• Asian equity markets traded with hefty losses again after another bloodbath on Wall St where the DJIA slipped into bear market territory
• Overnight, Dow futures fell below the 23k level, Nasdaq futures hit limit down and Euro Stoxx 50 futures fell by as much as 8%
• In FX, DXY weakened and reversed some of the prior day’s gains, lifting EUR/USD back towards 1.1300 and USD/JPY below 104.00
• WHO's Tedros said coronavirus is a global pandemic, while he suggested to double down and be more aggressive to contain the virus
• US President Trump announced that the US is to suspend all travel from the EU to the US for 30 days beginning Friday at midnight
• Italy PM Conte announced the closure of all shops aside from groceries and pharmacies for the entire country

CORONAVIRUS UPDATE 

WHO's Tedros said coronavirus is a global pandemic, while he suggested to double down and be more aggressive to contain the virus. There were also comments from WHO's Ryan that Iran and Italy are in the front line of the virus outbreak, but other countries will be in that situation very soon. (Newswires)

Mainland China reported 15 additional cases of coronavirus and 11 additional deaths on March 11th vs. Prev. 24 additional cases and 22 additional deaths on March 10th, to bring the total number of cases in mainland China to 80793 and total death toll to 3169. In other news, China Hubei province is to resume output and ease travel restrictions for 4 regions in the province. (Newswires)

South Korea reported 114 additional coronavirus cases for a total 7869 and the death toll increased by 6 to a total of 66, while Italy’s coronavirus total cases rose to 12,462 (prev. 10,149) and the death toll rose to 827 (Prev. 631). (Newswires)

US President Trump announced to suspend all travel from EU to the US for 30 days beginning Friday at midnight although restrictions will not apply to the United Kingdom and said they will take emergency action to provide financial relief for workers who are ill, quarantined or caring for others due to the coronavirus. Trump also instructed the Small Business Administration to provide capital and liquidity to firms affected by coronavirus and will ask Congress to increase funding to the SBA by USD 50bln. Furthermore, he is instructing the Treasury to defer some tax payments, will provide USD 200bln additional liquidity and called on Congress for immediate payroll tax relief. (Newswires)

Italy PM Conte announced to close all shops aside from groceries and pharmacies for the entire country, while they are closing bars and hairdressers nationwide. PM Conte also stated they are shutting all eateries which cannot guarantee 1 metre distance between customers, although factories can continue to operate with precautions and the tougher lockdown restrictions are to last until March 25th. (Newswires) 

ASIA-PAC

Asian equity markets traded with hefty losses again after another bloodbath on Wall St where the DJIA slipped by almost 1500 points and into bear market territory due to the ongoing fallout from the coronavirus which the World Health Organization labelled as a global pandemic, while the sell-off extended overnight in which Dow futures fell below the 23k level with losses of as much as 1200 points and Nasdaq futures hit limit down after US President Trump’s primetime address was met with disappointment. President Trump announced to suspend all travel from the EU to the US for 30 days which does not apply to the UK and he unveiled several relief measures including support for small businesses, the deferral of some tax payments and called on Congress for immediate payroll tax relief, although these failed to appease markets and the travel restrictions subsequently dragged EURO STOXX 50 futures lower by as much as 8%. ASX 200 (-7.4%) and Nikkei 225 (-3.9%) slumped with energy and commodity-related stocks front running the broad losses in Australia which saw the index post its worst decline since 2008 despite the government announcement of measures valued at AUD 17.6bln in response to the outbreak, while the Japanese benchmark collapsed on the weight of the JPY inflows and languished firmly below the 19k level where the BoJ flagged it would incur losses on ETF holdings. Hang Seng (-3.8%) and Shanghai Comp. (-1.7%) conformed to the negative tone amid the global rout and after weaker than expected Chinese lending data, but with losses in the mainland at a lesser extent as China’s coronavirus updates continued to show a moderation in additional cases. Finally, 10yr JGBs were pressured at the open and briefly fell below 154.00 on initial spill over selling from USTs, although Japanese bond prices then briefly reversed some of the losses as the sell-off in stocks worsened, before selling resumed once again in the aftermath of the 20yr JGB auction which showed weaker results across all metrics. 

