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EXECUTIVE SUMMARY

  • BIDEN TEAM WEIGHS A MASSIVE RELEASE OF OIL TO COMBAT INFLATION (BBG)
  • RUSSIA OFFERS OIL TO INDIA AT $35/BBL DISCOUNT TO PRE-WAR PRICE (BBG)
  • U.S. CONSIDERS ADDING MORE ETHANOL TO GASOLINE TO LOWER PUMP PRICE (RTRS SOURCES)
  • RUSSIA AND UKRAINE WILL RESUME TALKS ONLINE ON APRIL 1 (RTRS)
  • FED’S GEORGE FAVORS ‘STEADY, DELIBERATE’ SERIES OF RATE HIKES (BBG)
  • LAGARDE: EUR200BN IN EU FUND RESERVES COULD BE USED TO FIGHT SHOCK (BBG)
  • SEC CHIEF DOUBTS IMMINENT DEAL TO AVOID CHINA DELISTINGS (BBG)

Fig. 1: WTI & Brent Crude Oil Futures ($/bbl)

Source: MNI - Market News/Bloomberg

UK

POLITICS: As Boris Johnson hosted a dinner party for Tory MPs in the ballroom at Westminster’s Park Plaza hotel on Tuesday, he appeared assured of his survival. Whereas two months ago the prime minister was on the brink, on Tuesday evening he openly joked about attempts to remove him from office. With more than 200 Tory MPs in attendance — including several of his strongest critics — the prime minister said that letters of no confidence were “elastic” because they kept bouncing back and forth as they were withdrawn. (The Times)

POLITICS: Labour will be on the side of voters, Keir Starmer will say, as he launches the party's local election campaign. Speaking in Bury, he will accuse the Conservatives of a "pathetic" response to rising prices and urge voters to send the government a message "they cannot ignore". The Labour leader will also highlight its plan to cut energy bills through a windfall tax on oil and gas companies. The local elections take place on 5 May in England, Scotland and Wales. In Northern Ireland will vote for members to the Northern Ireland Assembly. The votes will be the first electoral test for party leaders since the war in Ukraine, increases to the cost of living and the row over parties held in Downing Street during the coronavirus lockdown. (BBC)

FDI: Australian investors have pledged to spend £28.5bn across the UK in clean energy, technology and infrastructure projects over the next decade, the British government said on Wednesday. Boris Johnson, UK prime minister, met leading Australian businesses, including financial services company Macquarie Group and infrastructure fund IFM Investors, to encourage further investment in the UK to help stimulate an economic recovery as the pandemic subsides. The £28.5bn consists of a combination of new and previously announced commitments. (FT)

EUROPE

ECB: “As far as Recovery and Resilience facilities are concerned there is roughly 200 billion euros of untapped resources because some of the European countries didn’t choose to request the benefit of the loans that they were entitled to,” ECB President Christine Lagarde says in an interview with Cyprus state-run RIK TV. “So, there is a reserve of 200 billion euros and I think that the Europeans are now looking on how to repurpose that reserve in order to fight this new shock that we’re facing”: Lagarde. Whether additional financing, whether more joint operations are needed “will have to be decided by the European leaders and I’m sure that the European Council will be looking at these possibilities in order to resist the consequences of the shock that we have,” Lagarde says. (BBG)

SWEDEN: MNI INTERVIEW: Swedish Wage Outlook Eases Rates Pressure- NIER

  • Swedish inflation should subside before the next major rounds of wage negotiations, helping to curb both second-round effects and the likely extent of rate hikes by the Riksbank, National Institute of Economic Research economist Jonas Kolsrud told MNI - on MNI Policy MainWire now, for more details please contact sales@marketnews.com.

ENERGY: The Greek gas grid operator will review its plans on additional cargoes of liquefied natural gas that Greece might need if Russia stops gas supplies to the country, the energy ministry said on Wednesday. Greece held an emergency meeting of its energy regulator, gas and power transmission operators and its biggest gas and power suppliers to assess all available scenarios about gas supply security. Gas grid operator DESFA will also examine the cost for adding an additional floating tank at the country's sole LNG terminal off Athens, the ministry said in a statement after the meeting. (RTRS)

U.S.

FED: Federal Reserve Bank of Kansas City President Esther George said that policy makers should raise interest rates in the face of surging inflation, though the pace of hikes may need to be deliberate to monitor economic developments during the tightening. Recognizing risks to the outlook “is not an argument for stalling the removal of accommodation, but it does suggest a steady, deliberate approach for the path of policy could provide space to monitor developments as they unfold,” George said Wednesday in prepared remarks to the Economic Club of New York. “It is clear that removing accommodation is required. How much and how aggressively accommodation should be removed is far more uncertain.” (BBG)

FED: The yield curve provides useful feedback on the path of monetary policy relative to neutral, Federal Reserve Bank of Minneapolis President Neel Kashkari says in Twitter post Wed. “Just reread my yield curve piece from July 2018. While conditions today are obviously different than 2018, I continue to believe the yield curve gives us useful feedback about where the path of policy is relative to neutral,” Kashkari tweets Kashkari links to his July 2018 post on Medium.com about whether the flattening yield curve is a warning sign of recession: “We do know the bond market is telling us that inflation expectations appear well-anchored, the economy is not showing signs of overheating and rates are already close to neutral,” he wrote at the time. (BBG)

FED: MNI INTERVIEW: KC Fed Index Implies Jobless Rate Nearing 3%

  • Adjusting the unemployment rate to incorporate information from the Kansas City Federal Reserve's Labor Market Conditions Indicators measure suggests the labor market is tighter than the unemployment rate alone implies and is consistent with a 3.1% unemployment rate, KC Fed senior economist Andrew Glover told MNI - on MNI Policy MainWire now, for more details please contact sales@marketnews.com.

FED: White House Communications Director Kate Bedingfield stated the following in a press briefing on Wednesday, “We need to confirm Dr. Cook, along with the other three qualified nominees — Jerome Powell for Chair, Lael Brainard for Vice Chair, and Philip Jefferson for a seat on the Board of Governors — so that the Federal Reserve can move ahead in its work to help address inflation.” (MNI)

ECONOMY: MNI BRIEF: St Louis Fed Model Signals 300k Gain For March Jobs

  • U.S. hiring in March likely took a step down from a month earlier, according to the St. Louis Federal Reserve's analysis of real-time employment data from the scheduling software company Homebase, showing a seasonally adjusted rise of 300,000 employed persons, economist Max Dvorkin told MNI - on MNI Policy MainWire now, for more details please contact sales@marketnews.com.

