MNI EUROPEAN OPEN: RBA's Lowe Pushes Back Against Market Pricing, China Stocks Stabilise

EXECUTIVE SUMMARY

• RBA GOVERNOR LOWE PUSHES BACK AGAINST MARKET PRICING OF RBA POLICY
• EU GOVERNMENTS BACK LEGAL ACTION AGAINST UK IN BREXIT ROW (FT)
• CHINA INSURERS DENY MARKET TALK ON FUND REDEMPTION (SEC. NEWS)

Fig. 1: U.S. 10- & 30-Year Tsy Yields (%)

Source: MNI - Markets News/Bloomberg

UK

BREXIT: EU nations have thrown their weight behind Brussels' plan to launch legal action against the UK over its decision to take unilateral steps to ease the impact of Brexit on Northern Irish businesses. France and other states backed plans outlined by EU Brexit chief Maros Sefcovic at a closed-door meeting of ambassadors in Brussels on Tuesday, according to several diplomats present. One said that the overall message from governments that intervened was that Brussels needed to be "calm and firm" in pushing back against the UK's announcement that it would go it alone in extending grace periods on post-Brexit rules. (FT)

BREXIT: Friction at the U.K. border is rising again following Brexit as shipping companies rejected more cargoes due to cross the English Channel from France. The rate that freight companies declined to take shipments that were scheduled to move rose last week and is now 69% higher than the average in the third quarter, according to the logistics platform Transporeon. (BBG)

FISCAL: Boris Johnson is promising a review of air passenger duty on domestic flights in an effort to boost connectivity in areas "left off" the transport map. A consultation will examine options including creating a new lower domestic rate or exempting return flights. The move is likely to be welcomed by struggling airline operators hit by Covid but worry environmental groups. The PM will also announce £20m for rail and road links and a review of a bridge between Northern Ireland and Scotland. (BBC)

ECONOMY: Emergency schemes led to gross bank lending to small and medium-sized companies rising by 82 per cent last year to £104 billion, fuelling concerns about business debt. A report from the state-run British Business Bank underlines the scale of borrowing by small businesses. Almost half applied for support last year, compared with one in eight in 2019. Their indebtedness is expected to prolong the recovery in some sectors. More than one in three expect to stay the same size over the next year and a similar proportion expect to shrink, the bank said. (The Times)

EUROPE

ECB: Climate activists are urging the European Central Bank to stop lending against brown bonds, arguing that marginal changes taking into account climate risks won't sufficiently lower the institution's carbon footprint. A paper published by Greenpeace and the New Economics Foundation on Wednesday criticizes that the ECB favors carbon-intense companies through its list of bonds eligible as collateral, and by not considering threats from global warming in setting discounts on how much banks can borrow against individual securities. (BBG)

CORONAVIRUS: The European Union is likely to issue its approval for the anti-COVID-19 vaccine of Johnson&Johnson soon, Internal Market Commissioner Thierry Breton said, adding he was not worried reaching the overall EU goal for vaccines from all producers in the second quarter. "I have the feeling that EMA will give its authorisation within the next hopefully days or hours, which is very good news because then we will have four vaccines ready to go," Breton told a news conference. (RTRS)

CORONAVIRUS: The tourism industry in particular has taken "an incredibly heavy blow," EU Commission Vice President Margrethe Vestager told German newspaper Handelsblatt on Tuesday. The data should remain as private as possible; people should be able to use the vaccination card wherever they want. (BBG)

SNB: The Swiss National Bank's accommodative stance is essential and can be eased further, though the bank welcomes the franc's drop in recent days, Vice President Fritz Zurbruegg told newspaper Blick. "We're convinced that our expansionary monetary policy with a negative interest rate at -0.75% and foreign exchange interventions is necessary, to maintain adequate conditions for the Swiss economy," Zurbruegg said in an interview. "We can go further with both instruments, should the situation require that." (BBG)

U.S.

ECONOMY: Ramamurti: White House monitoring inflation carefully. (BBG)

FISCAL: The House plans to pass Democrats' $1.9 trillion coronavirus relief bill on Wednesday morning. The vote will allow President Joe Biden to sign the plan into law by this weekend. Washington will likely beat the Sunday deadline to extend key unemployment aid programs. (CNBC)

FISCAL: As Congress closes in on passing a $1.9 trillion coronavirus- relief package, Treasury Secretary Janet Yellen said her department is preparing to send out aid as rapidly as possible. "In the coming days, our Treasury team is going to work to get this aid out as in the quickest way possible -- and the one that produces the greatest impact," Yellen said Tuesday in the text of a speech for a virtual conference organized by the National League of Cities. The White House said earlier Tuesday that President Joe Biden's name will be left off the next round of stimulus checks in a bid to speed distribution to Americans. (BBG)

