• Asian equity markets were mostly higher as the region marginally benefitted from the tailwinds from Wall St
• The DXY was steady above the 100.00 level with price action rangebound following an uneventful FOMC Minutes release
• The Kuwait Oil Minister has touted the possibility of a 10-15mln bpd output reduction at today’s OPEC+ meeting
• Russia is reportedly ready to cut production by 1.6mln BPD, according to Tass citing comments from Russian Energy Minister Novak
• President Trump suggested the government could reopen the country in phases and maybe ahead of schedule
• Germany is reportedly mulling loosening COVID-19 restrictions after Easter, Italian PM Conte is being advised not to ease lockdown restrictions
• Looking ahead, highlights include German Trade, UK GDP and Output, ECB Minutes, US Initial Jobless Claims, PPI, Uni. of Michigan Sentiment, Canadian Labour Market Report, Eurogroup Press Conference, OPEC+ meeting, Fed Chair Powell, supply from Italy

FOMC MINUTES

FOMC Minutes stated all participants viewed the near-term US economic outlook as having deteriorated sharply in recent weeks and as having become profoundly uncertain. Participants judged that it would be appropriate to maintain the FFR at 0.00-0.25% percent until policymakers were confident that the economy had weathered recent events and was on track to achieve the Committee’s maximum employment and price stability goals.

Furthermore, several participants suggested that the public might view the ability of the Committee to provide further monetary policy accommodation as being limited after lowering rates to the Effective Lower Bound (ELB). However, this was countered by some by saying new forward guidance or balance sheet measures could be introduced. The minutes added that there was an "extremely large degree" of uncertainty on the outlook and many participants had repeatedly downgraded their outlook of late in response to the rapidly evolving situation. (Newswires)

CORONAVIRUS UPDATE

US President Trump said we are much closer to getting the country back to where it was prior to the coronavirus and he sees signs that efforts to slow the spread of the virus are working, while he called on Congress to pass loan program funding this week and stated that a phase 4 stimulus bill can be done later. Furthermore, President Trump suggested the government could reopen the country in phases and maybe ahead of schedule. (Newswires)

US House Speaker Pelosi said Republican's proposals to add money for small business loans will not win unanimous approval in the House, while there were also comments from US Senate Majority Leader McConnell that there is no realistic chance a USD 500bln coronavirus bill could pass the Senate or House by unanimous consent this week. (Newswires)

Italy PM Conte said scientists are telling him not to ease lockdown restrictions saying that "we must continue with this rigour". There were also separate reports that France is set to extend virus lockdown in which President Macron will address the nation on Monday and Germany is mulling loosening COVID-19 restrictions after Easter. (Newswires/AFP/Handelsblatt)

UK PM Johnson remains in intensive care and continued to make steady progress, according to a statement. In other news, the UK Deputy Chief Scientific Adviser said the count of new cases is not accelerating out of control and the spread of the virus is not accelerating which is good news. (Newswires)

Senior UK Ministers are to review the UK’s lockdown in today’s COBRA meeting, some ministers reportedly believe a decision to ease restrictions will not be taken until PM Johnson returns. Additionally, expectations are for an extension into May. Foreign Secretary Raab is expected to warn of an extension to the lockdown in today’s press update, but no formal announcement after the COBRA meeting is expected. (Sky News) Note, the current Parliamentary legislation mandates a review of the lockdown before next Thursday.

World Bank sees GDP of developing countries and EM in Europe and Central Asia contracting by 2.8%-4.4% this year due to the coronavirus pandemic. (Newswires)

ASIA

Asian equity markets were mostly higher as the region marginally benefitted from the tailwinds from Wall St where major indices were underpinned by hopes of a coronavirus peak nearing and amid a surge in energy prices on optimism for a potential output cut deal at today’s OPEC+ meeting. ASX 200 (+2.6%) was buoyed after parliament approved the record AUD 130bln stimulus bill to support jobs and with upside led by notable strength in financials and tech, while energy names were lifted by the surge in oil prices after reports suggested potential cuts of 10mln-15mln bpd were being touted and that Russia was ready to join in on an OPEC+ deal. Nikkei 225 (-0.6%) lagged amid a choppy currency and after source reports noted the BoJ is to project an economic contraction but added there was no consensus yet within the central bank whether this would warrant additional easing. Hang Seng (+0.9%) and Shanghai Comp. (+0.3%) also traded positive but with gains capped as the former heads into the extended Easter weekend, while upside in the mainland was also limited after the PBoC refrained from liquidity injections and the Politburo reiterated the view that China was facing increasing difficulties for economic development. Finally, 10yr JGBs nursed the prior day’s losses and reclaimed the 152.00 level amid the underperformance in Japanese stocks and following stronger demand at the 5yr JGB auction.

PBoC skipped open market operations and were net neutral on the day. (Newswires) PBoC set USD/CNY mid-point at 7.0536 vs. Exp. 7.0488 (Prev. 7.0483)

BoK kept the 7-day Repo Rate unchanged at 0.75% as expected through a split decision as board members Cho Dong-Chul and Shin In-Seok dissented in which they advocated a 25bps cut. BoK stated it has policy room to respond to slowing growth and will increase outright purchases of government bonds if required, while Governor Lee commented they are seeing an impact of the previous rate cut and will announce plans to buy government bonds this afternoon. (Newswires)

UK/EU

UK Chancellor Sunak said he is confident the UK will get through this but cannot say there is not going to be hardship ahead and there is no precise estimate how much economic support will cost. Sunak added there will be a COBRA meeting for today and that virus outbreak will have a significant impact on the economy when asked if unemployment will rise sharply. (Newswires)

UK RICS Housing Survey (Mar) 11 vs. Exp. 14.0 (Prev. 29.0). Furthermore, UK RICS near-term house sales expectations printed at -92 in March which was the lowest reading since the series began in 1998. (Newswires)

