• US House passed USD 2.2trln COVID-19 economic aid bill which President Trump signed on Friday
• US President Trump announced that he is to extend federal guidelines on coronavirus to April 30th and that he sees deaths peaking in 2 weeks
• NIH’s Fauci projected the possibility of millions of coronavirus cases in the US and 100k-200k deaths
• Asian equity markets resumed their selling, and US equity futures also began the week on the backfoot (before gradually recouping losses)
• In FX, the DXY was slightly firmer and rose back above the 98.50 level as the downbeat sentiment underpinned safe-havens
• Looking ahead, highlights include regional and national German CPI, EZ Consumer Confidence (F), US Pending Home Sales

CORONAVIRUS UPDATE

US House passed USD 2.2trln COVID-19 economic aid bill which President Trump signed on Friday, while it was also reported that President Trump signed the Defense Production Act order which requires General Motors (GM) to produce ventilators. (Newswires). Congress is already working on a fourth stimulus bill, one which could be even larger than the USD 2trl bill signed into law on Friday. (WSJ)

US President Trump announced to extend federal guidelines on coronavirus to April 30th and that he sees deaths peaking in 2 weeks, while he hopes April 30th guidelines do not have to be extended again noted he is prepared to do everything necessary when asked about supporting a 4th relief bill. (Newswires)

US President Trump tweeted that he was giving consideration to quarantine developing hot spots including New York, New Jersey and Connecticut and that a decision will be made one way or another shortly. However, Trump later stated a quarantine will not be necessary and instead instructed the CDC to issue a strong travel warning in which it urged people in New York, New Jersey and Connecticut to refrain from non-essential travel for 2 weeks, while US President Trump also approved the District of Columbia disaster declaration, (Newswires)

US Treasury Secretary Mnuchin said the new bank lending programme will be ready by Friday and encouraged every business to apply because if you hire workers back/keep them, these are forgivable loans. (Newswires/Politico)

NIH’s Fauci projected the possibility of millions of coronavirus cases in the US and 100k-200k deaths. (Newswires)

Italy death toll rose by 756 to a total of 10779 and Spain’s death toll increased by 821 to 6803 on Sunday. UK COVID-19 cases rose on Sunday to 19,522 (prev. 17,089), death toll rises to 1,228 (prev. 1,019).

Mainland China reported 31 additional cases and 4 additional deaths on March 29th vs. 45 additional cases and 5 deaths on March 28th, to bring the total number of cases in mainland China to 81470 and total death toll to 3304. (Newswires)

England Deputy Chief Medical Officer Harries said it could be 6 months before life in the UK returns to normal but added that this is not to say we would be in complete lockdown for 6 months. (BBC)

ASIA

Asian equity markets resumed their selling, and US equity futures also began the week on the backfoot (before gradually recouping losses) as coronavirus woes continued to weigh on risk appetite and following last Friday’s declines on Wall St after the US overtook China with the greatest number of coronavirus cases. In addition, President Trump recently announced to extend federal guidelines on coronavirus until April 30th and NIH’s Fauci projected a possible 100k-200k deaths. The risk appetite was dampened across most the regional bourses with losses in Nikkei 225 (-3.9%) exacerbated by the flows into the JPY and with notable weakness seen in Softbank shares after a Co.-backed satellite start-up filed for bankruptcy, while ASX 200 (+3.7%) bucked the trend on stimulus measures with the government to announce support for employers and employees today. Furthermore, the Australian Banking Association said banks are to permit businesses with up to AUD 10mln in loan facilities to defer repayments up to 6 months which will apply to AUD 100bln of business loans, and regulator APRA announced the deferral of capital reform implementation by 1 year. Hang Seng (-1.5%) and Shanghai Comp. (-1.6%) were downbeat despite PBoC efforts in which it injected liquidity through repos for the first time since mid-Feb and lowered the 7-Day Reverse Repo rate by 20bps. Improved earnings including China’s largest banks did little to spur risk appetite amid the broad cautiousness and with press reports suggesting 100mln jobs could be at risk from the coronavirus fallout, while participants also await this week’s upcoming key data including the latest Chinese PMI numbers. Finally, 10yr JGBs were higher and briefly approached the 153.00 level amid the subdued risk appetite and after recent comments by PM Abe who vowed an unprecedented economic package which will include fiscal and monetary stimulus, while prices also tracked T-notes which gapped higher at the open to briefly test resistance at 139.00.

