US stock futures rebounded after Tuesday's rout as Intel’s shares surged on plans to expand advanced chip making capacity, while investors looked to business surveys for March and another day of testimonies from Yellen and Powell. Futures on the S&P 500 and Dow Jones also pointed to a rebound in the underlying indexes which dropped Tuesday amid a setback for reopening favorites. Stable bond yields and assurances by Powell on inflation risks has helped allay fears that a growth breakout will force tighter central-bank policy.

At 715 a.m. ET, Dow E-minis were up 135 points, or 0.4%, S&P 500 E-minis were up 18 points, or 0.5% and Nasdaq 100 E-minis were up 108.5 points, or 0.83%.

Overnight highlights: the tech rally helped the FAAMGs rise between 0.6% and 0.7%. Intel shares jumped about 5.7% after it announced plans to spend as much as $20 billion to expand into the foundry business, build two factories in Arizona and open its factories to outside customers. U.S.-listed shares of rival Taiwan Semiconductor dropped 2.6%, while semiconductor equipment makers Lam Research Corp, Applied Materials Inc and ASML Holding gained between 4.4% and 5.7%.

Bitcoin gained about 4% as Tesla Inc chief Elon Musk said the company’s electric vehicles can now be bought using bitcoin and the option will be available outside the United States later this year. Tesla’s shares advanced about 1.6%.

GameStop Corp dropped 13% after the video game retailer said it may sell new shares as the company that led the Reddit rally of “meme stocks” looks to take advantage of a more than 800% surge in its stock price since January.

Energy stocks Exxon Mobil, Chevron, Schlumberger, Occidental Petroleum and Marathon Oil were up between 1% and 4.2%, as crude prices rebounded from a 6% fall in the last session after the Ever Given containership blocked the Suez Canal, snarling global supply chains.

European stocks rose from session lows in early trading, with cyclical stocks including banks and auto firms among the fallers. The Stoxx Europe 600 Index fell 0.1% to 423.14 with 336 members down, 250 up and 14 unchanged.  The Stoxx Europe 600 Travel & Leisure Index rises as much as 1% after the U.K. said it aims to announce plans on the resumption of international flights by April 5. Sector extended gain as Germany drops plan for a five-day Easter lockdown. Here are some of the biggest European movers today:

• Unite Group shares jump as much as 5.2% with Berenberg upgrading the student accommodation operator to buy from hold, saying it has re-rating potential on expected normalization of operations and long-duration demand tailwinds.
• The Stoxx Europe 600 Technology Index jumps as much as 2.5% as European chip stocks rallied after Intel said it planned to spend billions on revising manufacturing and creating a new foundry business.
• Carrefour shares gain as much as 2.4% with Bryan Garnier saying the company’s decision to buy Grupo BIG, Walmart’s former Brazil unit, showed the French grocer was “clearly back in its consolidator role.”
• Leonardo shares slump as much as 11% as it canceled the IPO in New York of a minority stake in its DRS unit after failing to attract the price it sought. Kepler Cheuvreux said the decision on DRS IPO was “clearly” negative news.

A gauge of Asia-Pacific shares fell the most in about two weeks. Hong Kong equities fell to a 10% correction in five weeks amid the city’s decision to temporarily suspend BioNTech SE vaccines. Asian stocks were set for their fourth daily losses, the longest losing streak since January, as resurgent coronavirus-related concerns sparked broad declines. Financials were the biggest drag on the MSCI Asia Pacific Index, as Treasury yields slumped for a third day. Consumer discretionary stocks also fell as investors eyed rising infections and new lockdowns in Europe and other parts of the world. TSMC and Samsung drove losses in tech shares on Intel’s ambitious plan to create a rival foundry business. Hong Kong’s Hang Seng Index fell 2%, entering a technical correction. Japan’s Topix also shed more than 2%, although the nation’s chip-equipment sector got a boost from the Intel news. China’s benchmark stock gauge extended losses for a second day, closing at a new low for the year after breaching the key 5,000 point threshold. Australia bucked the decline, with its key equity gauge rising about 0.5%.