CORONAVIRUS/FISCAL: President Joe Biden warned Wednesday that the U.S. will not have enough Covid vaccine shots this fall to ensure free and easy access for all Americans if Congress fails to pass the $22.5 billion in additional funding the administration has requested. Biden said the U.S. has enough supply to ensure people eligible for fourth shots have access to them. The Centers for Disease Control and Prevention this week recommended an additional Pfizer or Moderna dose for people ages 50 and older, as well as certain younger individuals who have compromised immune systems. Biden, 79, received his fourth dose on live television after his remarks. (CNBC)

CORONAVIRUS: The Biden administration is preparing to lift Title 42, the public health authority the U.S. has used since the spring of 2020 to stop the spread of Covid by preventing immigrants from crossing the U.S.-Mexico border to claim asylum, say two officials familiar with the planning. The policy, which the officials say will be lifted on May 23, has blocked more than 1.7 million attempts by immigrants to cross the border since its start during the Trump administration in March 2020, often turning them around and sending them back into poor conditions in Mexico. Early in the Biden administration, the U.S. Border Patrol stopped enforcing Title 42 against children crossing alone and immigration advocates sued to afford the same protections to families crossing together. Now, according to the sources, all immigrants — even single adults — will be allowed to enter the United States. (NBC News)

EQUITIES: Investors are in search of stocks that pay high and stable dividends, according to a new CNBC Delivering Alpha investor survey. When asked “what are you most likely to buy now?,” 30% of respondents said stocks paying high dividends. We polled about 400 chief investment officers, equity strategists, portfolio managers and CNBC contributors who manage money about where they stood on the markets for the rest of 2022. The survey was conducted this week. (CNBC)

FUEL: The Biden administration is considering temporarily removing restrictions on summer sales of higher-ethanol gasoline blends as a way to lower fuel costs for U.S. consumers, three sources familiar with the matter told Reuters. The review comes as President Joe Biden seeks to tame soaring pump prices, which hit a record this month following Russia's invasion of Ukraine in late February. The United States and other consumer countries have banned imports of oil from Russia, a major world supplier, to punish it for the invasion. Adding more ethanol to gasoline blends could potentially reduce prices at U.S. gas pumps because ethanol, which is made from corn, is currently cheaper than straight gasoline. The Environmental Protection Agency said it could not comment on whether it was considering the move, but said it was "considering a range of options across the administration to help mitigate impacts from Russia's actions on American consumers." (RTRS)

OTHER

GLOBAL TRADE: MNI INTERVIEW: Supply Chains Stuck Longer- Canada Trade Bank

  • China's rise in Covid cases and the Ukraine war mean global supply chains will remain impaired into the second half of the year and there could be longer-term challenges as governments and companies rethink production networks, the chief economist at Canada’s federal trade bank told MNI - on MNI Policy MainWire now, for more details please contact sales@marketnews.com.

GLOBAL TRADE: Apple Inc. is exploring new sources of the memory chips that go into iPhones, including potentially its first Chinese provider, after a production disruption at a key Japanese partner exposed the risks to its global supply. It’s considering expanding a roster of suppliers that already includes Micron Technology Inc. and Samsung Electronics Co. after Kioxia Holdings Corp. lost a batch of output to contamination in February, people familiar with the matter said. While Samsung and SK Hynix Inc. -- the world’s largest makers of flash memory -- are likely to pick up the slack, Apple remains keen to diversify its network and offset the risk of further disruption from the pandemic and shipping snarls, they said. The iPhone maker is now testing sample NAND flash memory chips made by Hubei-based Yangtze Memory Technologies Co., the people said, asking not to be identified discussing private deliberations. Apple’s been discussing the tie-up with Yangtze, owned by Beijing-backed chipmaking champion Tsinghua Unigroup Co., for months though no final decisions have been made. (BBG)

GLOBAL TRADE: Belarus will allow companies to export potash fertiliser in response to Western sanctions, Tass news agency said on Wednesday, citing a government decision. It did not give details. State-owned Belaruskali is one of the world's largest producers of potash. (RTRS)

U.S./CHINA: U.S. trade chief Katherine Tai said it’s time to forget about changing China’s behavior and instead focus on rebuilding the U.S. industrial manufacturing base and making domestic investments to counter the Asian nation. At a congressional committee hearing Wednesday, Tai said talks last year with China on a so-called phase one trade agreement reached under President Donald Trump failed to produce results. Discussions with China have been “unduly difficult,” and the tariffs that Trump placed on China haven’t incentivized the nation to change, Tai said, while not outlining any plans to remove them. Tai said on Wednesday that the U.S. will “absolutely” continue to enforce China’s phase one purchase commitments, won’t give up in that effort and is keeping all options on the table to incentivize China’s compliance. (BBG)

U.S./CHINA: Securities and Exchange Commission Chair Gary Gensler tamped down speculation that a deal is brewing to keep about 200 Chinese stocks from losing their listings, signaling that only total compliance with U.S. audit inspections will allow the companies to keep trading on American markets. The SEC chief’s tough words show the U.S. remains unwavering in its demand that American regulators get full access to the audits. Gensler also underscored that U.S. law gives him little room for compromise -- and a congressionally imposed deadline of 2024 for kicking businesses off the New York Stock Exchange and Nasdaq Stock Market unless China acquiesces is looming. “If we’re in the same place two years from now,” many companies “would be suspended,” he said. (BBG)

U.S./CHINA: China's securities regulator said on Thursday both China and the United States have a willingness to solve their audit disputes, and the outcome depends on the wisdom of both parties. The China Securities Regulatory Commission said whether Chinese companies listed in the United States are delisted in the future depends on the progress and results of the audit and regulatory cooperation between the two countries. (RTRS)

BOJ: MNI INSIGHT: BOJ Sees Factory Output Economy Risks After Q1

  • Bank of Japan officials remain sceptical of an industrial production recovery into the year as the war in Ukraine and resulting high energy costs put up another roadblock even as they welcomed a slight February rebound led by auto output that managed to work around continued semiconductor supply-chain gaps and pandemic restrictions, MNI understands - on MNI Policy MainWire now, for more details please contact sales@marketnews.com.

JAPAN: Japan’s government is closely watching the impact of a weakening yen on its economy, Chief Cabinet Secretary Hirokazu Matsuno says at a regular press conference. Sudden moves in foreign exchange rates are “undesirable,” he says, adding that Bank of Japan Governor Haruhiko Kuroda has also pointed to the importance of stability in currency markets. Japan will coordinate closely with U.S. currency authorities and implement policy in accordance with consensus with Group of Seven nations and others, he says. (BBG)

AUSTRALIA/CHINA: Australia will invest more to find new buyers for its exports in an effort to ease trade dependence on China, its treasurer said, in the face of “economic coercion” from Beijing that shows little sign of abating. In an interview with Bloomberg, Josh Frydenberg said the government was “investing more in trade diversification” after China subjected products ranging from coal to barley, lobsters and wine to punitive trade actions. “We are now, for example, sending more barley to Saudi Arabia, more wine into Singapore,” he said Thursday. “So even though Australia has been on the receiving end of economic coercion from China, we have been able to diversify our suppliers to and our exports to other countries.” (BBG)

AUSTRALIA/CHINA: The trial of Australian journalist Cheng Lei on charges related to state secrets began behind closed doors in a heavily guarded Beijing court on Thursday, more than 19 months after she was detained. Cheng, who was a television anchor for Chinese state broadcaster CGTN before being detained in August 2020, was formally arrested a year ago on suspicion of illegally supplying state secrets overseas. Australian Ambassador Graham Fletcher was barred from entering the court. "This is deeply concerning, unsatisfactory and regrettable. We can have no confidence in the validity of a process which is conducted in secret," he told journalists before leaving. (RTRS)