PBoC injected CNY 50bln via 7-Day Reverse Repos and cut the associated rate by 20bps to 2.20%. PBoC set USD/CNY mid-point at 7.0447 vs. Exp. 7.0448 (Prev. 7.0427)

PBoC Adviser Ma Jun said timing of reverse repo cut was in consideration of domestic work resumption, global virus situation and deterioration of external economic environment, while he added that China has plenty of room to adjust monetary policy. (Newswires)

Chinese press reports suggested that 100mln jobs could be at risk in the coronavirus-slowed economy. (Caixin)

Monetary Authority of Singapore reduced the slope of its currency band to zero but kept the width and mid-point of the band unchanged. MAS stated that it stands ready to curb SGD NEER volatility, while it noted that activity is likely to remain subdued in the travel-related and consumer-facing sectors until the pandemic is contained. Furthermore, it sees 2020 GDP to decline by 1%-4% vs. Prev. forecast of a modest improvement and it lowered its 2020 inflation forecasts range for MAS core inflation and CPI-all items to 0.0%-1.0%. (Newswires)

UK/EU

UK banks are asking regulators to ease the rules on credit card repayments as part of efforts to assist customers during the coronavirus crisis. (FT)

Fitch cut UK sovereign rating by one notch from AA to AA-; Outlook Negative. Fitch affirmed Poland at A-; Outlook Stable and affirmed Estonia at AA-; Outlook Stable. Moody’s affirmed Sweden at Aaa; Outlook Stable.

FX

In FX markets, the DXY was slightly firmer and rose back above the 98.50 level as the downbeat sentiment underpinned safe-haven currencies and spurred demand for cash. The greenback also benefitted from the pullback in its major counterparts including EUR/USD which gave up the 1.1100 handle after the alarming weekend death tolls from the blocs worst hit countries Italy and Spain, while GBP/USD trickled through support at 1.2400. Elsewhere, USD/JPY extended below 107.50 on the safe-haven flows and antipodeans were indecisive amid a lack of drivers and following a stable PBoC reference rate setting, while SGD was choppy and initially strengthened despite the MAS loosening its FX-based policy as some viewed the actions to be somewhat reserved after it only reduced the slope of the currency band to 0% or neutral, with both the width and the mid-point of the band kept unchanged. 

COMMODITIES

Commodities were pressured overnight amid the risk averse tone which saw WTI crude futures decline briefly below the USD 20/bbl level which was the weakest in around 17 years, with prices not helped by continued unwillingness by Saudi to budge on the price war as the kingdom opposed the proposal for an emergency meeting on prices. Elsewhere, gold was subdued by a firmer greenback which also pressured silver beneath USD 14/oz, while copper prices also conformed to the lacklustre risk appetite but moved off their worst levels as US equity futures gradually recouped losses. 

Baker Hughes US rig count (w/e 27th March): Oil -40 at 624, Nat Gas -4 at 102, Total -44 at 728, which is the largest decline in the oil rig count since 2015. (Newswires)

OPEC Presidency urged an emergency meeting regarding collapse in prices, although the proposal didn’t receive the required support and Saudi Arabia opposed to the emergency meeting. (Newswires)

Goldman Sachs said oil demand this week is estimated to be lower by 26mln bpd and suggested it is impossible to shut down that much demand without large and persistent ramifications to supply. (Newswires)

GEOPOLITICS

North Korea launched 2 short-range ballistic missiles from its east coast which landed in waters between North Korea and Japan, while North Korea confirmed the launch which it stated were super-large multiple rocket launchers. (Newswires)

US

THE TPLEX BULL FLATTENED amid a decline in risk assets and active Fed operations. The bid gained steam as European trade commenced while equities trundled lower. One desk highlights the lower volumes, which had previously been swamped by short covering, hedging and spread unwinds, is making the Fed’s asset purchases felt more acutely in the tape action. Furthermore, the Fed’s aggressive liquidity options have drastically cut the dollar funding pressures, where repo operations continue to see minimal take-up, with Dealers taking advantage of the reverse repo operation as yields in front-end Bills flirt with negative territory, seeing yield-thirsty participants move further out the curve. By settlement, 30s -8bps at 1.316%, 10s -7.5bps at 0.733%, 2s -2bps at 0.254%. T-note (M0) futures settled 17 ticks higher at 138-08+.

NY Fed announced it will purchase up to USD 75bln of treasuries on Monday, Tuesday and Wednesday, then decrease it to USD 60bln on Thursday and Friday, adding it will purchase USD 40bln a day of agency MBS next week. (Newswires)

Federal Reserve is considering new ways to support state and local governments. (WSJ)

Fed's Bostic (non-voter) said the Fed is still ready to add more support if it is needed and doesn't rule out providing direct monetary assistance to households if possible and necessary. (WSJ)