Original insights into market moving news

[PODCAST] European Open Rundown 8th April 2021

  • Asia-Pac bourses traded mixed-to-positive after a relatively flat finish on Wall Street
  • There was nothing new of particular note within the FOMC's March meeting minutes
  • In FX, the DXY sits sub-92.50, EUR/USD slipped back below 1.19 and GBP/USD remains on the backfoot
  • US President Biden said he is prepared to hear proposals for a corporate tax rate below 28%
  • Looking ahead, highlights include ECB minutes, US IJC, BoE's Haldane, Fed's Bullard, Powell, Kashkari, supply from Spain & France


FOMC minutes stated that participants agreed the economy remained far from the Committee's longer-run goals and that the path ahead remained highly uncertain with the pandemic continuing to pose risks, while participants noted that it would likely be some time until substantial further progress toward the Committee's maximum-employment and price-stability goals would be realized and that, consistent with the Committee's outcome-based guidance, asset purchases would continue at least at the current pace until then. Participants also judged that the Committee's current guidance for the federal funds rate and asset purchases was serving the economy well and they noted that a benefit of the outcome-based guidance was that it did not need to be recalibrated often in response to incoming data or the evolving outlook. Furthermore, participants saw inflation risks as broadly balanced, while they had discussed market- and survey-based measures of longer-term inflation expectations and their implications for the inflation outlook. (Newswires)


US COVID-19 cases +61,258 (prev. +62,878), deaths +781 (prev. +353), vaccines administered 171mln (prev. 169mln), those fully vaccinated 64.423mln (prev. 63mln), while US CDC Director Walensky commented that vaccinations could be expanded to those aged 12 and above by May. (Newswires)

AstraZeneca (AZN LN) stated the EMA and MHRA affirmed that its vaccine offers high-level protection against all severities of COVID-19 and that the benefits far outweigh the risk. Furthermore, reports stated that EU members could adopt a joint AstraZeneca recommendation and Italy is preparing to recommend the vaccine for use in people over the age of 60, while Spain is to only give the AstraZeneca vaccine to people over the age of 60. (Newswires)

Moderna (MRNA) CMO said they should be able to provide a booster shot of covid-19 vaccine should it be needed by the end of 2021. Moderna later highlighted the publication of its antibody persistence data in which it stated that antibodies elicited by its COVID-19 vaccine persisted through six months after the second dose and studies monitoring immune responses beyond six months are ongoing, while it is also pursuing a clinical development strategy against emerging variants. (Newswires)

Germany is to start bilateral negotiations with Russia to obtain the Sputnik COVID-19 vaccine and talks on a preliminary agreement depend on Russia providing necessary data to the EMA, while Germany will only buy Sputnik vaccine from Russia once it has been approved by EU drug regulators. (Newswires)

UK is reportedly expected to surpass the COVID-19 herd immunity threshold on Monday, according to Telegraph citing dynamic modelling by University College London. (Telegraph) Separately, The Telegraph reports that the potential use of COVID passports could have "sunset" clauses in order to reassure Tory rebels that such a move would be temporary. (Telegraph)

Japan is considering stronger COVID-19 controls in Tokyo and other cities. (Sankei)


Asia-Pac bourses traded mixed-to-positive as the region took its cue from Wall Street where the major indices finished relatively flat after having meandered near their record levels following an anticlimactic FOMC Minutes release, although US equity futures gradually made headway after-hours. ASX 200 (+0.9%) advanced with resilience seen across all industries led by strength in the blue-chip miners and big 4 banks to lift the index briefly above the 7,000-milestone. Nikkei 225 (-0.3%) was subdued amid reports Japan is considering stronger COVID-19 controls in Tokyo and other cities but with losses cushioned by recent M&A news including the buyout offer for Toshiba and with Hitachi said to be in discussions with Bain regarding a potential sale of Hitachi Metals which boosted shares in the latter by nearly 5.0%, while the KOSPI (-0.1%) lacked direction as participants reflected on the stunning defeat by South Korea’s ruling Democratic party at the Seoul and Busan mayoral elections and as domestic COVID-19 cases continued to increase. Hang Seng (+1.1%) and Shanghai Comp. (+0.2%) were varied with sentiment in the mainland clouded by ongoing tensions in the South China Sea after the US warned China of its increasingly aggressive moves, while Hong Kong was underpinned by strength in the tech sector aside from industry heavyweight Tencent which was pressured on reports its largest shareholder plans to offload around USD 15bln of Co. shares. Finally, 10yr JGBs were lacklustre after the indecisive trade seen in USTs and as support from the firmer demand at the 5yr JGB auction dwindled, while Australian yields were slightly softer in the belly amid the RBA operation for AUD 2bln of government bonds.

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 6.5463 vs exp. 6.5497 (prev. 6.5384)

White House said the US is not discussing a joint boycott of the Beijing Olympics, while there were later comments from the US State Department that it has taken note with "great concern" the pattern of ongoing Chinese efforts to intimidate in the region. Furthermore, the US warned China against what the Philippines and Taiwan see as increasingly aggressive moves whereby State Department spokesman Price said that an armed attack against the Philippines' armed forces, public vessels or aircraft in the Pacific, including in the South China Sea, will trigger our obligations under the US-Philippines Mutual Defense Treaty. (Newswires/Channel News Asia)

US Senate Commerce Committee is set to announce the first hearing on the "endless frontier act" dealing with China for April 14th, according to a notice. (Newswires)


ECB's Lane reiterated that favourable financing conditions must be maintained and that monetary policy must get us closer to the inflation target. (Newswires)

  • UK RICS Housing Survey (Mar) 59 vs. Exp. 55.0 (Prev. 52.0)