PBoC skipped open market operations for a daily net neutral position. (Newswires) PBoC set USD/CNY mid-point at 6.9641 vs. Exp. 6.9632 (Prev. 6.9612)

UK/EU

UK PM Johnson is to chair emergency coronavirus meeting today and UK is expected to shift to delay phase of coronavirus from current contain phase. Johnson is expected to approve more stringent measures to counter the outbreak, which could include restricting large gatherings, closing schools and urging people to work from home. (Newswires)

UK RICS Housing Survey (Feb) 29 vs. Exp. 20.0 (Prev. 17.0, Rev. 18), (Newswires)

FX

DXY weakened and reversed some of the prior day’s gains after President Trump’s address was met with disappointment which subsequently sent yields lower and saw Fed Fund Rate futures price in nearly 95% chance of the Fed cutting rates by a further 100bps this month. The softer greenback provided some reprieve for EUR/USD which briefly reclaimed the 1.1300 handle ahead of today’s ECB meeting, although GBP/USD remained subdued near 1.2800 after the prior day’s 50bps emergency rate cut by the BoE, UK budget spending boost and weak data releases. Elsewhere, USD/JPY retreated below the 104.00 handle on the safe-haven flows which also underpinned CHF, while antipodeans were lacklustre due to their high-beta statuses and after AUD/USD and NZD/USD recently gave up the 0.6500 and 0.6300 handles respectively. EM currencies were also pressured overnight as the spooked risk appetite continued to spur hot money outflows and with MXN dragged by lower oil prices.

Australian PM Morrison announced they will launch measures to support the economy amid the coronavirus with the fiscal measures valued at AUD 17.6bln which will not extend beyond June 30 2021 and with full package over time said to be worth 1.2% of GDP, while he noted it will focus on keeping jobs and Treasurer Frydenberg said there will be a total of 6 measures and that AUD 11bln of stimulus will be dispersed before end of June. (Newswires) 

COMMODITIES

Commodities were subdued in which WTI crude futures retreated nearly 5% to test the USD 31.00/bbl level, with the energy complex pressured by the negative risk environment. Furthermore, there were also bearish comments from Russia’s Deputy Energy Minister who suggested that deeper oil cuts would challenging and ineffective. Elsewhere, gold prices were flat and failed to benefit from the weaker greenback and stock sell-off, while copper prices slumped in tandem with the panic selling across risk assets.

Russia Deputy Energy Minister Sorokin said OPEC+ could not cut output indefinitely and that OPEC+ asked Russia to cut by an additional 300k BPD but it would be technically challenging, while he added that global oil demand growth could be close to zero this year due to virus. (Newswires)

CME Group said it will close Chicago trading floor at the close of business on Friday as a precaution to large gatherings and reopening of the trading floor will be evaluated as more medical guidance becomes available, while it added that all products will continue to trade on CME GLOBEX as they do today. (Newswires)

CME raised crude oil NYMEX futures margins by 13.4% to USD 4650/contract from USD 4100/contract and raised RBOB gasoline futures margins by 7.1% to USD 4925/contract from USD 4600/contract. (Newswires)

GEOPOLITICS

US House passed resolution to rein in President Trump's ability to wage war on Iran, although a veto from the President is expected. (Newswires)

Two Americans and a British person were killed when 15 Katyusha rockets landed at the Taji military camp in Iraq. Furthermore, Twitter sources later noted reports that that US forces were carrying out airstrikes near Iraq-Syria border in response to earlier rocket fire and that 18 Iraqi fighters were reportedly killed in airstrikes in eastern Syria. (Fox/Twitter)

US 

A choppy session for the TPLEX as duration came to somewhat of a roadblock as equities sold off. Despite the returning risk aversion, after Tuesday’s dead-cat bounce, the belly to long-end of the curve failed to catch a bid. Desks noted the likely profit taking after recent sessions of strong flight-to-quality, particularly RP-type selling the long-end, with bonds failing to perform as an equity hedge as positions become overstretched. Note that participants took advantage of the back up in yields at the 10-year Treasury auction, which stopped through the 0.854% WI by 0.5bps, although did see dealers take a larger than average takedown as well as being covered less than average, but nonetheless did provide a short-lived paring of the steepener, before selling re-emerged into the settlement, where the 10-year yield had risen around 6bps to 0.810%, 2s10s +6.5bps, 2s30s +8.5bps.

US President Trump said he we will be making lots of small business loans after a meeting with top banking executives and believes there will be pent-up demand when the outbreak is over in the hopefully not too distant future. In other news, Trump was said to have urged Treasury Secretary Mnuchin to pressure Fed Chair Powell regarding stimulus. (Newswires/Washington Post)

US House Democrats unveiled new coronavirus response bill which included additional funding for food programs, expanded unemployment insurance and paid days for workers, while House Speaker Pelosi earlier said that she hopes the Trump administration will support coronavirus package House Democrats will bring to the floor for a vote on Thursday. (Newswires)

NY Fed increased size of overnight repo operations in which it will offer at least USD 175bln in the o/n repo ops, while it maintained term repo operations at USD 45bln and will offer three 1-month operations of USD 50bln. Furthermore, New York Fed said employees are now leveraging its extensive work from home capabilities and that it is prepared to conduct all business and market operations in any contingency. (Newswires)

US Senator Sanders said he will stay in the presidential candidate race and looks forward to debating Biden. (CNN)

US State Department raised its global travel advisory in which it urged US citizens to reconsider travel abroad. (Newswires)