• Asian equity markets were indecisive as the region failed to sustain the rebound on Wall St from its worst sell-off since 1987
• UK Chancellor Sunak announced new measures including cash grants, tax holidays, mortgage moratoriums and lending facilities
• Canada is to announce a CAD 27bln economic and aid package today to offset the coronavirus impact
• DXY slightly pulled back overnight but held on to the majority of gains seen in the prior session where it surged above 99.00
• Looking ahead, highlights include EZ CPI, US Building Permits and Housing Starts, Canadian CPI, DoEs, NZ GDP, Japanese CPI, supply from Germany

CORONAVIRUS UPDATE

Mainland China reported 13 additional cases of coronavirus and 11 additional deaths on March 17th vs. Prev. 21 additional cases and 13 additional deaths on March 16th, to bring the total number of coronavirus cases in China to 80894 and death toll at 3237. (Newswires)

South Korea reported 93 more cases of new coronavirus for total of 8413 and the death toll rose by 3 to total of 84. (Yonhap)

US Treasury Secretary Mnuchin said the virus will yield 20% jobless rate without policy action, while there were separate reports that the US coronavirus plan to combat coronavirus warned policy makers last week that pandemic will last for 18 months involving shortages. (Newswires/New York Times)

Nevada ordered the shutdown of non-essential businesses including casinos for 30-days. (Newswires)

US and Canada will announce an agreement to partially close the border on Wednesday while permitting trade and commerce to continue. (The Globe and Mail)

Canada is to announce CAD 27bln economic and aid package on Wednesday to offset coronavirus impact, according to a government source. Furthermore, the package will boost unemployment insurance payments, child benefits and push back tax deadlines, although the source added that Canada is not yet ready to offer aid to airlines. (Newswires)

EU leaders agreed to close borders to prevent virus spread in which borders will be shut for a 30-day period. (Newswires)

UK Chancellor Sunak announced new measures including cash grants, tax holidays, mortgage moratoriums and lending facilities, with government interventions to be made in the economy on an "unimaginable" scale. The measures include GBP 330bln of guarantees for business and every single shop, pub and others in hospitality will pay no business rates for 12 months, while the UK is to support liquidity for larger firms and there will be a facility to support lending to SMEs. Furthermore, mortgage lenders will offer a 3-month payment holiday for those in need and the NHS will get whatever funding it needs, while further measures will be announced in the coming days. (Newswires) UK PM Johnson said although measures are extreme, we may have to go further and faster in the coming days and are doing all we can to increase NHS capacity, while he later stated we are keeping the situation regarding schools under continuous review. (Newswires)

Irish PM Varadkar said Ireland could see 15000 cases of coronavirus by end of the month and that at some point, we will tell the elderly and those with underlying illnesses to stay at home for a number of weeks. Furthermore, he added that there will be help from banks and government utilities for those who lost jobs, while damage to the economy will be significant and lasting with the bill enormous although noted it is possible to borrow billions of EURs on financial markets if needed. (Newswires)

ASIA

Asian equity markets were indecisive as the region failed to sustain the rebound on Wall St from its worst sell-off since 1987, where sentiment was underpinned by efforts to address the coronavirus fallout including reports US plans stimulus of as much as USD 1.2tln consisting of a USD 300bln deferral in IRS payments and sending checks to citizens within 2 weeks, while the Fed also announced it will establish a commercial paper funding facility to support credit flow. ASX 200 (-6.4%) underperformed amid heavy losses in the tech and energy sectors, as well as a retreat in US equity futures after-hours which hit limit down, while Nikkei 225 (-1.9%) was initially positive following better than expected trade data despite Exports remaining at a contraction for the 15th consecutive month but the pared gains heading into the close. In terms of the notable stock movers, Fujifilm Holdings hit limit up after reports that China said the Co.’s influenza medicine was effective against coronavirus and are said to plan officially recommending the drug’s use for treatment, while SoftBank shares were at the other side of the spectrum on news it is backing away from part of the planned WeWork bailout. Hang Seng (-2.5%) and Shanghai Comp. (-0.8%) also conformed to the indecision and ahead of key earnings from Hong Kong heavyweight Tencent with broad selling later triggered after US equity futures hit limit down. Finally, 10yr JGBs declined as they tracked the recent losses in T-noted, and although prices initially rebounded off their lows after finding support at 152.00 and with the BoJ in the market for nearly JPY 1.2tln of JGBs heavily concentrated in 1yr-10yr maturities, this was short-lived and selling was then exacerbated on a break below the aforementioned support.