Japanese stocks fell, with the Topix suffering its steepest drop in a month, as growing virus cases overseas damped investor sentiment and encouraged investors to keep selling shares sensitive to economic prospects. Telecommunications companies and banks were the heaviest drags on the Topix, which declined for a third day. The Nikkei 225 Stock Average slid for a fourth day, its longest slump since Jan. 6. Selling accelerated as investors adjusted positions before Japan’s fiscal year ends this month. “The vaccine was leading the pandemic toward an end, but once again there are outbreaks,” said Mitsushige Akino, a senior executive officer at Ichiyoshi Asset Management. “There’s concern whether this will hold back the economic recovery outlook,” he added. “This could impact bank sectors and other cyclical sectors that had been bought on the back of rising yields.” This year’s best-performing sectors dropped. A gauge of shipping stocks tumbled 4.9%, paring its surge this year to 35%. Sub-indexes of energy companies and banks -- also among 2020’s best performers -- fell at least 4% Wednesday. Oil dropped about 6% Tuesday. “It looks like investors are rebalancing ahead of quarter-end, buying bonds and selling off stocks,” said Hajime Sakai, the chief fund manager at Mito Securities Co. “It’s possible investors will bring fresh funds next month when Japan starts a new fiscal year.”

In rates, treasury yields were around 1.625%, little changed on the day, and within 1bp of Tuesday’s closing levels after paring Asia-session gains amid advances for S&P 500 and crude oil futures. Treasuries steadied after advancing following Fed Chair Jerome Powell saying U.S. inflation isn’t expected to get out of control and a sale of two-year notes drew solid demand.  The auction cycle continues with $61b 5-year note sale at 1pm ET, and Fed Chair Powell appears before the Senate Banking Panel at 10am. Gains during Asia session were led by N.Z. bonds, which ripped higher after an RBNZ QE operation received too few offers to meet its target. Bunds trimmed their advance after German manufacturing and services PMI figures for March beat median estimates

“Yields have been tamed in recent sessions,” according to Steen Jakobsen, chief investment officer at Saxo Bank. The auctions “will help determine whether the ‘rising U.S. yields’ narrative can be entirely taken off the frontburner for now,” he wrote in a note.

In FX, the Bloomberg dollar index erased most of its advance as the euro recovered ground, after positive economic data from Europe. Earlier the greenback climbed to a two-week high as turmoil in Turkey’s financial markets and a new wave of virus-related lockdowns fueled haven bids.  New Zealand bonds jumped as investors pared rate- hike bets after the government moved to cool the property market. Leveraged and macro funds sold into early gains in AUD/USD above the 0.7630 level, according to a trader.

In commodities, West Texas Intermediate crude rose more than 3% after a container ship ran aground in the Suez Canal, blocking off traffic in both directions on one of the world’s busiest maritime trade routes. Bitcoin rose after Tesla Inc. Chief Executive Officer Elon Musk tweeted that the firm’s cars can be purchased with the largest cryptocurrency.

Looking at the day ahead, once again we’ll hear from Fed Chair Powell and US Treasury Secretary Yellen as they testify before the Senate Banking Committee. Other Fed speakers today include the Fed’s Barkin, Williams, Daly and Evans, and there’s a pre-recorded speech from ECB President Lagarde on climate change. On the data side, Markit’s flash reading at 9:45 a.m ET is likely to show business activity in the manufacturing and services sectors improved in March from the prior month. We also get the preliminary reading of US durable goods orders for February, and the European Commission’s advance Euro Area consumer confidence reading for March.

