• Asia equity markets traded mostly lower. Most major FX pairs were indecisive overnight amid a lack of key data releases and speakers
• UK PM May advisers are reportedly considering a customs union deal post-Brexit.
• Looking ahead, highlights include US NFP, Uni. Of Michigan (F), ECB’s Coeure, Fed’s Kaplan and Williams

ASIA

Asia equity markets traded mostly lower with sentiment in the region dampened amid a lack of catalysts and following the indecisive lead from Wall St. where most major indices finished negative and the Nasdaq 100 underperformed. ASX 200 (+0.5%) and Nikkei 225 (-0.8%) were mixed with Australia kept afloat by financials and energy, while the Japanese benchmark was the laggard and saw nearly all the prior day’s gains wiped out. Elsewhere, Shanghai Comp. (-0.4%) and Hang Seng (-0.1%) were downbeat amid Shenzhen volatility, while continued inaction by the PBoC also resulted to a weekly net liquidity drain of CNY 760bln. Finally, 10yr JGBs reversed the initial spill-over selling from US, with support from a risk averse tone and after the BoJ Rinban announcement in which it increased purchases in the 5yr-10yr range. Furthermore, the BoJ also effectively placed a cap on yields as it offered to buy an unlimited amount in 10yr JGBs at a yield of 0.110%.

BoJ announced to buy JPY 450bln in 5yr-10yr (Prev. JPY 410bln), JPY 190bln in 10yr-25yr and JPY 80bln in 25yr+ JGBs, while it also announced a special bond operation to buy an unlimited amount of 10yr JGBs at a yield of 0.110%. However, there were no takers for the fixed rate operation and the BoJ stated it took the steps after a surge in yields and that it is adhering to policy of keeping 10yr yield near 0%. (Newswires)

PBoC skipped open market operations for a net weekly drain of JPY 760bln vs. Prev. JPY 320bln drain W/W. (Newswires)

PBoC set CNY mid-point at 6.2885 (Prev. 6.3045)

UK

UK PM May advisers are reportedly considering a customs union deal post-Brexit. However, there were also reports that UK Trade Secretary Fox stated that a customs union is incompatible with post-Brexit vision. (Newswires)

UK reportedly could water-down migration plan post Brexit, as ministers are said to be drawing up plans for a post-Brexit immigration policy which an impact assessment suggests would only reduce the number of EU migrants to the UK by 40,000 per year. (Telegraph)

EU

German Chancellor Merkel sees scope for additional spending by potential new government on the back of strong growth. (Newswires)

Germany's CSU Party Secretary General Scheuer said that large barriers remain in German government talks. (Newswires)

FX

Most major pairs were indecisive overnight amid a lack of key data releases and speakers, which has kept participants looking towards the upcoming NFP jobs report for a better catalyst. USD/JPY traded choppy in which it was initially pressured by safe-haven flows but then later supported after the BoJ upped its Rinban purchases and announced a special buying operation, while antipodeans weakened in which AUD/USD retested a breakdown of the 0.8000 level and NZD/USD met resistance at the 0.7400 handle.

COMMODITIES

Commodities were mixed amid quiet Asia trade, in which WTI crude futures extended on the prior session’s gains and rose to above USD 66/bbl. Elsewhere, Gold traded sideways and is relatively flat for the week, with overnight resistance seen at USD 1350/oz level, while all focus turns to the upcoming key-risk US jobs data.

Reports suggested that 25 US steel firms & groups have urged US President Trump to act now to 'prevent excess steel capacity,' surging steel imports. (Newswires)

GEOPOLITICAL

US Secretary of State Tillerson says China's economic foothold in Latin America has brought some benefits but its unfair trading practices have hurt manufacturing in region, while he also noted Russia's LatAm presence is alarming. (Newswires)

North Korea reportedly plans parade of long-range missiles prior to the Winter Olympics. (Twitter)

US

US paper made fresh lows late in the session a 15K block seller in 10-year futures pushed yields to fresh cycle highs as the 30-year yield breached 3.0%. The space was also pressured by longer dated corporate issuance, although Treasuries caught a brief reprieve after global equities took a hit in the early part of the European afternoon. US T-Note Futures settled 11+ ticks lower at 121-07.

US President Trump said that there may be a phase 2 of the Tax Reform. (Newswires)

US House Speaker Ryan confirmed that the US will require another stop-gap spending bill, while reports also stated that the House could vote as early as Tuesday on a stopgap bill to fund government tspanough to March 22nd. (Newswires/Politico)

Atlanta Fed GDP Now (Q1) 5.4% (Prev. 4.2%). (Newswires)