Original insights into market moving news

[PODCAST] European Open Rundown 29th March 2021

  • Asia-Pac equity markets eventually traded mostly higher as the region picked up the baton from last week's late surge on Wall St
  • In FX, the DXY consolidated overnight, EUR/USD was rangebound beneath 1.18, GBP/USD sits on a 1.37 handle
  • German Chancellor Merkel threatened the use of federal law to toughen pandemic restrictions
  • The stuck tanker in the Suez Canal has reportedly been refloated with engineers partially freeing the ship
  • White House Press Secretary Psaki stated that President Biden plans to split his Build Back Better package into two separate proposals
  • Looking ahead, highlights include ECB net PEPP purchases, ECB's de Cos
  • Note, UK & European clocks have switched to Daylight Saving Time with the UK moving from GMT to BST; as such, the London - New York time gap will revert back to the usual 5-hours


US CDC reported total COVID-19 cases rose to 30.04mln from 29.98mln the day before and total deaths rose to 546.1k from 545.3k the day before, while New York reported a surge in cases on Sunday with 9,395 new infections in the prior 24 hours as they state continues to lack a plan for rolling out vaccines to all adults. (Newswires/FT)

UK COVID-19 cases +3,862 (prev. +4,715) and deaths +19 (prev. +58), France cases +37,014 (prev. +42,619) and deaths +131 (prev. +190), Italy cases +19,611 (prev. +23,839) and deaths +297 (prev. +380). (Newswires)

WHO Assistant Director General said a potential link to very rare side effects of the AstraZeneca (AZN) COVID-19 vaccine is still being investigated by the WHO and EMA. (Newswires)

UK Culture Minister Downden responded "later this month we will see Moderna (MRNA)" when asked about the Moderna vaccine timing and stated that they will make a decision regarding allocations if there is a surplus of vaccines. The Culture Minister also responded that they are looking at all these issues as part of a taskforce which will report beginning of next month when asked if the government is considering a traffic light option on holidays, while he stated they are looking at ventilation, behaviour, spread risk and COVID-19 certification regarding live events. (Newswires)

UK is planning COVID-19 vaccine booster shots for those aged over 70 years old from September to protect them against variants of the virus. In other news, UK Transport Minister Shapps stated that truck drivers arriving in the UK for over 2 days will be required to take a COVID-19 test within 48 hours and a test every 72 hours after. (Newswires/Telegraph)

German Chancellor Merkel threatened the use of federal law to toughen pandemic restrictions and is not convinced that measures already taken will snap a 3rd wave of the virus. Merkel added that additional measures including curfews and reducing contacts could be important instruments to halt exponential growth, while she warned that they do not have much time and that they need to become more flexible regarding vaccinations. (Newswires)

Sinopharm (1099 HK) CNBG executive stated that antibodies triggered by 2 of their COVID-19 vaccine products have good neutralising effect on UK and South African variants, while it added that it will depend on Phase 3 clinical trials whether a booster vaccine shot is necessary. In related news, the UAE is to produce the Co.’s COVID-19 vaccine. (Newswires/FT)

Russian President Putin stated that he expects the Russian population to achieve herd immunity and to lift virus restriction by end-summer, while he also stated that he only felt slight pain after receiving a Russian-made COVID-19 vaccine. (Newswires)