Market Snapshot

• S&P 500 futures up 0.3% to 3,910.50
• SXXP Index down 0.4% to 421.84
• MXAP down 1.5% to 203.27
• MXAPJ down 1.1% to 675.64
• Nikkei down 2.0% to 28,405.52
• Topix down 2.2% to 1,928.58
• Hang Seng Index down 2.0% to 27,918.14
• Shanghai Composite down 1.3% to 3,367.06
• Sensex down 1.1% to 49,499.35
• Australia S&P/ASX 200 up 0.5% to 6,778.77
• Kospi down 0.3% to 2,996.35
• Brent futures up 2.7% to $62.40/bbl
• Gold spot up 0.1% to $1,729.52
• U.S. Dollar Index up 0.2% to 92.53
• German 10Y yield down 2 bps to -0.36%
• Euro down 0.2% to $1.1825

Top Overnight News from Bloomberg

• A giant container ship could be stuck in the Suez Canal for days, blocking one of the world’s busiest maritime trade routes that’s vital for the movement of everything from oil to consumer goods
• The International Monetary Fund’s board conveyed broad support for drafting a proposal to create $650 billion in additional reserve assets to help developing economies cope with the pandemic, with an eye on considering a formal plan by June
• The European Union’s closest neighbors, including countries in the Balkans and those that have special trading relationships with the bloc like Norway and Switzerland, will need authorization to import Covid vaccines from the EU under a proposal to be unveiled on Wednesday
• Chancellor Angela Merkel dropped plans for a five-day Easter shutdown amid massive criticism in the latest setback for Germany’s pandemic fight

A quick look at global markets courtesy of Newsquawk

Asia-Pac bourses traded mostly lower following the losses seen stateside where cyclicals and value underperformed amid a stronger USD and rise in treasuries, while soft US new home sales data, talk of future tax hikes and a continued slump in oil prices also contributed to the glum mood. The weak handover pressured most regional markets although antipodes bucked the trend helped by softer currencies, with the ASX 200 (+0.5%) also underpinned as strength across most its sectors atoned for the energy-related woes and following the substantive easing of COVID-19 restrictions in New South Wales. Nikkei 225 (-1.9%) was weighed on by currency inflows and as automakers suffered from the ongoing chip shortages, while KOSPI (-0.4%) reflected on geopolitical events after it was confirmed that North Korea resumed its missile tests last weekend and with chipmakers initially dampened by Intel’s plan to invest USD 20bln on new chip plants to challenge Asian dominance of the sector, although Taiwan’s Economy Minister has since suggested that Intel’s investment plan is not a threat to Taiwan’s chipmakers. Hang Seng (-2.4%) and Shanghai Comp. (-1.4%) were subdued in which the former entered correction territory amid ongoing US-China tensions and the BioNTech vaccination suspension in Hong Kong and Macau due to defective vial caps. Furthermore, participants digested a slew of earnings releases and reports noted expectations of tighter scrutiny on Tencent after its founder met with antitrust officials earlier this month, while the Co. along with Xiaomi are scheduled to announce their results today. Finally, 10yr JGBs gained as they tracked the upside in T-notes and with demand spurred by the broad risk aversion, while the Australian 10yr yield saw the steepest decline overnight and fell by 7bps in the aftermath of the 2032 bond auction.

Top Asian News

• Prestige Wins $1.4 Billion Mumbai Home Project from Bankruptcy
• Thailand Holds Rate, Cuts GDP Outlook With Tourism Stalled
• India Likely to Resume Bankruptcy Filings as Halt Expires
• Deeply Polarized Israel Fails to Anoint a Leader Once Again

European equities opened softer across the board (Euro Stoxx -0.2%) following on from Asia’s mostly negative lead, but Europe has since drifted off worst levels. After the cash open, UK, France, Germany, and the Eurozone all reported notable beats across the board in Flash PMIs for March, although some of this data could be stale given that France and Germany recently renewed COVID-related restrictions. Across the pond, US equity futures are not abiding by the same sentiment and all reside in firmer territory but do not immediately portray much growth/value bias as the RTY (+0.7%) and NQ (+0.8%) are neck and neck at the time of writing, with the latter feeling tailwinds from an overnight pullback in yields coupled with Intel’s (+4.8% pre mkt) update as it upped guidance and undertake a significant expansion of manufacturing capacity with USD 20bln to be spent on chip plants – lifting the likes of ASML (+5.6%) and Infineon (+2.0%) in tandem. Back to Europe, sectors opened firmly in the red featuring an anti-cyclical bias, with Technology (+1.8%) the only sector residing in the green upon market open. This has since stabilised into a mixed and more pro-cyclical picture, with defensives residing towards the bottom. Nonetheless, Auto (-0.5%) remains as a laggard amid the ongoing chip shortage, with Honda extending its suspension of output in certain North American factories due to chip supply issues. In terms of individual movers, dwelling to the downside is Leonardo (-6.0%) which comes after the Co. announced the postponement of its DRS IPO amid adverse market conditions. On the flip side, Carrefour (+2.3%) is supported amid reports the Co. is to acquire Grupo BIG for EUR 1.1bln, which if approved, the Co. would control the number one and three largest food retail names in Brazil.