FISCAL: Psaki: Reconciliation isn't off table for infrastructure bill. (BBG)

CORONAVIRUS: Pfizer and Moderna vaccine shipments to U.S. states, tribes and territories will rise next week to 15.8 million doses, from 15.2 million a week earlier, White House Press Secretary Jen Psaki said. Shipments to pharmacies will rise to 2.7 million from 2.4 million a week earlier. (BBG)

CORONAVIRUS: Alaska will allow anyone in the state over the age of 16 to get the COVID-19 vaccine, Gov. Michael Dunleavy (R) announced Tuesday night, adding the measure is "effective immediately." Why it matters: Alaska is the first state to allow people under 18 to get vaccinated and to remove eligibility requirements. (Axios)

CORONAVIRUS: When the Texas mask mandate lifts tomorrow, the state capital of Austin plans to continue requiring face coverings, directly contradicting Governor Greg Abbott's move to reopen the second-largest U.S. state. Officials in bigger cities such as Houston have expressed displeasure with Abbott's order but so far have stopped short of open defiance. (BBG)

CORONAVIRUS: Maryland Gov. Larry Hogan lifted restrictions on gyms, restaurants and other nonessential businesses in the state, becoming the latest state to eliminate capacity limits as Covid cases slow. (CNBC)

EQUITIES: Apple is slashing its planned production of the iPhone 12 mini for the first half of this year as part of a broader adjustment to output plans it formulated late last year, Nikkei Asia has learned. (Nikkei)

OTHER

U.S./CHINA: U.S. President Biden's pandemic relief plan has shown that the country's system encourages the pursuit of immediate interests and that the current administration risks side effects including a huge debt burden, said Global Times in an editorial. Conversely, China restrained from assuming massive stimulus, it said. The U.S. economy is a dangerous system under increasing pressure and is bound to explode sooner or later, the newspaper said. (MNI)

UK/CHINA: The Chinese foreign ministry summoned the British ambassador, escalating a row between the countries over press freedom. The ministry said in a statement that Ambassador Caroline Wilson posted a public article on the popular WeChat messaging service complaining about sanctions on foreign media, even as those news outlets spread fake news. The article "deliberately confused defamation with critical news reporting" and was "selectively blind" to the oppression of Chinese media, the ministry said. "A critical media plays a positive role as watchdog of government action and protecting those without a voice," Wilson wrote earlier this month, when she shared the Chinese-language article on Twitter. (BBG)

CORONAVIRUS: A fresh row has broken out between the UK and the EU after the bloc's most senior official suggested the UK had banned all Covid-19 vaccine exports. Charles Michel, the president of the European Council, wrongly claimed the UK had an "outright ban" on exports of vaccines produced on its soil. The BBC understands Foreign Secretary Dominic Raab has written to him to say the claims are "completely false". And that an EU representative has been summoned for "further discussions". It is the second time since the start of the year that the UK and EU have been at loggerheads over the issue of the production and distribution of coronavirus vaccines. (BBC)

CORONAVIRUS: With the push on for 10 billion-plus COVID-19 vaccine doses in 2021, manufacturers and suppliers - and governments tempted to block exports - must coordinate and cooperate to avoid stumbling over each other, said Richard Hatchett, who leads the Coalition for Epidemic Preparedness Innovations (CEPI). The meeting's focus, Hatchett said, "was sorting out that problem and trying to create awareness among the different stakeholders about how we can successfully navigate these bottlenecks ... rather than a conversation which was principally around intellectual property." "That's not the acute problem," he said. (RTRS)

CORONAVIRUS: BioNTech could have capacity to make 3 billion doses of Covid-19 vaccine with U.S. partner Pfizer next year, the German company's chief executive officer said, making their pioneering shot far more widely available around the world. "In principle, we could further increase manufacturing capacity," BioNTech CEO Ugur Sahin said Tuesday in an interview with Bloomberg TV. Pfizer and BioNTech have committed to make 2 billion doses of their two-shot vaccine this year. Pfizer promised to ship two-thirds of the U.S.'s 300 million-dose order by the end of May. In the European Union, the partners have promised to ship at least 500 million doses this year, with an option for an additional 100 million doses. (BBG)

CORONAVIRUS: A first ever leaders' meeting of the Quad group of countries on Friday plans to announce financing agreements to support an increase in manufacturing capacity for coronavirus vaccines in India, a senior U.S administration official told Reuters. The financing agreements will be between the United States, Japan and others and focus particularly on companies and institutions in India manufacturing vaccines for American drugmakers Novavax Inc and Johnson & Johnson, the official, who did not want to be identified by name, said. The aim of the initiative by the Quad, which groups the United States, India, Japan and Australia, would be to reduce manufacturing backlogs, speed vaccination, and defeat some coronavirus mutations, the official said. (RTRS)