In FX markets, the USD consolidated as the recent choppy price action reflected fluctuations in yields and although the DXY momentarily gained, the upside was limited by resistance around 92.50 and following uneventful FOMC Minutes in which participants noted that the economy was far from the Fed’s goals and the path ahead was uncertain amid the pandemic. There were also separate comments from several Fed speakers although none of the latest rhetoric shifted the dial in which Fed's Brainard noted the outlook has considerably brightened, while Fed's Evans suggested it is a "good thing" that longer-term yields are rising and is confident the Fed will adjust policy if it sees that inflation is too high. EUR/USD was contained near the prior day’s Asia-Pac levels after a brief incursion into the 1.1900 territory where it met resistance and slipped back beneath its 200DMA. GBP/USD attempted to nurse some of its recent losses but remained near a weekly low despite forecasts that the UK could surpass the herd immunity threshold on Monday. USD/JPY and JPY-crosses were clouded by the early indecisive mood which also provided headwinds for antipodeans and resulted in AUD/USD and NZD/USD testing the 0.7600 and 0.7000 levels to the downside respectively, where they eventually found support.

  • New Zealand ANZ Business Confidence (Apr P) -8.4 (Prev. -4.1)
  • New Zealand ANZ Activity Outlook (Apr P) 16.4 (Prev. 16.6)


WTI crude futures oscillated around the USD 59.50/bbl level after the prior day's choppy price action despite the absence of a palpable catalyst to drive prices. Gold saw muted price action, while copper prices nursed recent losses following comments from the Codelco Chairman who noted strong price fundamentals for copper.

Codelco Chairman said copper price fundamentals are strong and could see fresh volatility over COVID-19 variants, while production is to drop in 2022 and 2023 as revamped operations get up to speed. Furthermore, they will not issue more debt and have surplus cash owing to high global prices and cost cutting. (Newswires)


US State Department spokesman said the US is prepared to lift sanctions on Iran including sanctions that are inconsistent with the Iran nuclear deal but didn’t provide any details, while the State Department also noted that Iran nuclear talks will be hard for many reasons including a lack of trust between US and Iran and that talks have so far been "business-like". (Newswires)

US President Biden is reportedly looking to appoint a special envoy to kill the Russia-Germany energy pipeline. In relevant news, the US government completed its intelligence review of the alleged misconduct by Russia related to the SolarWinds hack and election interference, while the US may announce retaliatory measures in the near future. (Newswires/Politico)

White House said the US is prepared to consider diplomacy with North Korea if it leads to a path of denuclearisation. (Newswires)

Saudi-led coalition intercepted an explosives-laden drone launched by the Houthis towards Khamis Mushait. (Newswires)

Explosions were reported over Damascus, Syria and Syrian air defences were launched to confront Israeli aggression. (Newswires)


Yield movements were dictating the tone of macro on numerous occasions on Wednesday, with even small gyrations influencing USD and equity trading. Ultimately, the curve is steeper at settlement, with 10-year yields little changed, and 30s wider by around 3bps or so. The Fed meeting minutes contained no surprises, and the lack of disagreement between Governors and Presidents and the lack of taper signal amid the solid recent US data allowed the thin ranges and snoozy trading conditions to persist. Next week's CPI and bank earnings may provide a more meaningful catalysts, some desks suggested. The minutes did, however, contain some incremental updates for the money market watchers; in reference to the Fed's new, higher RRP counterparty limits, the minutes made clear that there was broad support on the Committee for that tweak, with some participants looking to eliminate the limit altogether, while Chair Powell emphasised that if there was any downward pressure on overnight rates, it could be appropriate to tweak administered rates, potentially in between meetings. T-note futures (M1) settle 4+ ticks higher at 131-26+.

Fed's Brainard (voter) said the outlook has considerably brightened and that it is doubtful there will be a sustained surge in inflation that is persistent, while she added that the US recovery looks like it will pick up steam faster than its peers globally and that the Fed will be as transparent as it can about its reaction function. (Newswires)

Fed's Daly (voter) stated she expects a temporary pick-up in inflation readings above 2% this summer and expects it will take a further year or two to get up to 2% inflation sustainably. Daly also commented that there are only two real constraints on the size of Fed's balance sheet and stated that they are far from a situation where either of the constraints on the Fed's balance sheet size are binding. (Newswires)

Fed's Evans (voter) said there is still quite a long way to go but we are moving in the right direction when asked about the labour market, while he reiterated that it is too early to start talking about a QE taper and that the Fed is focussed on actual data not just forecasts when assessing substantial further progress. (Newswires)

Fed's Kaplan (non-voter) stated that he'd prefer that the Fed substantially taper asset purchases before adjusting rates but wants to maintain flexibility. (Newswires)

US President Biden said he will not impose any tax increases on people making less than USD 400,000 a year and that he is prepared to hear proposals for lower than 28% corporate tax rate. There were also comments from the US Treasury that President Biden’s tax plan would double the 'GILTI' minimum tax rate to 21% and apply it on a country-by-country basis rather than global average. Furthermore, it stated that the tax plan with a 28% corporate tax rate will raise about USD 2.5trln in new revenue over 15 years and the proposed 15% minimum tax on booked income would impose average USD 300mln tax liability on about 45 corporations. (Newswires)

US Senate Republican Leader McConnell said there could be a way forward on an infrastructure bill targeted at roads and bridges without revisiting 2017 tax cuts. (Newswires)

US Democrat Senator Manchin said he would not vote to eliminate or weaken the filibuster and he does not believe the reconciliation process should replace the regular order in the Senate. (Newswires)

White House stated it is optimistic its "skinny" budget will be out this week. There were also separate reports that US President Biden is to unveil executive action regarding guns on Thursday and the DoJ is to propose a rule on 'ghost guns' as part of package of executive actions on firearms. (Newswires)