Original insights into market moving news

[PODCAST] European Open Rundown 26th April 2021

  • Asia-Pac equity markets traded tentatively albeit with a positive tilt ahead of a slew of upcoming risk events
  • In FX, the DXY remained pressured below 91.00, EUR/USD and GBP/USD breached 1.21 and 1.39 to the upside respectively
  • US Senator Manchin says that he would prefer a more targeted infrastructure bill
  • US Senator Graham says that Republican support could exist for a USD 800-900bln infrastructure package
  • Looking ahead, highlights include German IFO, US durables, ECB's Panetta, Lane, 2yr and 5yr supply from the US. Earnings from Tesla


US CDC reported COVID-19 cases rose to around 31.85mln from around 31.80mln the prior day and total deaths rose to nearly 569.0k from 568.2k the day before. (Newswires)

US health agencies lifted the pause on Johnson & Johnson’s COVID-19 vaccine on Friday which had been in place for 10 days due to blood clots. (Newswires)

UK COVID-19 cases +1,712 (prev. +2,061) and deaths +11 (prev. +32), France cases +24,465 (prev. +32,633) and deaths +145 (prev. +217), Italy cases +13,158 (prev. +13,817) and deaths +217 (prev. +322). (Newswires)

UK officials are reportedly close to finalizing a deal to purchase tens of millions of Pfizer (PFE) vaccines in time for a 3rd booster for the elderly, with the government said to be hoping to roughly double the UK’s original order of 40mln doses. (Sunday Times)

EU is reportedly set to allow vaccinated US tourists to visit this summer, according to NYT. In relevant news, German Vice Chancellor Scholz said the government could be in a position next month to set a binding timetable for the re-opening of the economy. (Newswires/New York Times)

Chile trial leaders said their study showed the AstraZeneca (AZN LN)/Oxford COVID-19 vaccine is 76% effective against symptomatic cases 15 days after the second dose and is 100% effective against serious or critical cases, while there are no instances of blood clots in 2,200 participants in the trial. There were also reports that Health Canada issued a statement regarding vaccines produced at the Emergent Biosolutions Baltimore facility in which it stated that 1.5mln doses of AstraZeneca vaccines imported to Canada that were produced at the site met quality inspections and are safe. Furthermore, it is aware of the recent FDA inspection of the Baltimore facility which noted multiple areas of concern but added that the Johnson & Johnson (JNJ) vaccines produced at the site have not entered Canada and the ones expected to enter Canada next week do not come from the Baltimore site. (Newswires)

US will immediately make available specific raw materials needed by India to produce COVID-19 vaccines and will provide India with supplies of therapeutics, rapid diagnostic test kits and personal protective equipment. It was also reported that France will send oxygen equipment to India to help with the COVID-19 crisis and Netherlands is to ban flights from India until May 1st due to concerns regarding a new variant, while the Delhi Chief Minister announced a 1-week extension of the lockdown to May 3rd. (Newswires)

Hong Kong and Singapore will begin their travel bubble on May 26th, while Hong Kong residents are required to be fully vaccinated to travel. (Newswires)


Asia-Pac equity markets traded tentatively albeit with a positive tilt as the major bourses in the region and US equity futures lacked firm commitment heading into month-end, as well as this week’s key events including the BoJ and FOMC meetings, as well as US GDP and Chinese PMI data. ASX 200 (-0.1%) was rangebound as strength in mining names and the top-weighted financials sector helped offset the headwinds from a snap 3-day lockdown in Perth and neighbouring Peel region, while Nikkei 225 (+0.4%) shrugged off early jitters from the reinstatement of the state of emergency for four areas including Tokyo and following the ruling LDP’s failure to win in three by-elections which is seen as a blow to PM Suga ahead of the general election later this year. Hang Seng (+0.1%) and Shanghai Comp. (+0.2%) traded with mild gains as participants digested earnings and with China to begin a month-long campaign promoting consumption in May, with the advances led by outperformance in health care and strength in mining stocks as mainland commodity prices hit fresh record levels. Finally, 10yr JGBs were subdued and broke beneath Friday’s tight ranges to test the 151.50 levels amid a similar subdued trade in T-note futures and with demand sapped as participants await the BoJ which kick started their 2-day policy meeting today.

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 6.4913 vs exp. 6.4886 (prev. 6.4934)

US President Biden will reportedly urge allies at the G7 meeting in June to increase the pressure on China regarding forced labour in Xinjiang, according to a senior White House official. There were prior comments on Friday from the Chinese Foreign Minister that they welcome US President Biden's administration returning to multilateralism and hopes the US will respect China's own choice of system, while the Foreign Minister added that the "Taiwan card" is "playing with fire". (Newswires)

Chinese groups' fundraising on US equity markets rose 440% during the beginning months of 2021 with a record USD 11bln raised on the NYSE and Nasdaq through IPOs, share sales and convertible bond issuances, according to reports citing Dealogic data. (FT)

Japan's ruling Liberal Democratic Party failed to win any of the three parliamentary by-elections held on Sunday which reportedly weakens PM Suga's standing in the party ahead this year’s general election. There were later comments from PM Suga that they will take the results of Sunday's elections with humility and analyse them, while he responded that he will keep making the COVID response top priority when asked about a possible snap election. (Newswires/Nikkei)


BoE Deputy Governor Broadbent suggested to get ready for a 'very rapid' recovery as he forecasts consecutive quarters of speedy growth although he warned that inflation will prove less predictable. (Telegraph)

UK PM Johnson is reportedly being pressed by the EU to align UK food standards to the bloc's food and safety rules in return for easing import and exports checks between Britain and Northern Ireland. (The Times)

