Original insights into market moving news

[PODCAST] US Open Rundown 12th March 2020

  • US equity futures have hit limit down (5% in futures) multiple times in European hours as sentiment remains subdued after Trump failed to announce sweeping support
  • US President Trump announced to suspend all travel from EU to the US for 30 days beginning Friday at midnight
  • DXY is modestly firmer with the complex overall mixed but safe-haven JPY outperforms
  • BoJ is reportedly likely to strengthen stimulus at its meeting next week, more active stance on buying assets, but are unlikely to deepen negative rates without a jump in the JPY
  • OPEC+ JTC meeting scheduled for March 18th in Vienna is unlikely to occur, according to sources
  • Looking ahead highlights include US Initial Jobless Claims, PPI, ECB Rate Decision & Press Conference, supply from the US


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)

China's Health Commission said the country has passed the peak of coronavirus epidemic. (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)

Japanese Government are likely to downgrade their economic view in its monthly report due on March 26th; govt could remove language describing the economy as recovering moderately or replace it to reflect weakening fundamentals, but policy makers are undecided, according to sources. (Newswires)

BoJ is reportedly likely to strengthen stimulus at its meeting next week, more active stance on buying assets, but are unlikely to deepen negative rates without a jump in the JPY, according to sources. (Newswires)

French Finance Minister Le Maire says the public invest bank will be increasing guarantee on SME loans to 90% from 70%. (Newswires)

Switzerland could reportedly declare a state of emergency soon, according to SRF. (Newswires)

German IFW Kiel institute sees the German economy shrinking in 2020 due to the coronavirus. (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)

Argentina Economy Minister says they are in need of 'substantial' debt relief in an upcoming restructuring, has no capacity to serve debt interest payments over the next few years. (Newswires)

RBI stands ready to take measures in order to ensure the coronavirus effects on the Indian economy are mitigated. (Newswires)

Iran has asked the IMF for USD 5bln in coronavirus aid. (Newswires)


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 (-4.4%) 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 (-3.7%) and Shanghai Comp. (-1.5%) 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)


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)

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


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)

EU Industrial Production YY (Jan) -1.9% vs. Exp. -3.1% (Prev. -4.1%, Rev. -3.6%); MM (Jan) 2.3% vs. Exp. 1.4% (Prev. -2.1%, Rev. -1.8%)

French Finance Minister Le Maire hopes the ECB sends a signal in favour of loans to banks for small/medium sized firms; adds, he is not closed to the idea of a solidarity fund for Co's most impacted by the virus. (Newswires)


Turkish Defence Minister says they have largely reached an agreement with the Russian delegation on the details of the ceasefire in Idlib. (Newswires)

EQUITIES – US Equity Circuit Breakers

Another detrimental session for the equity space as the impact of the virus outbreak further materialises across the globe and with US measures to tackle the pandemic seemingly deemed unsatisfactory by markets. APAC stocks suffered hefty losses overnight, with the Aussie index ending the session over 7.5% lower, whilst Japan’s Nikkei gave up the key 19k handle and some more. Meanwhile, the sentiment reverberated in US and EU equity futures with the former trickling lower to trade at/near their respective 5% limit downs (Full details of levels available on the headline feed), futures across the pond fare no better. In terms of cash markets, European stocks show broad-based losses to the tune of 5.5-7.0% [Eurostoxx 50 -5.5%] with losses of similar magnitude reflected across sectors, although defensive fare slightly better than the cyclicals. Zooming into the sectors, EU Travel & Leisure underperforms its peers after US President Trump announced a 30-day travel ban to Europe. As such, the likes of Norwegian Air Shuttle (-21%), Lufthansa (-9.9%), Air-France (-11.0%), easyJet (-5.4%) all under pressure alongside cruise names. Financial names meanwhile bear the brunt of the low-yield environment; Barclays (-8.9%), Deutsche Bank (-8.3%), Commerzbank (-8.8%), BNP Paribas (-7.0%), UBS (-6.2%). In terms of individual movers, Nestle (-3.7%) failed to gain impetus from source reports that it is progressing with the sale of its China unit Yinlu Foods for ~USD 1bln. AstraZeneca (-4.0%) underperforms vs. the sector after its Phase III trial for Cediranib did not meet its primary endpoint.


USD - Although the Dollar is on a somewhat mixed footing against major counterparts and the US Treasury curve has flipped back into bull-steepening mode, the DXY has bounced firmly from overnight lows and back above 96.500 to breach Fib resistance at 96.695 by virtue of heftier gains vs high beta, activity, risk and even yield rivals, not to mention even more pronounced appreciation relative to floundering EM currencies. On that note, even the recently resilient YUAN is succumbing to the latest bout of safe-haven positioning irrespective of latest reports that nCoV has peaked and the epicentre of the coronavirus outbreak is returning to normal, as Usd/Cnh crosses the psychological 7.0000 mark again.