ECB's Lagarde says the full alignment of fiscal and monetary policies are needed in the crisis and solidarity is self-interest. Lagarde added that it is essential to prevent viable firms from folding and employees from losing jobs. (Newswires)

FX

In FX markets, the DXY was steady above the 100.00 level with price action rangebound following an uneventful FOMC Minutes release in which members viewed the near-term US economic outlook as having deteriorated sharply and was profoundly uncertain, while they noted it would be appropriate to maintain the current level of rates until policymakers were confident that the economy had weathered recent events and was on track to achieve its maximum employment and price stability targets. EUR/USD was flat above 1.0850 after the Eurogroup failed to reach an agreement on coronavirus support in which talks were dragged out to Thursday and with the single currency sandwiched between a slew of hourly MA levels including its 50-Hour and 100-Hour moving averages, while GBP/USD was capped by resistance at 1.2400 although remained near the prior day’s best levels with PM Johnson’s condition said to be improving. Elsewhere, USD/JPY stalled at the 109.00 level and antipodeans held on to the recent risk-fuelled gains with only a mild pullback seen in AUD/USD following the RBA Financial Stability Review which noted financial market uncertainty is elevated and that many households will find finances under strain due to efforts to contain the virus.

RBA Financial Stability Review said regulatory authorities have been working together to minimise economic harm from pandemic but noted financial market uncertainty is elevated and that the heightened uncertainty related to pandemic is compounding usual volatility in financial markets. RBA added that capital levels are high and banks' liquidity positions improved over recent times, while banks also entered the downturn with high profitability and very good asset performance. Furthermore, it stated that many households in the period ahead will find finances under strain due to efforts to contain the virus. (Newswires)

COMMODITIES

Commodities edged mild gains overnight in which WTI crude futures briefly broke above the USD 26.00/bbl level as it extended on the rally seen heading into today’s OPEC+ meeting amid optimism for an agreement after the Algeria Energy Minister suggested the meeting will be fruitful and his Kuwaiti touting a potential 10mln-15mln bpd cut, while Russia was also said to be on board for a deal that would end the current oil price war. Elsewhere, gold traded steady with price action stuck within a tight range near the USD 1650/oz level, while copper prices were higher but with upside only limited amid the similar cautious gains seen across Asia-Pac bourses.

The Algerian oil minister said the emergency OPEC+ meeting will be "fruitful" and later added that the emergency OPEC++ meeting will discuss a massive reduction in production which could reach 10mln bpd. (Newswires)

Kuwait Oil Minister said that after talking with countries that will attend OPEC+ meeting, the intention is moving towards reaching an agreement to lower output by a large amount between 10mln-15mln bpd. (Newswires)

Russia is reportedly ready to cut production by 1.6mln BPD, according to Tass citing comments from Russian Energy Minister Novak, while other reports also noted Russia is ready to participate in the OPEC+ deal in line with its share in oil production of countries involved in the deal. (TASS/Newswires) Goldman Sachs suggested that a 10mln bpd cut would not be enough to improve the global balance and it sees downside risks to near-term WTI price forecast of USD 20/bbl, but added that lasting supply could create upside risks for its USD 40/bbl October estimate for Brent. Furthermore, Goldman Sachs now expects Q2 demand to be down 14mln bpd Y/Y, while it sees demand in Q3 and Q4 falling 3.3mln and 1.4mln bpd Y/Y. (Newswires)

GEOPOLITICS

Saudi-led coalition announced there will be a 2-week ceasefire in Yemen beginning Thursday following UN calls for a pause in hostilities amid the coronavirus pandemic. There were also comments from the Saudi Vice Defence Minister that the kingdom fully supports UN calls for de-escalation and confidence building measures, as well as resumption of political talks between political parties in Yemen. (Newswires)

US

Treasuries endured a choppy session, although ranges have been thinner and major curve spreads are ultimately steeper, led by a strong bid at the 2-year tenor, while yields along the long-end are higher on the day. The T-Note had originally seen support in early European trade as the Eurogroup meeting failure induced risk-off. However, participants soon looked past the news amid a bid in equity futures, and yields moved higher. Duration also came under pressure after Treasury Sec. Mnuchin doubled-down on its plans for issuance out the curve, citing the (yet-to-be-released) 20-year bond, again. Corporate supply was also weighted towards the long-end across six IG issuers (although less than Monday and Tuesday), in addition to Abu Dhabi launched USD 7bln of 5s, 10s, and 30s. As the NY Fed’s daily operations got underway, the whole curve found support, and steepened, rising in sync with equities, and richening ahead of the Treasury’s upsized 30-year auction reopening, where USD 17bln was sold at a high rate of 1.325%, stopping through by 0.5bps, and was covered 2.35x; Dealers and indirects took a bit more than average at the expense of less direct participation (11% vs six-auction avg. 17.7%). By settlement, yields were mixed; worth noting in the rates complex, the white strip of Eurodollar curve was little changed, indicative of participants expectations of LIBOR to remain elevated for the near future. However, UBS’ strategists expressed their view recently that they see the rate normalising in the next month or so. US T-note futures (M0) settled 2 ticks lower at 137-27. 

Fed's Kaplan (voter, dove) said US GDP may shrink 25%-35% in Q2 then expand in H2 and sees GDP shrinking 4%-5% in 2020, while unemployment rate may rise as high as mid-teens before declining to 7%-8% by year-end. Kaplan added that even after economy reopens, consumers may be more cautious and that he expects a phased return to work as economy reopens. (Newswires)

Fed's Barkin (non-voter, hawk) said it is hard to imagine the US heading back to work until infection numbers drop which could be in May or even later. (Newswires)