SOUTH KOREA: South Korea will actively consider steps to stabilize the government bond market in coordination with the central bank if interest rate fluctuation is excessive, Finance Minister Hong Nam-ki says in a meeting. Steps to stabilize bond market may include adjusting treasury bond volume depending on timing and maturity. (BBG)

NORTH KOREA: U.S. Ambassador to the United Nations Linda Thomas-Greenfield emphasized the importance of a unified UN Security Council response to North Korea’s ballistic missile launches during a meeting with China’s Special Representative for Korean Peninsula Affairs Liu Xiaoming, according to a readout. Greenfield also expressed the need to communicate to North Korea the consequences of violating multiple UN Security Council resolutions, per readout from the U.S. Mission to the United Nations. (BBG)

BRAZIL: Brazil’s government is considering granting a 5% pay increase to civil servants to help make up for inflation losses, said two people with direct knowledge of the matter. The blanket raise is one of the possibilities being discussed and no final decision has been made, according to the people, who asked not to be named because the talks are private. The increases, which would come into effect in July, would have a fiscal impactof about 5 billion reais ($1 billion) this year and 10 billion reais in 2023, the people said. Since the government only has about 1.7 billion reais earmarked for civil servant adjustments, it would need to cut other expenditures to fit the extra cost in the spending cap, and send a bill to Congress to adjust next year’s budget. (BBG)

RUSSIA: Russia and Ukraine will resume their peace talks online on April 1, a senior Ukrainian official said on Wednesday after the latest round of negotiations had ended in Turkey. Ukrainian negotiator David Arakhamia said in an online post that Ukraine had proposed the countries' two leaders should meet, but Russia responded by saying more work needed to be done on a draft treaty. (RTRS)

RUSSIA: Negotiations with Russia are ongoing but are “only words”, Ukrainian President Volodymyr Zelensky said in a video message posted to social media on Wednesday night. “Yes we have negotiations process but they’re only words, without anything concrete,” Zelensky said. Zelensky said the “alleged pullback” of Russian troops from Kyiv and Chernihiv is not a retreat but a result of the work of the Ukrainian military. (CNN)

RUSSIA: The Ukrainian government said Wednesday that Russian military forces are redeploying throughout the country. Some troops are spreading through eastern Ukraine, while others are being redeployed to Kyiv and Chernihiv, said Oleksii Danilov, the secretary of Ukraine’s National Security and Defense Council. “Some of them are appearing in the Kharkiv direction and in the Donetsk direction. There, the enemy is now strengthening its groups in order to try to increase the pressure on our boys and girls who are defending our country in the Kharkiv, Donetsk and Luhansk regions,” Danilov said. He said Russia is gathering mercenaries from around the world to help in its fight against Ukraine. (NBC News)

RUSSIA: Russia has started to reposition under 20% of the forces arrayed around Ukraine's capital Kyiv, the Pentagon said on Wednesday, but cautioned Russia was expected to refit and resupply them for redeployment into Ukraine, and not bring the forces home. Russian forces bombarded the outskirts of the capital Kyiv and the besieged city of Chernihiv in northern Ukraine on Wednesday, a day after Russia said it would scale down military operations in both cities in what the West dismissed as a ploy to regroup by invaders suffering heavy losses. (RTRS)

RUSSIA: Russian forces have begun to pull out of the defunct Chernobyl nuclear power site, a US defense official said Wednesday, a day after Moscow said it would scale back attacks on two key Ukrainian cities. (AFP)

RUSSIA: White House officials said U.S. intelligence suggests Putin has felt misled by his advisers about the war in Ukraine, including in the lead-up to the conflict last month, raising tensions between the Russian president and military. “We believe that Putin is being misinformed by his advisers about how badly the Russian military is performing, and how the Russian economy is being crippled by sanctions, because his senior advisers are too afraid to tell him the truth,” Bedingfield told reporters, without providing details on the evidence behind the assessment. (BBG)

RUSSIA: The head of Britain's GCHQ spy service said on Wednesday that new intelligence showed some Russian soldiers in Ukraine had refused to carry out orders, sabotaged their own equipment and accidentally shot down one of their own aircraft. Government Communications Headquarters (GCHQ) chief Jeremy Fleming said President Vladimir Putin had "massively misjudged" the capabilities of Russia's once mighty armed forces while underestimating both the resistance of the Ukrainian people and the resolve of the West, which has punished Moscow with largely coordinated sanctions. Citing new intelligence, Fleming said there was evidence that Russian soldiers had low morale and were poorly equipped. "We’ve seen Russian soldiers – short of weapons and morale - refusing to carry out orders, sabotaging their own equipment and even accidentally shooting down their own aircraft," Fleming said. (RTRS)

RUSSIA: Ukraine sees the billionaire Roman Abramovich as an effective mediator between Kyiv and Moscow who helps prevent misunderstandings from happening between the two sides, Ukrainian negotiator Mykhailo Podolyak said on Wednesday. "It has long been known in the media space that he is an extremely effective mediator between delegations and partially moderates the process so that there is no misunderstanding at the outset," he told a televised briefing. Podolyak also played down as speculative "conspiracy theories" the reports that Abramovich had been poisoned several weeks ago, saying such reports were meant to put pressure on the delegations. (RTRS)

RUSSIA: Ramzan Kadyrov, the powerful head of Russia's republic of Chechnya, said on Wednesday that Moscow would make no concessions in its war in Ukraine and that Kremlin negotiator Vladimir Medinsky had been wrong to suggest otherwise. In a video statement on his Telegram that appeared to deviate starkly from Russia's official position, Kadyrov said that Russian President Vladimir Putin would not just stop what he had started in Ukraine. (RTRS)

RUSSIA: The breakaway Georgian region of South Ossetia will take legal steps to join the Russian Federation, its President Anatoly Bibilov said in an address posted on the Russian ruling party’s website. Only a handful of countries, including Russia, Syria and Nauru, have recognized South Ossetia since it declared independence after Russia’s 2008 war with Georgia. Russia last annexed a territory in 2014, when it seized Crimea from Ukraine. (BBG)

RUSSIA: Negotiations between Russia and Ukraine have not advanced, France's Foreign Minister Jean-Yves Le Drian said on Wednesday. There were no signs that suggest changes in Russia's position, Le Drian told international broadcaster France24 in an interview. (RTRS)

RUSSIA: Italian Prime Minister Mario Draghi, during a telephone conversation with Russian President Vladimir Putin, called for a ceasefire in Ukraine and expressed readiness to promote a peaceful settlement, the Italian leader's office said on Wednesday. "The focus was on the negotiation process between the Russian Federation and Ukraine. Prime Minister Draghi stressed the importance of achieving a ceasefire as soon as possible in order to protect the civilian population and give impetus to the negotiations," the report says. "The prime minister announced the readiness of the Italian government to contribute to the peace process, subject to clear signs of de-escalation from Russia," it says. (Interfax)

RUSSIA: A peace deal between Russia and Ukraine will have to respect the territory and sovereignty of Ukraine in order to ease European sanctions against Moscow, Dutch Prime Minister Mark Rutte said on Wednesday. "A peace agreement at gunpoint, with the loss of Ukrainian territory and sovereignty, is not the way to get back to normal. Nor will it automatically lead to easing our sanctions", Rutte said in a speech during a state visit to Spain. (RTRS)