AUD/NZD - The Aussie has pulled back further towards 0.6400 and through 1.0300 in Kiwi cross terms amidst renewed risk-off trade, and hardly getting any relief from a substantial fiscal injection overnight, while its Antipodean peer has fallen in sympathy from 0.6300+ to sub-0.6250 territory awaiting the RBNZ for more independent impetus and more immediately NZ manufacturing PMI tonight.

NOK/SEK/GBP/EUR - Also on the backfoot, with Eur/Nok soaring beyond 11.0000 to another new ATH circa 11.1675 amidst a deeper retracement in crude prices and calls for the Norges Bank to cut the benchmark depo rate by 50 bp next week. Eur/Sek lagging on less dovish Riksbank vibes and mixed Swedish inflation data, while Sterling is back down near early March lows (Cable around 1.2750 and Eur/Gbp 0.8800+) in wake of yesterday’s emergency BoE ease and UK budget excesses. However, the Euro has unwound more post-Fed rate cut strength vs the Greenback in the run up to the ECB amidst high uncertainty over the likely policy adjustments given elevated anticipation for something big like last September’s multi-faceted salvo (check out the Newsquawk Research Suite for a full preview of the March policy meeting that comes with updated Staff forecasts). Eur/Usd has lost grip of 1.1300 and 1.1250 to probe technical support between 1.1239-13 that spans a Fib retracement level.

JPY/CAD/CHF - Relative G10 outperformers or at least displaying a degree of resistance to the Buck’s ongoing revival, as the Yen holds above 104.00, albeit off best levels following yet more talk about imminent or impending BoJ stimulus to supplement Japanese Government measures. Meanwhile, the Loonie is trying to contain losses within a 1.3821-3752 band against the backdrop of renewed pressure on oil and the Franc is firm, though contingent on the SNB’s reaction to what unfolds in Frankfurt via the ECB.

EM - As noted above, broad and hefty losses for regional currencies due to well documented negative factors, but with the Rouble and Mexican Peso particularly weak due to crude correlations.

Notable FX Expires, NY Cut:

-        EUR/USD: 1.1200-10 (850M), 1.1245-50 (470M). 1.1295-1.1300 (1.2BLN), 1.1325 (730M), 1.1350 (785M), 1.1480 (685M)



Not quite a case of hero from zero, but UK debt has gradually chipped away at Wednesday’s post-BoE/budget arrears to reclaim 138.00+ status at 138.12 and overtake Bunds in the process, even though BTPs and Eurozone peripheral bonds are looking more apprehensive pre-ECB and after Italian supply. Meanwhile, US Treasuries have regained some composure following a pronounced sell-off late yesterday as thin liquidity and purported RP long liquidation compounded the move, but with the curve re-flattening perhaps counterintuitively in advance of the 30 year auction that may need some form of concession, albeit with long bond yields remaining considerably high than they were at the start of the week (circa 1.24% compared to only a fraction above 70 bp at one stage on Monday).



Further downside in WTI and Brent front-month futures as the complex continues its OPEC and virus-induced sell-off with the overall narrative around the market largely unchanged, although additional bearish factors include WHO labelling the outbreak as a pandemic and US President Trump announcing a 30-day travel ban to Europe. The contracts are under further pressure from bearish comments from the Russian Deputy Energy Minister who suggested that deeper oil cuts would be ineffective and challenging – alluding to a reaffirmation in stance as Saudi attempts to force Moscow’s hand to agree to further reductions. That said, Energy Ministry Novak stated that the OPEC+ JTC on March 18th will be conducted by video conference – which was signalled earlier but the notion suggests that Russia is willing to cooperate with the other oil producers despite the soured relations with Saudi Arabia. However, the Russian Energy Minister is set to meet with Russian oil companies today to discuss the OPEC situation, with expectations skewed to no-change in their stance regarding cuts. WTI Apr’20 and Brent May’20 hold onto losses of ~5% at the time of writing as the former briefly breached USD 31/bbl to the downside in APAC trade whilst the latter found an overnight base sub-33.50/bbl. Conversely, the risk-off sentiment has kept an underlying bid in spot gold which resides just south of the USD 1650/oz level. As a reminder, desks note that gold prices could be less supported amid a stock-market selloff as traders and investors will need to close positions to account for decaying margins. Elsewhere, copper prices continue to suffer amid the broad risk-off sentiment with prices firmly back under the USD 2.5/lb mark.

OPEC+ JTC meeting scheduled for March 18th in Vienna is unlikely to occur, according to sources. (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)


Saudi Aramco has reportedly rejected at least three Asian refiners' request for extra barrels of April loading crude, sources state. (Newswires)

The third Najarian brother? @jonnajarian @petenajarian #TigerKing