Top European News

• German Factories See Record Growth as French Economy Steadies
• Apax to Acquire $1.8 Billion German Eyewear Firm Rodenstock
• Commerzbank Sees 2021 Loss on Restructuring, Credit Provisions
• NatWest Planning Overhaul of its Retail Banking Operations

In FX, The Dollar remains upwardly mobile amidst deteriorating risk sentiment on latest waves of the coronavirus that are forcing many countries to roll-back reopening plans and some to re-enter lockdown or tighten restrictions. However, the DXY has encountered some resistance in chart terms beyond 92.500 and its prior 2021 peak around the 200 DMA (92.604) alongside resilience in the Euro and Pound belatedly following significantly better than expected preliminary PMIs from France, Germany, the bloc as a whole and UK even though the EZ readings could all be downgraded in the final reckoning given fresh pandemic outbreaks since the cut-off point for compiling the flash surveys. Hence, the index has drifted down from best levels within a 92.608-338 band awaiting US durable goods data and Markit’s initial March PMIs before another bunch of Fed speakers and a double helping of supply.

• CAD/NOK/SEK - A relatively firm rebound in crude prices on the back of Suez canal passage problems caused by a container tanker has helped the Loonie, Norwegian Krona and other commodity currencies pare declines vs the Greenback. Meanwhile, Usd/Cad has also retreated from just over 1.2600 in wake of confirmation from the BoC that several emergency QE lines will be terminated as planned and comments from Deputy Governor Gravelle alluding to scaling down the pace of sovereign bond purchases from an operational standpoint rather than providing fresh guidance for tapering that is widely anticipated to come with the April policy meeting. Back to Scandinavia, Eur/Nok is back under 10.2000 and roughly on a par with Eur/Sek following a squeeze on Nok/Sek back through zero when oil was plummeting.
• GBP/EUR - Sterling is still sitting at the bottom of the G10 table after significantly softer than forecast UK inflation data, but Cable has regained 1.3700+ status and Eur/Gbp is flattish between 0.8645-10 parameters following the aforementioned PMI beats that have also helped the Euro retain hold of the 1.1800 handle against the Buck.
• AUD/NZD/JPY/CHF - All now narrowly mixed vs their US counterpart, but not before conceding more ground as the Aussie and Kiwi tumbled below 0.7600 and 0.7000 respectively overnight with no visible support via trade data or PMIs amidst further dovish rhetoric from RBA Assistant Governor Debelle on balance – see posts on the Headline Feed at 10.20GMT and 9.41GMT for details. Conversely, risk aversion is offering the Yen some respite either side of 108.50, while the Franc is still retreating across the board as the clock ticks down to the SNB tomorrow.
• EM - The Mxn and underperforming Rub are drawing comfort from the recoveries in WTI and Brent, but no joy for the Try from a rise in Turkish consumer sentiment or efforts by President Erdogan to talk the Lira up and persuade his subjects to convert FX and Gold holdings into domestic currency denominated assets. In contrast, softer than anticipated SA CPI has not hampered the Zar irrespective of potential implications for the SARB policy meeting/guidance on Thursday, and the Rand may be content that Gold is holding above Usd 1700/oz quite comfortably.