UK and Australia reportedly reached a consensus on the vast majority of elements of a comprehensive free trade agreement and aim to reach agreement in principle by June. (Newswires)

Italian PM Draghi announced that a deal was reached with the European Commission over the Recovery Plan which paves the way for it to be submitted to Brussels by the end of April. (Newswires)

Germany’s opposition Green Party overtook Chancellor Merkel’s CDU in an opinion poll after the party nominated Annalena Baerbock as its top candidate for the national election, with an opinion poll by Kantar showing support for the Greens rose 6ppts to 28% and support for the CDU/CSU fell 2ppts to 27%. (Bild)

European Commission is to propose a bolder approach to dealing with foreign and market-distorting subsidies on May 5th, according to Trade Commissioner Dombrovskis, adding that we need to remain open to global trade but more assertive re. unfair practices. Separately, Commission President von der Leyen, in an unpublished progress report, uses unusually tough language on China and says that the EU will move quickly to combat the unfair trade practices from China. (Politico)

S&P affirmed UK at AA; Outlook Stable although stated that narrower access to the EU is likely to weigh on the recovery. S&P also affirmed Italy at BBB; Outlook Stable and upgraded Greece to BB; Outlook Positive on improved government effectiveness, while Fitch affirmed Netherlands at AAA; Outlook Stable. (Newswires)


In FX markets, the DXY remained pressured after its recent retreat beneath the 91.00 level which was in tandem with the rebound of stocks last Friday on Wall Street, and with price action in Asia constrained ahead of this week’s FOMC where analysts are not expecting any major fireworks from the Fed nor more explicit signals on tapering, but instead will likely affirm that further substantial progress will be required prior to tapering. EUR/USD breached 1.2100 to the upside owing to the subdued greenback and increasing optimism regarding the COVID-19 situation as German Vice Chancellor Scholz said the government could be in a position next month to set a timetable for the re-opening of the economy and reports also noted that the EU is set to allow vaccinated US tourists to visit this summer. GBP/USD reclaimed the 1.3900 status following recent comments from BoE Deputy Governor Broadbent who suggested to get ready for a 'very rapid' recovery and forecasts consecutive quarters of speedy growth, while it was also reported that the EU was offering to ease checks between Britain and Northern Ireland if the UK aligns its food standard regulations with the bloc. Elsewhere, USD/JPY and JPY-crosses traded mixed with price action reflective of the tentative mood and antipodeans were underpinned by the USD woes and strength in Chinese metal prices.


Commodities were mixed with WTI crude futures kept rangebound around the USD 62.00/bbl level amid the tentative risk appetite and heading into the OPEC+ ministerial meeting scheduled mid-week. In addition, there were mixed reports on the virus front as the EU is set to allow vaccinated US tourists to visit this summer and with the Hong Kong-Singapore travel bubble confirmed to begin late next month, although India remained a concern with another record daily increase of infections and deaths which has prompted Washington to take action. Elsewhere, gold prices moved off Friday's low but with the rebound limited, while LME copper prices printed their highest since 2011 alongside strength in Chinese commodity prices in which Dalian iron ore futures, Shanghai rebar and hot rolled coils hit fresh record levels early in the session.

Baker Hughes US Rig Count (w/e Apr. 23) and Oil -1 at 343, Nat gas unchanged at 94 and total -1 at 438. (Newswires)


US President Biden officially recognized the killing of 1.5mln Armenians by the Ottoman Empire in 1915 as genocide, while it was also reported that Turkey summoned the US Ambassador to Ankara to convey a strong reaction regarding the genocide acknowledgement. (Newswires)


The belly led Treasuries modestly lower amid a strong risk tone and ahead of next week's auctions. By settlement, 2s +0.9bps at 0.160%, 5s +1.8bps at 0.820%, 7s +1.9bps at 1.255%, 10s +1.2bps at 1.568%, and 30s +1.1bps at 2.252%; TYM1 volumes were below recent averages. Real yields little changed. SOFR unch. at 1bps. NY Fed RRP demand at USD 73.794bln across 18 bidders (prev. USD 102.644bln across 25 bidders). A very quiet overnight session with volumes low and price direction lacking as the dust settled from Thursday's tax hike headlines. The European morning saw a slow and modest gentle grind higher in bonds amid the choppy risk tone, excluding a brief selling spurt on ECB sources, with analysts citing more "short-covering" - the topic du jour for rates currently. Yields hit their lows not long before the NYSE stock open: 1.54% and 2.22% for 10s and 30s, respectively. But, as equities began to rise into the open, yields began to ascend again; there was also much attention on inflation-warning commentary from corporates this morning. Furthermore, dealers were reported to be on the offer, particularly in the belly, as they make room for next week's belly supply from the Treasury (2s, 5s, 7s). The curve cheapened further after the solid Markit PMIs and New Home Sales data, with real money accounts said to be selling in decent size. Yields soon hit their peaks for the day - 1.58% and 2.26% for 10s and 30s - and fell back to unchanged levels into the sleepy Friday afternoon. Worth noting that we had T-Note May option expiries today, so it's possible that some "pinning" effects kept volatility down. Otherwise, participants now look to next week's Treasury auctions, in addition to Biden tax details, FOMC, BoJ, OPEC JMMC, US GDP and a slew of other events (preview in Newsquawk Week in Focus). T-note (M1) futures settled 3+ ticks lower at 132-14.

White House responded to criticism regarding plans to hike the capital gains tax in which it stated that the increase will only hit the richest 0.3%. (FT)

US Senator Manchin (Democrat) said that he would not support a circa USD 2.5trl infrastructure bill via reconciliation and would instead prefer a more targeted bipartisan measure. (Newswires)

US Senator Graham (R) has suggested that Republican support potentially exists for a USD 800-900bln stimulus measure. (Fox)