RUSSIA: China has reaffirmed its partnership with Russia and said it wanted to push bilateral relations “to a higher level”, as Moscow faced international sanctions and widespread criticism over its invasion of Ukraine. In the first meeting between the countries since Russia started the war a month ago, China’s foreign minister Wang Yi told his Russian counterpart, Sergei Lavrov, that “the two sides’ will to develop bilateral ties is even firmer, our confidence in advancing co-operation in various areas even stronger”, according to a Chinese foreign ministry statement. (FT)

RUSSIA: President Joe Biden spoke to Ukraine’s President Volodymyr Zelenskiy for about an hour Wednesday, and pledged “$500 million in direct budgetary aid” from the U.S., according to a White House statement. They discussed how the United States is “working around the clock to fulfill the main security assistance requests by Ukraine” and “continued efforts by the United States with allies and partners to identify additional capabilities to help the Ukrainian military defend its country, according to the statement. (BBG)

RUSSIA: The U.S. included 100 killer drones in a colossal weapons package for Ukraine that President Joe Biden approved earlier this month, U.S. officials confirmed Wednesday. Celeste Wallander, assistant secretary of Defense for international security affairs, told lawmakers that Kyiv asked for the weapons, which are dubbed “kamikaze drones,” as it fights off a Russian invasion. (CNBC)

RUSSIA: The Biden administration is weighing new sanctions on Russia, the White House said hours after a phone call between Biden and Zelenskiy. “We are continuing to look at options to expand and deepen our sanctions and I anticipate that we would probably have more for you on that in the coming days,” White House Communications Director Kate Bedingfield told reporters. (BBG)

RUSSIA: Senators have cut a deal with Sen. Rand Paul (R-Ky.) aimed at breaking the logjam over legislation to limit trade with Russia. The agreement — confirmed by Paul and Sen. John Thune (S.D.), the No. 2 Senate Republican — would clarify what qualifies as a violation of human rights under a U.S. law named after Sergei Magnitsky, a Ukrainian-born Russia who died in police custody more than a decade ago in Moscow. Senators are using the bill House-passed bill ending normal trade relations with Russia to reauthorize the Magnitsky Act sanctions. “They will include specific language defining what human rights abuses are and that we don’t have the problem of having language that can be misinterpreted,” Paul said, asked by The Hill they had worked out a deal on the sanctions language. The original Magnitsky bill targeted “gross” violations of human rights. The language in a bill approved by the House and now under consideration by the Senate would expand that to target “serious” human rights violations, codifying language used in a Trump-era executive order. As part of the deal with Paul, senators agreed to keep the “serious” violation phrasing but provided a definition for what would qualify. (The Hill)

RUSSIA: The European Commission is readying new sanctions against the Kremlin over Russia's invasion of Ukraine, EU sources told Reuters on Wednesday, with the magnitude of the new measures depending on Moscow's stance on gas payments in roubles. (RTRS)

RUSSIA: The European Union may agree as early as next week on a new set of measures to tighten existing sanctions against Russia and strengthen their enforcement. The measures could include sanctioning banks that the EU has cut off from the international payments system SWIFT, including state-controlled VTB, but hadn’t yet applied other restrictions to, according to people familiar with the preparations who asked not to be identified because the talks are private. The bloc is also looking to add more people to its listings as it continues to go after Russian tycoons and their associates. (BBG)

RUSSIA: Under Secretary of State for Political Affairs Victoria Nuland and Enrique Mora, a top European Union official met in Washington and discussed “additional steps” to further cut off Russia from the American and European economies. They underscored the number of nations who have imposed sanctions and other restrictions on Russia since its assault on Ukraine began in February and “reiterated their commitment to further expanding the coalition and strengthening enforcement of these measures,” according to a joint statement by the U.S. State Department and the European External Action Service. (BBG)

RUSSIA: Australia is taking further action to increase the economic costs to Russia following its illegal invasion of Ukraine, supported by Belarus, by applying an extra tariff of 35% for all imports from Russia and Belarus, according to a statement. The additional tariffs will take effect from April 25 and will be in addition to general duty rates that currently apply. Australia will issue a formal notification withdrawing entitlement to the Most-Favoured-Nation tariff treatment for Russia and Belarus from Apr. 1. (BBG)

RUSSIA: Ukraine is readying sanctions against enterprises which work with Russia's military-industrial complex, Ukraine's top security official said on Wednesday. Security council secretary Oleksiy Danilov added that sanctions were also being prepared against companies who "help the Russian budget support the army." (RTRS)

RUSSIA: Russian hackers have recently attempted to penetrate the networks of NATO and the militaries of some eastern European countries, Google's Threat Analysis Group said in a report published on Wednesday. The report did not say which militaries had been targeted in what Google described as "credential phishing campaigns" launched by a Russian-based group called Coldriver, or Callisto. "These campaigns were sent using newly created Gmail accounts to non-Google accounts, so the success rate of these campaigns is unknown," the report said. (RTRS)

RUSSIA: The Russian Union of Grain Exporters has asked the Bank of Russia to investigate the possibility of enabling foreign purchasers of Russian grain to make payments on export contracts in rubles, according to a letter written by the Union (its copy has been obtained by TASS). "We are asking to find the possibility of ensuring liquidity in rubles for foreign banks serving purchasers of grain. Among the largest purchasers are Turkey, Egypt, Iran, Saudi Arabi, other African and Middle Eastern countries, as well as a number of Asian countries - Vietnam, Pakistan, Bangladesh," the document said. (TASS)

RUSSIA: Russia’s central bank will lift a ban on some short selling on the stock market on Thursday but this will be limited to shares in 83 enterprises and can be carried out only by banks and brokers, the Moscow stock exchange said on Wednesday. The announcement means that short sales remain prohibited for the vast majority of investors. Russian stocks and bonds resumed trading in full on Monday, albeit for a curtailed time frame and with various restrictions, including a ban on short selling. (RTRS)

RUSSIA: Mounting reputational risks, costly legal letters, and approvals from internal committees are just some of the challenges traders and hedge funds are facing when it comes to buying and selling Russian bonds. And yet, the volume of corporate-debt trades is at a two-year high. The average daily value of trades on dollar-denominated Russian corporate bonds this month was $156 million as of March 24, according to data from MarketAxess. That’s double this time last year, and the most since March 2020. The bonds of Yandex, Lukoil, Gazprom, Novolipetsk Steel and Russian Railways were among some of the most traded. (BBG)

RUSSIA: S&P Dow Jones Indices (S&P DJI) said on Wednesday it has decided to remove Russian and Belarusian bonds from its 11 indices. "S&P Dow Jones Indices ("S&P DJI") conducted a consultation with market participants on the potential removal of Russian bonds and announced the results on March 15, 2022, indicating that all bonds from issuers whose Country of Risk is Russia or Belarus will be removed from the impacted indices," it said in a press statement posted on its website. According to S&P, the bonds will be removed from the indices on March 31. (TASS)