In commodities, WTI and Brent front month futures are grinding higher in what is seemingly a reversal of the substantial losses seen this week, with WTI and Brent May contracts below USD 59.50/bbl and USD 62.50/bbl respectively. However, putting these numbers into context, the contracts were closer to USD 65/bbl and USD 69/bbl at this time last week. One of the developments that have garnered attention has been the blockade at the Suez Canal in Egypt – which provides the shortest sea link between Asia and Europe. GAC noted that traffic is expected to resume soon as the Suez Canal authority is close to re-floating the ship. Tanker Trackers has estimated that 10mln bbls of Saudi, Russian, US and Omani crude remains parked, Vortexa estimated 13mln bbls, whilst Bloomberg’s Chief Energy Correspondent suggests that the blockade is a problem for refined products but not a major one for crude as it can bypass the canal via two large nearby regional pipes. Nonetheless, market participants are seemingly receiving this as a short-term bullish factor for prices, which also coincides with gains across stocks and blockbuster but outdated EZ Flash PMI metrics. Meanwhile, underlying fundamentals are little changed, with France, Germany and the Netherlands observing stricter COVID-related measures in light of rising cases and slower-than-expected inoculation. That being said, it will be interesting to see what OPEC+ opts to do at its upcoming meeting, with Saudi’s unilateral 1mln BPD production still offline and prices somewhat in a sweet spot and amid fears of rising US market share. Analysts at ING continue to hold a constructive medium-term outlook in the complex, “with inventories set to continue declining as we move through the year. In addition, if for any reason the market continues to weaken as we move towards the end of the month, OPEC+ would likely take action to support the market when they meet on 1 April.” The bank notes that if this weakness persists, then a rollover of current cuts look increasingly likely. Elsewhere spot gold and silver have been trading sideways during APAC and early European hours, but have since drifted towards the top of todays tight intraday ranges of USD 1724-35/oz for the yellow metal and USD 25.00-25.36/oz for silver. In terms of base metals, LME copper is now firmer as the red metal tracks the Buck waning off highs and stocks climbing off lows. Finally, Dalian iron ore futures saw a rebound as it retraced some losses from the Tangshan developments, albeit the front month April contract in Singapore fell almost a percent.

US Event Calendar

• 8:30am: Feb. Cap Goods Orders Nondef Ex Air, est. 0.5%, prior 0.4%
• 8:30am: Feb. -Less Transportation, est. 0.5%, prior 1.3%
• 8:30am: Feb. Durable Goods Orders, est. 0.5%, prior 3.4%
• 9:45am: March Markit US Services PMI, est. 60.0, prior 59.8; Markit US Manufacturing PMI, est. 59.5, prior 58.6
• 10am: Revisions: Wholesale inventories

Fed speakers

• 8:50am: Fed’s Barkin Takes Part in Virtual Discussion
• 10am: Powell and Yellen Appear Before Senate Banking Panel
• 1:35pm: Fed’s Williams Takes Part in Moderated Discussion
• 3pm: Fed’s Daly Discusses Equitable Growth
• 7pm: Fed’s Evans Discusses the Economic Outlook

DB's Jim Reid concludes the overnight wrap

Markets saw a moderate pullback yesterday as investors absorbed news of the continued rise in Covid cases, which in turn is raising concerns as to whether more restrictions might end up getting imposed over the coming weeks and thus delaying the grand global re-openings. The release of today’s flash PMIs is the next major event even if it will only really tell us how well economies are dealing with current levels of restrictions. The interesting thing about the last few months is that Western economies have held up better than expected over this winter lockdown period but that restrictions are probably likely to go on longer than expected.

Back to yesterday and the appearance of Fed Chair Powell and Treasury Secretary Yellen before the House Financial Services Committee didn’t generate any major headlines (more below) but shortly after they concluded, oil prices saw another leg lower on fears that short-term global demand will suffer if shutdowns spread. The reopening trade in particular took a big hit.