Asia-Pac equity markets eventually traded mostly higher as the region picked up the baton from last week's late surge on Wall St although upside was capped and sentiment was somewhat choppy with participants tentative heading into quarter-end, as well as Friday’s NFP jobs data and Easter holiday closures. ASX 200 (-0.1%) failed to hold on to opening gains with the index pressured by underperformance in tech and a subdued financial sector, while a 3-day lockdown in the Queensland state capital of Brisbane and China’s final ruling for tariffs of between 116.2%-218.4% on imported wines from Australia clouded risk sentiment. Nikkei 225 (+0.6%) initially outperformed due to the recent JPY weakness and after the upper house of parliament approved a record budget of JPY 106.6tln for fiscal 2021 but with some weak spots including Nomura Holdings after it flagged a USD 2bln charge from losses in its US operations which was said to be linked to the Archegos margin call sell down. Note, gains for the Nikkei were trimmed ahead of the European entrance. Elsewhere, Hang Seng (+0.2%) and Shanghai Comp. (+0.8%) gradually composed themselves after the early choppy price action with sentiment eventually helped by stronger earnings from China’s megabanks including ICBC, CCB and Bocom, while Sinopec is higher despite posting lower profits and reports of the Co. is to acquire stakes in five assets from its parent valued at a total of nearly CNY 7bln. In addition, there was a large surge in Industrial Profits which grew by 178.9% Y/Y for January-February, although like the recent strong trade and activity data for China, it was most likely due to distortions from base effects and there was also some IPO-related disappointment in which Bilibili shares fell as much as 6% in its Hong Kong debut. Finally, 10yr JGBs were lower with prices subdued amid the outperformance in Japanese stocks, recent softness in USTs and with the lack of BoJ purchases in the market today, while the Summary of Opinions from the March meeting didn’t provide any meaningful fresh insights regarding the BoJ’s clarification that long-term yields can move +/-25bps from the 0% target.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.5416 vs exp. 6.5418 (prev. 6.5376)

US President Biden and UK PM Johnson spoke in which the two expressed concern about retaliatory action taken by China, while US President Biden suggested to UK PM Johnson that democratic countries should have a belt and road initiative to rival China's. (Newswires)

The US is becoming concerned that China is considering seizing control of Taiwan, as they are seemingly moving to a period of being 'more impatient and more prepared to test the limits'; assessment was made after considering behaviour over 2-months, according to a Senior US Official. (FT)

US Trade Representative Tai stated that the US is not ready to lift the tariffs on China, while it was separately reported that the US condemned China’s sanctions on two US Commission on International Religious Freedom Commissioners. (Newswires/WSJ)

US Secretary of State Blinken said he sees adversarial, competitive and cooperative aspects to US-China relationship, while there were also prior comments from a State Department Spokeswoman that the US condemns China's state-led social media campaign against companies over Xinjiang. In related news, the UK summoned the Chinese Charge D'Affaires on Friday and made clear Beijing's decision to impose sanctions on British individuals and entities was unwarranted and unacceptable, while there were comments from a Xinjiang region government spokesman that the US, UK, EU and Canada have engaged in political manipulation to destabilize China. (Newswires)

BoJ Summary of Opinions from the March meeting stated it is important to firmly continue with policy responses to the impact of COVID-19 and it should continue to provide support for financing, mainly of firms, as well as to ensure stability in financial markets. BoJ stated ensuring current policy framework can be sustained in a stable fashion is important to maintaining loose policy and that they must heighten transparency of policy by clarifying the band it allows rates to move from the target, whereby it is desirable to give long-term yields the flexibility to move +/- 25bps from the target. Furthermore, it stated that it is desirable for BoJ to buy ETFs in a flexible manner and that deflation risk in Japan is still higher than that of unwelcome inflation. (Newswires)

  • Chinese Industrial Profits YTD (Feb) Y/Y 178.9% (Prev. 4.1%)


BoE Governor Bailey joined calls for a tougher government stance on the large tech companies which put consumers at risk by allowing scam financial promotions on their online services. (Newswires)

BoE's Tenreyro said there remains a number of scenarios that she would anticipate that requires looser policy this year and that required loosening in monetary policy would depend on fiscal response to any weakness. Tenreyro added it is important to differentiate between sustained rises in inflation and temporary volatility, while a key influence on outlook for the BoE will be the extension of the furlough scheme to the end of Q3. (Newswires)

BoE is reportedly calling on banks to seek its approval prior to relocating UK jobs or operations to the EU and is concerned that the bloc's regulators are demanding more to move than what is necessary for financial stability post-Brexit. (FT)

ECB's Lane stated that the central bank must remain a key stabilizer of the euro zone economy as the bloc is at risk of suffering longer-term damage from its double-dip recession that was caused by the fallout from the COVID-19 pandemic. (Newswires)