SOUTH AFRICA: South Africa has begun the process of establishing a new utility to help it entice private investment in infrastructure needed to head off potentially crippling water shortages. The Department of Water and Sanitation plans to submit a bill to the cabinet by the end of April that sets out proposals for the creation of the National Water Resources Agency, according to Sean Phillips, its director general. It will be created by combining the department’s Water Trading Entity and the Trans-Caledon Tunnel Authority, or TCTA, and could be operational next year. With Africa’s most industrialized economy and a growing population, South Africa is struggling to keep pace with water demand. The country is one of the world’s 30 driest, with rainfall averaging less than 500 millimeters (20 inches) per annum, and climate change is expected to make it even more arid. (BBG)

IRAN: Washington on Wednesday imposed sanctions on a procurement agent in Iran and his companies and accused them of helping to support Tehran's ballistic missile program following missile attacks by suspected Iran-backed proxies against countries in the region. In a statement issued as talks stalled on reviving the 2015 Iran nuclear deal, the U.S. Treasury Department cited Iran's March 13 missile attack on Erbil in Iraq and an "Iranian enabled" Houthi missile attack on Friday against a Saudi Aramco facility as well as other missile attacks by Iranian proxies against Saudi Arabia and the United Arab Emirates. (RTRS)

IMF: The International Monetary Fund said on Wednesday it has updated its guidance on capital flow restrictions to allow member countries to impose pre-emptive measures to reduce the risks of abrupt capital outflows causing financial crises or deep recessions. The IMF's institutional view on capital flow measures was launched in 2012, in the wake of the 2008-2009 financial crisis, to allow for capital flow management measures and macroprudential measures in the event of capital surges. Under the new guidance, countries would no longer have to wait until capital flow surges materialize under the new guidance. They could impose such measures to counter a gradual buildup of foreign-currency debt that is not backed by foreign currency reserves or hedges, the IMF said. (RTRS)

ENERGY: Russia plans to keep the contract currency for gas exports to Europe unchanged but will seek final payment in roubles as one of the options to switch the currency of gas trade, two Russian sources said on Wednesday. "Only payment currency is changing, the contract currency is not," one source said. For example, for deals clinched in euros the payment should be made at the official rouble/euro exchange rate set by the Russian central bank, that source said. (RTRS)

ENERGY: Germany will continue to pay for Russian gas in euros or dollars, a government spokesman said, adding that Russian President Vladimir Putin had told the German chancellor nothing would change for European partners despite his plan for rouble payments. Russia has said that because of Western financial sanctions over Ukraine, it plans to require payment for its energy exports - especially the gas that Germany depends on - in roubles rather than the usual euros or dollars from April 1. (RTRS)

ENERGY: China doesn’t rule out possible use of rubles or yuans in trade in energy sources with Russia, the Chinese foreign ministry told TASS on Thursday. "Market players are free to choose the currency in bilateral settlements," the ministry said when asked whether China is ready to use rubles or yuans, instead of US dollars, to pay for Russian energy sources. "The use of own national currencies in the process of regular trade and economic cooperation may help avoid currency risks and reduce losses stemming from currency exchange." According to the Chinese foreign ministry, Chinese companies plan to make wider use of rubles or yuans in trade with Russia "on the equal and mutually beneficial basis, with due account of changes on the market." "Naturally, we will use currency of other countries due to various considerations," the ministry said. (TASS)

OIL: The Biden administration is weighing a plan to release roughly a million barrels of oil a day from U.S. reserves, for several months, to combat rising gasoline prices and supply shortages following Russia’s invasion of Ukraine, according to people familiar with the matter. The total release may be as much as 180 million barrels, the people said, speaking on condition of anonymity ahead of an official move. The plan is accompanied by a diplomatic push for the International Energy Agency to coordinate a global release by other countries. A final decision hasn’t been reached on the global release, but the White House may make an announcement on the U.S. release as soon as Thursday, one of the people said. (BBG)

OIL: The International Energy Agency has called an emergency ministerial meeting for Friday to discuss oil supply, a spokesperson for Australian energy minister Angus Taylor said on Thursday. “The IEA have called an emergency meeting to be scheduled for Friday night Australian time,” the spokesperson said, adding that Taylor would be participating. Two senior U.S. officials said President Joe Biden’s administration is considering releasing 1 million barrels of oil a day for several months from the Strategic Petroleum Reserve to reduce gasoline prices. (RTRS)

OIL: International Energy Agency (IEA) member countries are set to meet on Friday at 1200 GMT (1400 Paris time) to decide on a collective oil release, a spokesperson for New Zealand's energy minister said on Thursday. The amount of the potential collective release has not been decided," the spokesperson for energy minister Megan Woods said. The IEA called an emergency ministerial meeting for Friday. "That meeting will set a total volume, and per country allocations will follow," she said. (RTRS)

OIL: Russia is offering India steep discounts on the direct sale of oil as mounting international pressure lowers the appetite for its barrels elsewhere following the invasion of Ukraine, according to people with knowledge of the matter. The sanctions-hit nation is offering its flagship Urals grade to India at discounts of as much as $35 a barrel on prices before the war to lure India to lift more shipments, the people said, asking not to be identified discussing confidential deliberations. Headline Brent prices have risen about $10 since then, implying an even larger reduction from current prices. Russia wants India to take 15 million barrels contracted for this year just to begin with, they said, adding the talks are taking place at government level. (BBG)

OIL: A significant increase in Russian oil imports by India could expose New Delhi to a "great risk" as the United States prepares to step up enforcement of sanctions against Moscow for its invasion of Ukraine, a senior U.S. administration official said. While the current U.S. sanctions against Russia do not prevent other countries from buying Russian oil, the warning raises expectations that Washington will attempt to restrict other countries' purchases to normal levels. "U.S. has no objection to India buying Russian oil provided it buys it at discount, without significantly increasing from previous years," said the source who spoke on condition of anonymity. "Some increase is allowed," said the source, who did not offer more detail. (RTRS)

OIL: The Joint Technical Committee of the OPEC+ alliance on Wednesday decided with immediate effect to replace the IEA with Wood Mackenzie and Rystad Energy reports as secondary sources used to assess crude oil production and conformity of participating countries, a source with direct knowledge of the matter told Reuters. The decision was taken after thorough analysis presented by the secretariat at the request of the JTC, the source said. The JTC, which advises OPEC+ on market fundamentals, met on Wednesday and the full ministerial meeting of OPEC + is taking place on Thursday. (RTRS)

OIL: The Biden administration is debating whether to ease some sanctions on Venezuela to let Chevron Corp. speak directly with President Nicolas Maduro’s government, as the U.S. looks for ways to jump-start stalled talks with the political opposition, people familiar with the matter said. Lifting a ban on communication with senior members of the Maduro regime would allow Chevron to prepare for a day when punishing sanctions on Venezuela’s oil industry are lifted -- something the U.S. insists isn’t currently under consideration. It would also allow Chevron to negotiate more control over its joint ventures with state- run oil company PDVSA, according to the people. (BBG)

