.9146-22 and 1.1063-49 parameters vs the Dollar and Euro respectively as sight deposits at Swiss banks held fairly steady in the latest week.

EM - The Lira did not glean much encouragement from an uptick in Turkish manufacturing sentiment, but Usd/Try has recoiled from 8.4840+ to test 8.3000 amidst the aforementioned pull-back in crude and what looks like a correction perhaps aided by official intervention in defence of 8.5000. Meanwhile, the Rand may be deriving support over 14.2500 from the SA Health Ministry pledging rigorous pre-vaccine assessments and monitoring after jabs once it restarts the J and J study.

FIXED

Bunds managed to mount another recovery effort and traded 4 ticks above par on this occasion, at 170.87 (vs -37 ticks at worst), but again the rebound was short-lived and fleeting as sellers pounced before any real momentum had chance to build. However, the core Eurozone debt future and its peers could well get a 2nd wind or gather more impetus as the week progresses given an unusually long index extension for April, according to UBS, at 0.19 year vs the 3 year average of 0.16 for this month. Elsewhere, Gilts have also succumbed to heavier offers into upturns than buyers on dips and are back in the red alongside US Treasuries ahead of US durable goods, ECB QE tallies, Dallas Fed manufacturing and just over Usd 120 bn 2/5 year issuance, with ECB’s Panetta and Lane also scheduled to speak.

COMMODITIES

WTI and Brent front-month futures are pressured in early European trade with the former testing USD 61/bbl to the downside at the time of writing (vs high 62.31/bbl) and the latter hovering around USD 65/bbl (vs high 66.26/bbl). The crude complex continues to adjust to the fluid supply/demand dynamics, with India’s dire COVID situation raising demand concerns, both on a domestic front and internationally as the so-called “double-mutant” (B.1.617) is cited as the fuel behind the latest surge in cases and deaths – with some also expressing concerns over its resilience to vaccines, although no official studies nor announcements have yet been made on this front. Meanwhile, eyes remain on geopolitics as Iranian JCPOA talks are reportedly going the right way, although Tehran sticks to its guns for economy-crippling sanctions to be removed before any meaningful progress can occur. Turning to OPEC, both the JMMC and OPEC+ meetings are seemingly going ahead this week, with the latter suggesting a non-zero chance of a tweak to the quotas set through to July – and although expectations are currently skewed towards no change in policy, it is worth being cognizant of the fact that OPEC+ has surprised at almost every meeting this year thus far. Elsewhere, spot gold and silver trade uneventfully moving in tandem with the Dollar, with the former in a tight band around USD 1,780/oz whilst spot silver trades on either side of USD 26/oz. Turning to base metals, copper prices have been tearing higher once again with LME copper extending gains above USD 9,500/t and hitting 10yr highs amid a weaker Buck alongside some supply-side concerns as Chilean port workers called a strike today, with miners also threatening strike action amid the government’s move to block a pension bill; for reference, Chile accounts for around 25% of the global copper supply.

Morgan Stanley expects Brent to trade in a USD 65-70/bbl range until year-end. (Newswires)