• Asian equity markets traded mostly negative following the lacklustre handover from US where major indices retraced their initial oil-inspired gains
• The DXY was firmer overnight and back above 100.50 as the soured risk tone helped the safe-haven claw back the lost ground
• Gilead's Remdesivir reportedly flopped in the first randomized clinical trial according to draft documents obtained by the FT
• EU leaders talks ended with no agreement on the recovery package
• EU Commission President Von Der Leyen will propose an increase of budget headroom to raise funds against guarantees from member states
• US House voted to pass the USD 484bln coronavirus package bill as expected
• WTI crude futures extended on gains overnight but with upside eventually capped by resistance just shy of USD 18.00/bbl
• Looking ahead, highlights include, UK Retail Sales, German IFO, US Durables, Uni. of Michigan (F), Baker Hughes, earnings from Sanofi, Eni, Verizon, S&P on Italy and the UK

CORONAVIRUS UPDATE

US CDC said coronavirus cases rose to 828411 (Prev. 802,583) and the death toll rose to 46,379 (Prev. 44,575), while other reports noted there were 3176 coronavirus deaths in US during last 24 hours citing the Johns Hopkins tracker. (Newswires/AFP)

US President Trump said to keep momentum against coronavirus, every American needs to maintain social distancing and voluntary use of face coverings, while he added we are very close to a vaccine but also stated the US may need to extend social distancing guidelines to early summer. (Newswires) US VP Pence said there are promising signs of progress in a number of states including New York which appear beyond peak and noted that 16 states have formally released plans to reopen. (Newswires)

US House voted to pass the USD 484bln coronavirus package bill as expected with the final vote count at 388-5 and voted to create a special panel to investigate the federal response to the pandemic, while President Trump said he will sign coronavirus stimulus bill in a noon ceremony on Friday. (Newswires)

Gilead's Remdesivir reportedly flopped in the first randomized clinical trial according to draft documents posted accidentally, while the Chinese study which included 237 patients including 79 placebos, did not improve patients' conditions nor reduce the pathogen's presence in the bloodstream. (Newswires)

ASIA

Asian equity markets traded mostly negative following the lacklustre handover from US where the major indices retraced their initial oil-inspired gains as sentiment soured following weak data and with anti-viral hopes dashed by disappointing results for Gilead's Remdesivir drug in a clinical trial. ASX 200 (+0.5%) and Nikkei 225 (-0.9%) were mixed with energy front-running the gains in Australia after similar outperformance of the sector stateside due to the continued rebound in oil and as state governments are set to begin releasing a list of projects next week to spur the rebound in the domestic economy, while sentiment in Tokyo was subdued as exporters suffered from recent adverse currency flows and ongoing COVID-19 disruptions. Hang Seng (-0.4%) and Shanghai Comp. (-0.6%) conformed to the regional glum amid weak financial earnings from the likes of China Life Insurance and Ping An Insurance, while the PBoC’s CNY 56.1bln 1-Year Targeted Medium-term Lending Facility and respective 20bps rate cut failed to spur upside given that the injection was less than the CNY 267.4bln maturing and with the rate cut inline with the recent similar reductions in the 1-year MLF and PBoC Loan Prime Rate. The biggest losses in the region were seen in the Philippines PSEi (-2.2%) after President Duterte extended the lockdown for the national capital region to May 15th and warned the country was running out of funds which the Finance Secretary suggested was not the case, while India’s NIFTY Index (-1.2%) also slumped with financials pressured following the decision by Franklin Templeton Mutual Fund to wind up six of its credit funds in India. Finally, 10yr JGBs were higher amid the downbeat overnight risk tone and following recent source reports that suggested the BoJ could consider unlimited bond buying at next week’s policy meeting. Furthermore, the BoJ were present in the market today for a total of JPY 180bln of JGBs concentrated in the long to super-long end, while the Chinese 10yr yield also dropped to its lowest in 10yrs as markets had widely anticipated the PBoC’s TMLF actions.

PBoC conducted CNY 56.1bln through 1-Year Targeted MLF at rate of 2.95% vs. Prev. 3.15%. (Newswires) PBoC set USD/CNY mid-point at 7.0803 vs. Exp. 7.0823 (Prev. 7.0887)

Japanese National CPI (Mar) Y/Y 0.4% vs. Exp. 0.4% (Prev. 0.4%). (Newswires) Japanese National CPI Ex. Fresh Food (Mar) Y/Y 0.4% vs. Exp. 0.4% (Prev. 0.6%) Japanese National CPI Ex. Fresh Food & Energy (Mar) Y/Y 0.6% vs. Exp. 0.6% (Prev. 0.6%)

UK/EU

UK PM Johnson is planning to return to Downing Street as early as Monday to take back control of the coronavirus crisis. (Telegraph)

The UK is prepared to offer 100% guarantees on loans to the nation’s small businesses, according to the FT. (FT)