FOREX: The unprecedented financial sanctions imposed on Russia after its invasion of Ukraine threaten to gradually dilute the dominance of the US dollar and result in a more fragmented international monetary system, a top official at the IMF has warned. Gita Gopinath, the IMF’s first deputy managing director, said the sweeping measures imposed by western countries following Russia’s invasion, including restrictions on its central bank, could encourage the emergence of small currency blocs based on trade between separate groups of countries. “The dollar would remain the major global currency even in that landscape but fragmentation at a smaller level is certainly quite possible,” she said in an interview with the Financial Times. “We are already seeing that with some countries renegotiating the currency in which they get paid for trade.” (FT)

CHINA

PBOC: The People’s Bank of China is likely to increase support for the real economy through stable growth of overall credit expansion and encouraging structural policy support to sectors including small businesses, green development, farming and innovation, the China Securities Journal said interpreting a statement following the central bank's Q1 Monetary Policy Committee meeting. The central bank is also likely to keep ample liquidity with cuts to interest rates or reserve requirement ratios remaining possible, the newspaper said. The PBOC also reiterated policy support for meeting reasonable housing purchase needs and healthy real estate development, which could help the property market recover, said the newspaper. (MNI)

PBOC: The PBOC may still cut reserve requirement ratios (RRR) in April and step up monetary policy support given a likely weakened economic performance in March, the Securities Daily said citing analysts. The yuan has remained relatively strong and cross-border capital flow has been overall stable, supporting a possible RRR cut, it said. The central bank has this week consistently added net liquidity injections to stabilize funding costs and support the real economy, the newspaper said. (MNI)

FISCAL: Chinese provinces sold infrastructure bonds during the first quarter at a record pace for that time of year, a rush that reflects Beijing’s aim to use up the annual quota before October as it seeks to boost an economy under strain from Covid lockdowns. A total of 1.25 trillion yuan ($197 billion) of new special local notes, mostly used to fund government investment in infrastructure, has been issued in January-March, according to Bloomberg calculations. That’s equivalent to 34% of the annual quota of 3.65 trillion yuan, the quickest progress for that period. Local authorities were first allowed in 2019 to sell the debt ahead of it being approved by the annual parliamentary meeting in March. (BBG)

FISCAL: China urges faster issuances of special local government bonds to help boost investment and drive consumption as the economy faces increasing headwinds, Xinhua News Agency said late Wednesday following a State Council meeting. China has planned a total of CNY3.65 trillion local government special bonds for this year and seeks to have all the quotas allocated to local governments issued by the end of September, Xinhua said. China will also begin some qualified water conservancy projects, which will lead to CNY800 billion investment this year, Xinhua said citing the government. (MNI)

CORONAVIRUS: Shanghai will adopt “static management” of the whole city, according to a government statement, which doesn’t explain whether this means any substantial changes to the two-phase lockdown started on Monday. Shanghai’s Communist Party chief Li Qiang repeated at a meeting that city-wide Covid tests will be conducted. (BBG)

CORONAVIRUS: Shanghai will decide on how to lift lockdown in eastern half of the city based on nucleic acid test results and opinions from experts, city official says at Covid briefing Thursday. Shanghai to start nucleic acid testing of about 16m people in the western part of the city from April 1. Government apologizes for insufficient preparation and support amid virus control. (BBG)

PROPERTY: China's pledges to shore up its embattled property industry have done little to boost prospects for the sector, according to developers, with access to funding still challenging and many local government authorities reluctant to ease rules more effectively. The world's second-largest economy needs more decisive policy easing at the city level to stimulate demand from wary buyers and inject new credit to stop more property-related firms from defaulting, executives at top developers said. Beijing has repeatedly signalled more government support for the sector after bond payment defaults by China Evergrande Group and others rattled global markets and weighed on the economy. As part of those efforts, China's central bank has said financial institutions need to extend real estate loans steadily under prudent management to meet the "reasonable" funding needs of the sector. But executives at five developers, all among China's top 50 by sales, told Reuters they have not been able to get new loans from banks. (RTRS)

BANKING: Moody's Investors Service says in a new report that China's shadow banking assets contracted sharply in 2021 amid regulators' continued focus on containing financial systemic risk – although the rate of decline will likely slow in 2022 as fewer new regulatory measures are rolled out given the effectiveness of those already taken. "Chinese authorities' intensified regulation of the shadow banking sector, which began in 2017, has substantially reduced the sector's size as a share of nominal GDP and of banking sector assets. Banks' and shadow banks' interconnectedness has also sharply declined, and while pockets of risk remain, we expect no major new regulatory initiatives in 2022," says Lillian Li, a Moody's Vice President. (Moody’s)

OVERNIGHT DATA

CHINA MAR M’FING PMI 49.5; MEDIAN 49.8; FEB 50.2
CHINA MAR NON-M’FING PMI 48.4; MEDIAN 50.3; FEB 51.6
CHINA MAR COMPOSITE PMI 48.8; FEB 51.2

JAPAN FEB, P INDUSTRIAL PRODUCTION +0.2% Y/Y; MEDIAN +0.8%; JAN -0.5%
JAPAN FEB, P INDUSTRIAL PRODUCTION +0.1% M/M; MEDIAN +0.5%; JAN -0.8%

JAPAN FEB HOUSING STARTS +6.3% Y/Y; MEDIAN +1.2%; JAN +2.1%
JAPAN FEB ANNUALISED HOUSING STARTS 0.872MN; MEDIAN 0.824MN; JAN 0.820MN

AUSTRALIA FEB BUILDING APPROVALS +43.5% M/M; MEDIAN +5.0%; JAN -27.1%

AUSTRALIA FEB PRIVATE SECTOR HOUSES +16.5% M/M; JAN -16.3%
AUSTRALIA FEB PRIVATE SECTOR CREDIT +7.9% Y/Y; MEDIAN +7.9%; JAN +7.6%
AUSTRALIA FEB PRIVATE SECTOR CREDIT +0.6% M/M; MEDIAN +0.6%; JAN +0.6%

AUSTRALIA FEB JOB VACANCIES +6.9% Q/Q; JAN +18.8%

SOUTH KOREA APR BUSINESS SURVEY M’FING 85; MAR 93
SOUTH KOREA APR BUSINESS SURVEY NON-M’FING 82; MAR 84

SOUTH KOREA FEB INDUSTRIAL PRODUCTION +6.5% Y/Y; MEDIAN +4.5%; JAN +4.2%
SOUTH KOREA FEB INDUSTRIAL PRODUCTION +0.6% M/M; MEDIAN -0.2%; JAN +0.3%

SOUTH KOREA FEB CYCLICAL LEADING INDEX CHANGE -0.3; JAN -0.1

UK MAR LLOYDS BUSINESS BAROMETER 33; FEB 44

“March’s data shows UK businesses are facing significant challenges from the impact of Russia’s invasion of Ukraine in increasing economic uncertainty and ongoing inflationary pressures. Following encouraging improvements at the start of the year, March’s fall in confidence is therefore disappointing, but not surprising. “There are positives with the fact that confidence remains above the long-term average and it appears for now that growth will moderate. But it is difficult to gauge what the full impact will be and therefore businesses have become more cautious.” (Lloyds)

CHINA MARKETS

PBOC NET INJECTS CNY130 BLN VIA OMOS THURSDAY

The People's Bank of China (PBOC) injected CNY150 billion via 7-day reverse repos with the rates unchanged at 2.10% on Thursday. The operation has led to a net injection of CNY130 billion after offsetting the maturity of CNY20 billion repos today, according to Wind Information.