Oil futures fell by roughly 6% for the second time in the last four sessions, with WTI down -6.16% to $57.76/bbl and Brent down -5.93% to $60.79/bbl – their lowest prices in roughly six weeks. This caused energy stocks to fall back on both sides of the Atlantic, but it was travel and leisure stocks that saw some of the worst losses as holiday plans – especially in Europe – are increasingly under threat. Airlines such as Lufthansa (-4.0%), United (-6.8%) and American Airlines (-6.6%) were near the worst performers in their indices, along with cruise lines such as Carnival (-7.8%) and Norwegian Cruise Line (-7.2%). However unlike for most of the last 12 months this did not prompt a rotation into the stay-at-home/tech trade as the NASDAQ fell -1.12% on the day. However, the megacaps outperformed somewhat with the NYFANG index down just -0.30%. European equities missed the worst of the bearishness with the STOXX 600 closing down -0.20%, whereas the S&P 500 fell -0.76%. Investors moved instead into safe havens like sovereign bonds and the US dollar, which rose +0.67% in its best day in nearly three weeks.

Yesterday was also a significant milestone as it marked the one-year anniversary of the Covid-19 lows in global equity markets, back when the S&P 500 closed just over a third beneath its pre-Covid high a month earlier. We’ve come a long way since then however, with the annual change in the S&P at an astonishing +74.78%, making that the biggest rolling 12-month increase in the index since 1936. You can see this in our Chart of the Day yesterday (link here), which we did before last night’s close that actually pushed up the year-on-year number a little higher. That said, yesterday probably marks the peak on this measure since on March 24 last year the S&P rose +9.38%, marking the start of its epic advance to repeated fresh all-time highs.

Looking back at yesterday in more depth, Treasury yields took another turn lower, with 10yr yields down -7.4bps to 1.621%, putting them below their level immediately prior to the Fed meeting last week. As with the previous day, there was a notable flattening of the curve, with 2yr yields closing largely flat (-0.2bps), and it was real rates that again led the bulk of the declines, falling -5.1bps. Over in Europe it was much the same story, with yields on 10yr bunds (-3.0bps), OATS (-3.3bps) and BTPs (-4.5bps) experiencing their own declines and a flattening of their curves.

As discussed at the top Treasury Secretary Yellen and Fed Chair Powell appeared before the House of Representatives Financial Services Committee as part of the Congressional oversight of the pandemic response. Both officials are expected to appear before the Senate Banking Committee later on today in what is likely to be an encore performance. Chair Powell spoke to inflation worries saying that he and his colleagues do believe there will be upward pressure on prices , but “that the effect on inflation will be neither particularly large nor persistent.” He went on to cite that “we have been living in a world of strong disinflationary pressures - around the world really - for a quarter of a century…We don’t think a one-time surge in spending leading to temporary price increases would disrupt that.”

Many of the questions aimed at Treasury Secretary Yellen focused on the recent $1.9 trillion stimulus package, and in particular what state and local governments could do with the hundreds of billions in grants. Yellen pledged to release more details on what levels of tax cuts, rental allowance and other services local governments could administer shortly. On the topic of market valuations, both the current and former Fed Chairs agreed that asset prices could be viewed as high by historical metrics but that banks continue to be highly capitalised, thereby mitigating some of the financial stability risks. Markets were little surprised during the testimony, with both equities and bond markets trading fairly flat while the officials spoke.

Overnight in Asia markets are continuing to trade lower with the Nikkei (-1.92%), Hang Seng (-2.31%), Shanghai Comp (-1.32%) and Kospi (-0.41%) all down. The underperformance of the Hang Seng is due to a temporary pause in BioNTech/ Fosun Pharma vaccinations in Hong Kong as a result of a packaging defect. Both the companies have played down concerns over safety due to this packaging issue. The Hang Seng is now down -10.67% from intraday highs observed on February 18 and has entered correction territory. Futures on the S&P 500 are down -0.05% while those on Nasdaq are up +0.33%. European futures are pointing to a weaker open with those on the Stoxx 50 and Dax down -0.58% and -0.62% respectively. Meanwhile the softening of sovereign bond yields is stretching into a third day with those on 10y USTs down -3.1bps to 1.592% driven by an equivalent drop in 10y real yields. New Zealand’s 10y yields are down -15.7bps after yesterday’s government actions to temper the housing bubble. Australia’s 10y yield is down -7.9bps with 10y JGBs down -1.2bps.