CORONAVIRUS: Japanese medical equipment maker Terumo in the next 12 months plans to make 20 million syringes that can pull one or two extra doses out of each Pfizer vaccine vial, Nikkei has learned, with the company intent on beginning mass production by the end of this month. (Nikkei)

RBA: Reserve Bank governor Philip Lowe has smacked down growing market expectations of an increase in official interest rates, saying the bank is unlikely to lift them until at least 2024 on the back of much stronger wages growth and low unemployment. Speaking in Sydney to the Australian Financial Review's business summit, the governor made clear that despite the economy doing much better than expected out of the pandemic recession, there was still a long way to go before the bank would consider a rate rise. (Sydney Morning Herald)

RBNZ: New Zealand's central bank said on Wednesday it will remove some temporary liquidity facilities it had put in place during the COVID-19 pandemic, as a result of improving market conditions. The Reserve Bank of New Zealand (RBNZ) said it will remove the term auction and corporate open market operation (COMO) facilities, which allowed banks to borrow money in exchange for eligible corporate and asset-backed securities. "Financial market conditions have improved significantly since March 2020 when these facilities were introduced and the usage of these special facilities has been very low in the last six months," said Vanessa Rayner, head of financial markets at RBNZ. (RTRS)

NEW ZEALAND: New Zealand, which tops Bloomberg's Covid Resilience Ranking of the economies which best-handled the pandemic, will have a targeted rollout of vaccines over the next three-to-four months to reach 2 million people in the most at-risk groups. Those in South Aucklandaged over 65 or with underlying conditions will get shots from the end of this month. The country has already started inoculating border and managed isolation facility workers and their families, along with 480,000 frontline workers and people living in high-risk settings. From May, shots will go to 1.7 million people who are at higher risk. "The rest of the population will be able to be vaccinated from July onwards and our plan is to have as many people as possible vaccinated by the end of the year," Covid-19 Response Minister Chris Hipkins said in a statement. "Every New Zealander will be able to get a vaccine and the vaccine will be free." (BBG)

NEW ZEALAND: The latest BNZ/SEEK employment report noted that "momentum in job advertising continued to peter out during February. In fact, there was a monthly slippage of 0.3%, in seasonally adjusted terms. Annual comparisons were also on the marginally negative side, with ads down 2.3% on February 2020. Of course, comparisons with year-ago levels will be flattered by the fact COVID-19 depressed activity over the early part of 2020, establishing an artificially low base. However, this effect will only be stark starting with the March data, as February 2020 was only on the cusp of the COVID-19 impacts. The stalling in national job advertising during February entailed relative weakness in Auckland. There, numbers fell a seasonally adjusted 3.1% to be down 12.3% on levels of February 2020. This, in turn, could reflect the fact Auckland has been more affected by COVID-19 restrictions of late than the rest of the country has. This was certainly the case during February 2021." (MNI)

NORTH KOREA: The Biden administration's review of its policy towards North Korea is expected to be completed "within the next month or so," a senior official of the administration told Reuters on Tuesday while declining to say what direction it might take. The new administration, which took office in January, announced the review following former President Donald Trump's unprecedented engagement with North Korean leader Kim Jong Un, which failed to persuade Pyongyang to give up its nuclear weapons. "We are involved and engaged in a highly intense strategic review. Our expectations are that it will be done in within the next month or so," the official said. (RTRS)

CANADA: Prime Minister Justin Trudeau says Canada has been warned of manufacturing problems plaguing the Johnson & Johnson vaccine. The viral vector vaccine developed by J&J's subsidiary, Janssen Pharmaceuticals, was authorized by Health Canada as safe and effective last week. Canada pre-ordered 10 million doses of the vaccine, which is the first and only one in Canada's vaccine plan that needs only one dose. But Trudeau says Canada still doesn't have a date for when it should receive the first deliveries. (CTV News)

BRAZIL: Brazil reported a record number of deaths from coronavirus as the country rushes to seal new vaccine deals. The Health Ministry said 1,972 died from Covid-19 in the last 24 hours, pushing the total to 268,370. Confirmed cases increased by 70,764, to 11,122,429. Brazil trails only the U.S. in number of deaths globally, and ranks third in infections. Hospitals across the country are reaching capacity, as a combination of year-end and carnival gatherings and a new, more contagious variant contribute to a spike of infections even as the virus recedes in most of the world. At the same time, a short supply of vaccines is slowing a mass immunization campaign in the country of 212 million. (BBG)