  • The operation aims to keep liquidity stable at the end of the quarter, the PBOC said on its website.
  • The 7-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.1229% at 09:28 am local time from the close of 2.2284% on Wednesday.
  • The CFETS-NEX money-market sentiment index closed at 45 on Wednesday, flat from the close of Tuesday.

PBOC SETS YUAN CENTRAL PARITY AT 6.3482 THURS VS 6.3566

The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower for a forth day at 6.3482 on Thursday, compared with 6.3566 set on Wednesday.

MARKETS

SNAPSHOT: Large U.S. SPR Release Touted

Below gives key levels of markets in the second half of the Asia-Pac session:

  • Nikkei 225 down 125.94 points at 27901.81
  • ASX 200 down 14.921 points at 7499.6
  • Shanghai Comp. down 6.602 points at 3259.994
  • JGB 10-Yr future up 9 ticks at 149.63, yield down 0.2bp at 0.225%
  • Aussie 10-Yr future up 0.5 ticks at 97.150, yield down 0.3bp at 2.787%
  • U.S. 10-Yr future +0-04+ at 122-24+, yield down 0.72bp at 2.342%
  • WTI crude down $6.46 at $101.41, Gold down $10.77 at $1922.20
  • USD/JPY up 36 pips at Y122.19
  • BIDEN TEAM WEIGHS A MASSIVE RELEASE OF OIL TO COMBAT INFLATION (BBG)
  • RUSSIA OFFERS OIL TO INDIA AT $35/BBL DISCOUNT TO PRE-WAR PRICE (BBG)
  • U.S. CONSIDERS ADDING MORE ETHANOL TO GASOLINE TO LOWER PUMP PRICE (RTRS SOURCES)
  • RUSSIA AND UKRAINE WILL RESUME TALKS ONLINE ON APRIL 1 (RTRS)
  • FED’S GEORGE FAVORS ‘STEADY, DELIBERATE’ SERIES OF RATE HIKES (BBG)
  • LAGARDE: EUR200BN IN EU FUND RESERVES COULD BE USED TO FIGHT SHOCK (BBG)
  • SEC CHIEF DOUBTS IMMINENT DEAL TO AVOID CHINA DELISTINGS (BBG)

BOND SUMMARY: Mixed Fortunes In Asia

U.S. Tsys looked through the softer than expected official Chinese PMI data for the month of March, with well-documented issues such as the localised COVID-related lockdowns evident in China & Russia-Ukraine related worry/disruptions already at the fore of participants’ minds. Note that the Chinese policymaking sphere has previously pledged to do more to support the economy, via several well-documented addresses, which likely limited any potential post-data follow through when it comes to market action. TYM2 printed through Wednesday’s high on source reports pointing to the potential for a meaningful release from the U.S. SPR oil stockpiles (with an IEA meeting scheduled for Friday to discuss such a move), but has pulled back, with oil markets continuing to soften (WTI is within touching distance of $100) as the market juggles the stagflation/inflation narrative and reports of Russia offering oil to India at steep discounts. The contract is last +0-00+ at 122-20+, with a lack of momentum evident after the initial pull higher. Cash Tsys are unchanged across the curve. There was no reaction to news that Russia-Ukraine talks will restart on 1 April (in an online format). Flow was headlined by a block sale of TUM2 futures (-2,407). Looking ahead, the NY session will bring the release of the PCE data suite, weekly jobless claims, the monthly MNI Chicago PMI release and Challenger job cuts. We will also get comments from NY Fed President Williams, although the scope for monetary policy-related language may be limited given the fact that he will make opening remarks at a conference on the future of NYC.

  • JGB futures traded in a more contained manner during the Tokyo session, dealing either side of unchanged, with participants seemingly happy to pause for breath after yesterday’s volatility, in what is the final Tokyo trading session of the Japanese FY. The super-long end of the cash JGB curve was a little more active, with the impact of yesterday’s BoJ action still being felt there, as 30s and 40s sit over 8bp richer on the day, with 40s back below 1.00% in yield terms, just. Note that 10-Year JGB yields are little changed on the session, printing around the 0.225% mark, 2.5bp shy of the upper boundary of the BoJ’s permitted trading range, with no offers tendered at today’s BoJ fixed rate operations (As you would expect, given yield levels). Futures are +7 last. This week’s reaffirmation of the BoJ’s dovish credentials, combined with the Japanese bias for domestic securities ahead of FY end & cross currency basis-related FX hedged yield pickup for some quarters of the foreign investor sphere outweighed any headwinds from offshore investors’ propensity to sell Japanese bonds ahead of the end of the Japanese FY when it came to today’s 2-Year JGB auction. That allowed the cover ratio to hit the highest level observed at a 2-Year auction since April ’20, with the price tail holding tight and low price topping wider expectations (which stood at 100.050). Participants now eye the release of the BoJ’s quarterly Rinban schedule, which will be published at 17:00 Tokyo/09:00 London. Given the BoJ’s clear support of its current YCC settings many expect the BoJ to increase the size of its Rinban purchase in Q222, via larger operations and/or more frequent purchases. Still, this doesn’t mean the BoJ will not face issues in defending its YCC strategy further down the line e.g. if global yields rise further or if it decides to reduce the cumulative size of its Rinban operations at some point.
  • The Aussie bond space operates off of best levels with YM +2.0 and XM -5.0, pulling lower into the bell, with nothing in the way of notable month-end buying to counter the move. This comes after a short squeeze in YM faded, with gyrations surrounding the reports re: a potential sizeable U.S. SPR oil release evident, as wider market moves began to re-exert control on the space. Aussie bonds looked through local data, which included much firmer than expected building approvals, in line with expected private sector credit and a continued increase in job vacancies in February (albeit at a slower 3-month rate vs. January). The latter added to the evidence of an ever-tightening labour market.

JGBS AUCTION: Japanese MOF sells Y2.2721tn 2-Year JGBs:

The Japanese Ministry of Finance (MOF) sells Y2.2721tn 2-Year JGBs:

  • Average Yield -0.025% (prev. -0.020%)
  • Average Price 100.062 (prev. 100.051)
  • High Yield: -0.022% (prev. -0.017%)
  • Low Price 100.055 (prev. 100.045)
  • % Allotted At High Yield: 29.0225% (prev. 0.8465%)
  • Bid/Cover: 5.427x (prev. 4.559x)

EQUITIES: Mostly Lower As Russia-Ukraine Ceasefire Hopes Ease; Chinese PMIs Miss Estimates

Most major Asia-Pac equity indices deal 0.3% to 0.8% weaker at typing on a negative lead from Wall St., with the Australian ASX200 and Korean KOSPI bucking the broader trend of losses in the region. Debate re: progress in ongoing Russia-Ukraine ceasefire talks has done the rounds in Asia, with participants noting continued Russian shelling of Ukrainian positions in the north despite the former’s assurances to the contrary earlier in the week