Turning to the first of the flash March PMIs mentioned above, Japan’s manufacturing number rose 0.6pt from last month to 52 while services improved by 0.2pt to 46.5. Japanese PMIs would have likely benefitted by the end of the state of emergency in several prefectures earlier this month. The Tokyo region left such conditions last weekend. Australia’s manufacturing PMI also printed 0.1pt above last month at 57 while the services reading improved to 56.2 from 53.4 last month.

In other news, the Suez Canal, one of the world’s busiest maritime trade routes, was blocked overnight as one of the biggest container ships in operation accidentally ran aground. This could have an impact on movement of oil and consumer goods. Bloomberg reported that this has caused a jam of at least 100 vessels seeking to transit between the Red Sea and Mediterranean.

Turning to the pandemic, Bloomberg reported that the European Commission could outline new rules today that impose tougher export restrictions on vaccines. This comes as the EU not only lag behind in their vaccination rollout relative to the US and the UK, but are also facing a new wave that has led multiple countries to impose fresh restrictions. We’ll see what’s announced, but the report cited a senior EU official saying that exemptions that guarantee supplies to 90 countries could be removed, as could another exemption that offers protection to companies like Pfizer that have met their commitments to Europe. This comes ahead of a summit of EU leaders tomorrow where Covid is expected to top the agenda, but as we mentioned in yesterday’s edition, there isn’t unanimity among the leaders on the merits of export restrictions, and Irish PM Martin has already described the idea as a “retrograde step” and “counterproductive”.

Meanwhile in terms of the row between the UK and the EU over vaccine production, Bloomberg also had a report saying that the EU was only prepared to offer the UK a small fraction of the AstraZeneca output from the Netherlands, citing officials who said that the allocation should be based on relative populations, and that the EU wouldn’t simply accept an equal split. The British pound is trading down -0.32% this morning after yesterday’s -0.81% move lower partly due to vaccine friction. On a separate note, following the release of the US clinical trial results from AstraZeneca, the company said that they were going to publish further data within 48 hours, after the DSMB group of outside experts raised concerns that it could be based on outdated information.

Following the news that Germany would impose a harder lockdown through the Easter holiday, the Netherlands has followed suit with Prime Minister Rutte telling reporters that the nation’s lockdown is extended until April 20. This comes as Norway increased curbs around the Easter holiday and Greece reported their highest daily rise in infections since the start of the pandemic. The US on the other hand continues to reopen the remaining restricted regions of the country with San Francisco opening some offices and outdoor bars. Texas and Georgia – the second and ninth largest states by population – have now made vaccination registration open to all adults, and are among the most populous states to do so.

Overnight, we also got some news on fake vaccines with Reforma reporting that the Russian Direct Investment Fund and Russia’s Health Ministry are preparing an investigation with Mexican authorities after the seizure of fake Sputnik V vaccines on March 17 at an airport in the state of Campeche. This comes after Reforma had reported earlier that more than 1,000 people in Mexico were injected with the false vaccine.

There wasn’t a great deal of data out yesterday, but we did get the UK’s employment figures for January, which indicated that the labour market was past the worst in terms of the pandemic’s effects. The figures showed that payrolled employment had risen by +68k in February compared with the previous month, marking the 3rd consecutive increase. The unemployment rate in the three months to January was at 5.0%, down from 5.1% in the three months to December. Over in the US, new home sales data for February fell by more than expected to an annualised rate of 775k (vs. 870k expected). That was a 9-month low, though severe weather last month was in part to blame.

To the day ahead now, and once again we’ll hear from Fed Chair Powell and US Treasury Secretary Yellen as they testify before the Senate Banking Committee. Other Fed speakers today include the Fed’s Barkin, Williams, Daly and Evans, and there’s a pre-recorded speech from ECB President Lagarde on climate change. On the data side, the flash PMIs for March from around the world will be the highlight, but we’ll also get the UK CPI reading for February, the preliminary reading of US durable goods orders for February, and the European Commission’s advance Euro Area consumer confidence reading for March.