In FX markets, the DXY consolidated amid the early choppy price action in stocks and following on from last Friday’s mixed data releases, while there were recent comments from the White House that President Biden’s Build Back Better package will be split into two separate proposals in which the first part involving infrastructure will be unveiled on Wednesday and more details for the second part will be provided later in April. EUR/USD was rangebound beneath 1.1800 after recent comments by ECB's Lane who warned of risks of a longer-term impact from the pandemic-induced double-dip recession and after German Chancellor Merkel threatened the use of federal laws to toughen pandemic restrictions as she is not convinced that current measures will snap a 3rd wave of the virus, while GBP/USD was little changed with last week’s rebound stalled by resistance at 1.3800. USD/JPY pulled back from Friday’s gains to trade around 109.50 and antipodeans are choppy in tandem with the early temperamental mood in stocks, as well as the 3-day lockdown announcement in Australia's 3rd most populous city.


Commodities were subdued amid the early tentative mood across asset classes and although stocks eventually traded mostly positive commodities failed to follow suit in which WTI crude futures declined beneath the USD 60.00/bbl level with pressure seen amid the refloating of the tanker that was blocking the Suez Canal, while participants are also looking ahead to the OPEC+ meeting later in the week. Gold prices were contained as the greenback consolidated overnight and copper gave back some of Friday's gains alongside the early indecision heading into quarter-end.

Baker Hughes US rig count (w/e 26th March): Oil +6 at 324, Nat gas unchanged at 92, total +6 at 417. (Newswires)

The stuck tanker in the Suez Canal has reportedly been refloated in which engineers partially freed the ship and tugboats were now working to straighten its course. There were prior reports that the White House sees some impact of the Suez Canal situation on energy markets and that it was monitoring market conditions with a willingness to respond appropriately if needed, while Egyptian President el-Sisi ordered preparations to unload the ship if the last ditch-efforts to unblock it failed. (Newswires/WSJ/FT)

Russia reportedly plans to invest some of its wealth fund into gold, according to reports on Friday. (Newswires)


US Secretary of State Blinken responded that it is up to those that are building and trying to complete it when asked if there is anything the US can do to stop the Nord Stream 2 pipeline from being completed. (Newswires)


Treasuries were lower after a Europe-led sell-off managed to sustain, with the belly leading the move post-Thursday's sloppy 7-year auction. By settlement, 2s +0.4bps at 0.141%, 5s +3.8bps at 0.857%, 10s +4.8bps at 1.662%, 30s +3.4bps at 2.368%; TYM1 volumes were light. Inflation breakevens were modestly wider, more so at the front-end. SOFR for March 25th unchanged at 1bps. NY Fed RRP demand at USD 11.45bln across 12 bidders (prev. 10.1bln across 5 bidders; seven-op average 18.671bln). USTs were choppy and rangebound in Asia trade on light volumes, before seeing some selling pressure from EGBs at the European open as stocks began to make advancements. There were also some peripheral concerns over the Fed's latest relaxing of the bank dividend/buyback rules, with the raised potential for banks to - at some point down the road - pull back from Treasury market intermediation to keep balance sheet capacity to ensure capital disbursements are made after the SLR exemption expired, although this is just one of several pathways. It was the belly maturities, where banks are most active, that suffered the most, although that was likely a result of spillover from Thursday's sloppy 7-year offering. T-note (M1) settled 12 ticks lower at 131-24+.

White House Press Secretary Psaki stated that President Biden plans to split his Build Back Better package into two separate proposals in which the first part involving infrastructure will be unveiled on Wednesday and more details for the second part will be provided later in April. (Newswires/Mail)

USTR is proceeding with public notices on possible tariffs on goods from Austria, India, Italy, Spain, Turkey and Britain over digital tax services, but is dropping digital services taxes investigations of Brazil, Czech Republic, EU and Indonesia. Furthermore, it is committed to working to resolve digital services taxes concerns through OECD process, but until a consensus is reached it will maintain its options. (Newswires)