  • The ASX200 sits 0.2% better off at typing, led by outperformance in the materials sub-index despite weakness in major commodity benchmarks. Large gains were observed in index heavyweights BHP Group, Rio Tinto, and Telstra, overcoming muted performance in financials and energy-related names.
  • The CSI300 deals 0.5% softer at typing, trading lower after official PMI figures for March came in below expectations while pointing to contractions in manufacturing and non-manufacturing activity, exacerbating worry re: slower growth as China has deployed lockdowns to fight an ongoing COVID-19 outbreak. Richly valued consumer discretionary equities underperformed, led by losses in Chinese liquor stocks.
  • The Hang Seng trades 0.8% lower at writing, with 54 of the index’s 66 constituents in the red. China-based tech stocks struggled, with the Hang Seng Tech Index sitting 1.3% weaker at typing after tech giant Baidu was added by the U.S. SEC to a list of companies that could get “kicked off” U.S. stock exchanges over well-documented auditing disputes re: U.S.-listed Chinese companies.
  • U.S. e-mini equity index futures have backed away from session highs and deal 0.1% to 0.4% firmer at typing. NASDAQ contracts outperformed, with the broader move higher coming as major crude benchmarks have declined in Asia.

OIL: Lower In Asia As Potential For Largest-Ever U.S. SPR Release In Focus

WTI is ~-$6.00 and Brent is ~-$5.20, operating around the session’s worst levels at writing. Both benchmarks have tumbled past Wednesday’s lows on BBG source reports of the Biden administration considering a sizeable release of crude from the U.S. SPR, with the report detailing plans to “release roughly a million barrels of oil a day”, totalling “as much as 180 million barrels”. Looking ahead, U.S. President Biden is expected to deliver remarks re: the plan later on Thursday.

  • Turning to China, demand worry re: pandemic control measures remains elevated, as COVID case counts for Mar 30 show overall fresh daily infections hovering at recent highs. Official Chinese Mar PMI data crossing earlier in the Asian session also pointed to contractions in manufacturing and non-manufacturing activity as both metrics have fallen below the 50-mark, although major oil benchmarks were little changed on the release.
  • Elsewhere, OPEC+ ministers will meet later on Thursday, with RTRS source reports on Wednesday suggesting that the group will likely stick to previously mentioned cumulative output increase targets (400K bpd).
  • Weekly U.S. EIA data released on Wednesday saw a surprise build in gasoline and distillate stocks, while there was a larger than expected drawdown in crude inventories, with Cushing hub stocks declining as well. The data release runs somewhat counter to Tuesday’s reports re: weekly API inventory estimates, with those reports having pointed to drawdowns across all inventories.

GOLD: Lower In Asia

Gold is ~$6/oz softer at ~$1,927/oz, operating a little above session lows at writing. Major crude benchmarks have tumbled in Asia, applying pressure to the precious metal as stagflation-linked worry in some quarters re: elevated energy prices has eased.

  • To elaborate, WTI and Brent futures have traded sharply lower after BBG source reports pointed to the Biden administration considering a plan to release “as much as 180 million barrels” of crude from the U.S. SPR over “several months”.
  • Ultimately, gold continues to trade clear above one-month lows made earlier in the week after closing ~$15/oz firmer on Wednesday, with that move higher facilitated by a downtick in the USD and U.S. real yields. Elsewhere, optimism surrounding progress towards a diplomatic resolution in the Russia-Ukraine conflict has moderated as both sides continue to play down progress in ongoing ceasefire negotiations. The next round of talks is due for Friday, and will be held online (as opposed to face-to-face on Tuesday).
  • From a technical perspective, bullion continues to trade within previously defined levels, with support located at $1,890.2/oz (Mar 29 low), while resistance is seen at $1,966.1 (Mar 24 high).

FOREX: Oil Weakness Spills Over Into FX Space, Yen Goes Offered Again

Major oil-tied currencies came under pressure as crude prices plunged on the back of a BBG source report suggesting that the Biden administration is considering a major release of oil from the U.S. Strategic Petroleum Reserve (SPR). The release could total 180mn barrels, or around 1mn barrels a day, amid rising fuel prices and supply shortages related to Russia's war on Ukraine.

  • The yen resumed losses with the BoJ showing resolve in enforcing its official cap on 10-Year JGB yield. Some suggested that month-/FY-end flows amplified pressure to the yen, with USD/JPY adding ~50 pips as a result. The pair's RSI stayed below the 70 ("overbought") threshold, just. The index fell below that level Wednesday as a corrective pullback in USD/JPY seen earlier this week occurred amid the unwinding of overbought technical conditions.
  • The U.S. dollar edged higher amid lower oil prices. The gauge of broader greenback strength (DXY) moved away from a four-week low lodged on Wednesday.
  • U.S. PCE data & MNI Chicago PMI, EZ unemployment as well as UK & Canadian GDPs take focus on the data front. Central bank speaker slate features Fed's Williams as well as ECB's Lane & de Guindos.

FOREX OPTIONS: Expiries for Mar31 NY cut 1000ET (Source DTCC)

  • EUR/USD: $1.1000(E3.4bln), $1.1069-80(E1.2bln), $1.1100(E1.5bln), $1.1110-15(E531mln), $1.1125(E759mln), $1.1200(E1.7bln)
  • GBP/USD: $1.3195-00(Gbp804mln)
  • USD/JPY: Y121.60($585mln)
  • AUD/USD: $0.7400(A$500mln), $0.7500(A$1.5bln)
  • USD/CNY: Cny6.3270($750mln), Cny6.3355($631mln)


UP TODAY (Times GMT/Local)

DateGMT/LocalImpactFlagCountryEvent
31/03/20220600/0700***UK GDP Second Estimate
31/03/20220600/0700*UK Quarterly current account balance
31/03/20220630/0730UK DMO Gilt Operations Calendar April-June
31/03/20220630/0830**CHRetail Sales
31/03/20220645/0845**FR Consumer Spending
31/03/20220645/0845**FR PPI
31/03/20220645/0845***FR HICP (p)
31/03/20220755/0955**DEUnemployment
31/03/20220800/1000EUECB Lane Lecture at Paris School of Economics
31/03/20220900/1100**EUUnemployment
31/03/20220900/1100***IT HICP (p)
31/03/20221000/1200EU ECB de Guindos at Discussion at University of Amsterdam
31/03/20221230/0830**US Jobless Claims
31/03/20221230/0830**US Personal Income and Consumption
31/03/20221230/0830**US WASDE Weekly Import/Export
31/03/20221230/0830***CA Gross Domestic Product by Industry
31/03/20221300/0900US New York Fed's John Williams
31/03/20221345/0945**US MNI Chicago PMI
31/03/20221430/1030**US Natural Gas Stocks
31/03/20221530/1130**US NY Fed Weekly Economic Index
31/03/20221530/1130**US US Bill 04 Week Treasury Auction Result
31/03/20221530/1130*US US Bill 08 Week Treasury Auction Result
31/03/20221600/1200**US USDA GrainStock - NASS
31/03/20221600/1200***US USDA PROSPECTIVE PLANTINGS - NASS
01/04/20222200/0900**AU IHS Markit Manufacturing PMI (f)
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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