EU leaders talks ended with no agreement on the recovery package, while there were comments from German Chancellor Merkel who said her view on euro bonds has not changed and that it is clear from talks that everyone said a recovery fund is needed and that everyone agreed to work together. EU Commission President Von Der Leyen said there are huge differences in how much support member states are giving in state aid and will propose an increase of budget headroom to raise funds against guarantees from member states. Furthermore, she added the Commission will explore innovative financial instruments in the next budget and that the recovery investment will be front-loaded, while the recovery fund is to mobilise EUR 1trln worth of recovery investment. (Newswires)

UK GfK Consumer Confidence (Apr) -34 vs. Exp. -40 (Prev. -9). (Newswires)

FX

The DXY was firmer overnight and back above 100.50 as the soured risk tone helped the safe haven claw back the lost ground. EUR/USD languished at the prior day’s lows beneath the 108.00 handle after discussions between the bloc’s leaders ended without an agreement on the recovery package, while GBP/USD was stuck around 1.2350 and clustered around numerous MA levels ranging from the 5-hour to 100-hour moving averages. Elsewhere, USD/JPY and JPY crosses consolidated amid the subdued risk appetite and commodity linked currencies AUD, NZD and CAD also retraced some of their oil-fuelled gains.

Mexico Central Bank Governor said will hold usual meeting on May 14th despite this week's off-schedule cut and central bank will continue to evaluate as well as take actions it deems necessary, while he added the challenge is overcoming the short-term crisis and it will be important to provide liquidity and financing to those that need it as economy gradually returns to normal. (Newswires)

COMMODITIES

Commodities were mixed overnight in which oil prices continued the rebound from the historic declines earlier in the week on bargain buying and as the geopolitical risk narrative remains intact following sabre-rattling between US and Iran with the IRGC Chief warning Tehran will give a crushing response to any US threat within the Gulf and that US warships will be destroyed if they threaten Iranian ships. As such, WTI crude futures extended on gains overnight but with upside eventually capped by resistance just shy of the USD 18.00/bbl level and amid the risk-averse tone.   Elsewhere, gold prices were subdued owing to a firmer USD although the precious metal remained north of the USD 1700/oz, while copper languished due to the soured overnight sentiment.

CME raised crude oil NYMEX margins by 17.6% to USD 10000/contract from USD 8500/contract, raised NY Harbor heating oil margins by 15.9% to USD 6200/contract from USD 5350/contract, raised RBOB gasoline futures margins by 11.1% to USD 9000/contract from USD 8100/contract and raised London spot silver margins by 9.4% to USD 8750/contract from USD 8000/contract. (Newswires)

GEOPOLITICS

US Defence Ministry said a US warship sailed through the Strait of Taiwan. (Newswires)

US

T-Notes were firmer amid a paring of risk appetite after reports of poor results from a trial for Gilead’s COVID treatment Remdesivir. Treasuries, from the long-end, had already caught a bid heading into the US cash equity open after reports that the BoJ is to announce limitless asset purchases had accentuated the support for sovereigns on both sides of the Atlantic. As the Fed wrapped up its UST purchases for the day, yields began to rise higher in lieu of firmer equities and oil, as well as a corporate supply dump and 5-year TIPS auction. However, the negative Remdesivir update brought yields down to lows later in the session, as well as the lack of progress out of Europe in financing their virus response. Note that throughout the session, from the 5-year sector and inwards, yields saw little changes, with primarily the long-end gyrating; by settlement, 2s +1bps at 0.22%, 5s unchanged at 0.37%, 10s -1.5bps at 0.60%, 30s -3bps at 1.19%. Meanwhile, in short rates, another several bps decline in 3-month USD LIBOR supported white pack Eurodollar futures again, with the FRA-OIS spread declining further. T-notes (M0) settled 1 tick lower at 139-00+.

Fed announced temporary easing of rules around bank access to intraday Fed credit in which it is suspending uncollateralised intraday credit limits and overdraft fees for primary credit banks. Fed also streamlined the process for seeking collateralized credit for secondary credit institutions and noted that the moves should encourage regular use of intraday credit by healthy institutions and not meaningfully increase credit risk to reserve banks. (Newswires)

Fed said it is working to widen access to paycheck protection program liquidity facility to include non-depository institutions such as community development financial institutions and will announce changes shortly on widened access to PPP facility. (Newswires)

Fed said it will release "substantial amounts" of information on a monthly basis about participants in its crisis facilities such as names of borrowers and amounts, while it will publish all of its programme information at least every 30 days without redactions. (Newswires)

US Treasury Secretary Mnuchin said they are mulling a lending facility for struggling oil firms and that investment grade drillers should look to the Fed, while it was also reported that Mnuchin will require companies critical to national security to offer equity to the government if they seek some of the USD 17bln of virus relief. (Newswires)

White House Economic Adviser Kudlow said it is critical that aid be put to work ASAP and that China will be held accountable for coronavirus at some point, while he reiterated that May will be a transition month in the fight against the virus. Furthermore, Kudlow said he expects a big rebound for the US economy if it reopens during next few weeks and that he supports the need for an infrastructure bill. (Newswires)