PBoC skipped open market operations for a daily net neutral position. (Newswires) PBoC set USD/CNY mid-point at 7.0328 vs. Exp. 7.0286 (Prev. 7.0094)

US President Trump said he took exception to China suggesting that the US brought the virus into China and said it is accurate that the virus came from China. (Newswires) China Foreign Ministry said China is taking countermeasures against the restrictions placed on its media agencies in the US in which it moved to disallow US journalists from WSJ, NYT and The Washington Post from working in the country, while they were also comments from Foreign Ministry spokesman Geng that they are very angry of US President Trump’s reference to ‘Chinese virus’. (Newswires)

Japanese Trade Balance (Feb) 1109.8B vs. Exp. 917.2B (Prev. -1312.6B, Rev. -1313.2B) Japanese Exports (Feb) Y/Y -1.0% vs. Exp. -4.3% (Prev. -2.6%) Japanese Imports (Feb) Y/Y -14.0% vs. Exp. -14.4% (Prev. -3.6%, Rev. -3.5%)

UK/EU

Group of asset managers told BoE Governor Bailey that financial markets should close for two weeks, according to WSJ citing sources. The call was held with senior executives from asset managers including Vanguard Group, BlackRock Inc. (BLK), JPMorgan Chase & Co. (JPM) and Bank of New York Mellon Corp (BK), in which the industry is said to have told Bailey that most mutual funds weren't seeing large outflows yet. (Newswires)

German Chancellor Merkel has stated that she could consider joint debt issuance in order to help mitigate the impact from COVID-19; a move that could lead to a large overhaul of European finances. (Newswires)

European member states are reportedly divided over when and under what conditions the EUR 500bln ESM could be used to support the Euro Zone, according to diplomats. (FT)

Italy’s market regulator banned short-selling for 3-months in an attempt to curb volatility, while France and Belgium also announced short-selling bans for a month each. (Newswires)

FX

DXY slightly pulled back overnight but held on to the majority of the gains seen in the prior session where it surged above the 99.00 handle. Nonetheless, the greenback retreated off its best levels to provide some reprieve for its major counterparts including EUR/USD which briefly slipped below the 1.1000 level, while GBP/USD continued its rebound from support at 1.2000 to temporarily reclaim the 1.2100 handle after the government announced massive stimulus measures including GBP 330bln of guarantees for business. Elsewhere, USD/JPY retraced some of the prior day’s gains amid the mixed risk sentiment and antipodeans were kept rangebound due to their high-beta properties and after PBoC set the weakest reference rate YTD, although the AUD/NZD cross briefly reclaimed 1.0100 to the upside after rebounding from near-parity.

COMMODITIES

Commodities were subdued overnight in which WTI crude futures extended on the prior day’s slump in prices amid reports that Saudi are to boost its oil exports to a record 10mln bpd. Furthermore, a surprise draw in the latest private inventory headline crude stockpiles did little to spur prices. Elsewhere, gold was flat for most the session but were later pressured as risk appetite deteriorated alongside the pressure across the commodity complex which saw copper shed over 3%.

US Private Inventory Crude Stocks (w/e 13th Mar) -0.42mln vs. Exp. +3.3mln (Prev. +6.4mln). (Newswires)

CME raised RBOB gasoline futures margins by 20.3% to USD 7100/contract from USD 5900/contract. (Newswires)

GEOPOLITICS

Rockets were reportedly fired into the Green zone in Baghdad, Iraq, according to witnesses cited by LA Times reporter. (LA Times)

US

Fed established a primary dealer facility to support market function beginning March 20th which will last at least 6 months for 90-day loans and noted the interest rate will be at the discount window rate, while it will accept broad range of investment grade debt for collateral for loans to primary dealers. (Newswires) New York Fed is to offer USD 1trln in overnight repo operations for the remainder of the week (USD 500bln both in the morning and afternoon). (Newswires)

Fed's Kashkari (Voter, Dove) said virus outbreak will quickly become an economic crisis for the US, while he added this could quickly become a recession and it could be a long crisis but noted the right reaction is to overreact to provide the best outcome. (Newswires)

Fed's Bostic (Non-Voter, Dove) said Fed actions are meant to show there will be maximum stimulus available now and when US gets on the other side, while he added that continuous turmoil in markets and across policy space convinced him last week for the need of Fed action. (Newswires)

Fed's George (Non-Voter, Hawk) says KC Fed continues to carry out key functions in this extraordinary time and we stand ready to lend through discount window, as well as address any regulatory or supervisory concerns

Former VP Biden was declared winner in the Florida, Illinois and Arizona Democrat primaries. (Newswires)