BRAZIL: Brazil lower house speaker Arthur Lira told reporters on Tuesday he expects to finish negotiations around the government administrative reform in two or three months. Lira added the House is working to allow new COVID-19 relief payments to begin this month. (RTRS)

BRAZIL: Brazil's Supreme Court could upend years of work by the Carwash anti-corruption task force that has sent some of the nation's top politicians and businesspeople to jail. A panel of five judges debated on Tuesday whether Sergio Moro, once the judge in charge of the investigation and its most public face, was biased in his rulings against former President Luiz Inacio Lula da Silva. If he's deemed prejudiced, the decision could open the door for others he convicted to request their cases be reviewed. Four justices have voted so far, two in favor and two against. The fifth requested more time to look into the case, delaying the ruling. Justices can change their votes until a final decision is announced, and there's no set time for the discussion to resume. (BBG)

RUSSIA: Russia should be prepared for another surge in coronavirus cases, a top medical researcher warned on Tuesday. The new outbreak would not be as big as in the spring and autumn of 2020, Alexander Lukashev, director of the Sechenov University Institute for Medical Parasitology, Tropical and Transmissible Diseases said. (FT)

SOUTH AFRICA: Eskom Holdings SOC Ltd. and Sasol Ltd., South Africa's two biggest polluters, must comply with emission limits even if it costs them tens of billions of rand, Environment Minister Barbara Creecy said. The companies, which use coal to produce electricity and gasoline respectively, have sought to avoid installing so-called flue-gas desulfurization, or FGD, units at their facilities to reduce sulfur dioxide pollution because of their cost. That's unacceptable, said Creecy. Eskom says the cost of installing FGD at a single power plant, Medupi, is 42 billion rand ($2.7 billion). (BBG)

ARGENTINA: Officials at the International Monetary Fund see some benefit in delaying a $45 billion agreement with Argentina after the nation's midterm election in October, with talks yielding little progress six months after they began, according to people familiar with the situation. While IMF negotiators prefer to hash out a deal with Argentina as soon as possible, some see a silver lining in the government's procrastination. Argentina could take more ownership and make bigger policy commitments once the pressure of a key legislative vote is off, three people familiar with the talks said, declining to be named because discussions are private. The IMF's top priority is for Argentina to design a deal that it can honor and that returns it to growth, and the Fund knows it can't force the nation's hand, the people said. (BBG)

OIL: The US Energy Information Administration revised its crude price forecast higher in its monthly Short-Term Energy Outlook released March 9 amid tightened first quarter supply outlooks. The EIA now expects Brent crude prices to average $60.67/b in 2021, up $7.47/b from its February forecast, and $58.51/b in 2022. EIA expects the WTI spot price to average $57.24/b in 2021, up $7.03/b from February, and at $54.75/b in 2022. (Platts)

OIL: Libya's National Oil Corporation (NOC) signed on Tuesday a consultancy service contract for oil conservation and services center with the Italian company Saipem, NOC said in a Facebook post. The contract is for the establishment of the "Oil Center for Maintenance and Services" in Benghazi, NOC added. (RTRS)

CHINA

POLICY: China expressed its confidence in the the economic recovery by setting a goal of "more than 6%" growth in 2021, said the official People's Daily in a commentary. The economy is resilient and dynamic, as proved by exports increasing 50% y/y in the first two month and box office receipts of CNY12 billion in February, the highest in a single month, the Daily said. The low-end GDP growth target enables China to pursue structural reforms this year, the commentary said. Most analysts expect China's growth to be about 8% this year, MNI noted. (MNI)

EQUITIES: Major insurance companies in Beijing and Shanghai say they didn't make large-scale redemption of stock funds recently and that their equity portfolios are generally stable and in reasonable range after adjustment made before the Spring Festival, Shanghai Securities News reports, citing investment managers at insurers. (BBG)

OVERNIGHT DATA

CHINA FEB CPI -0.2% Y/Y; MEDIAN -0.3%; JAN -0.3%
CHINA FEB PPI +1.7% Y/Y; MEDIAN +1.5%; JAN +0.3%

MNI DATA IMPACT: China Feb CPI Fell Again; PPI Over 2-Yr High

• China's inflation fell 0.2% y/y in February due to the higher comparison base with the same period last year. The result compared with the previous month's 0.3% decline and was basically in line with the median forecast of -0.3%. The Producer Price Index, another key indicator measuring factory gate prices, rose further to 1.7% y/y from last month's 0.3% gain, outshining the 1.3% forecast and registering the highest since December 2018, according to data released on Wednesday by the National Bureau of Statistics - on MNI MainWire and email now, for more details please contact sales@marketnews.com.

AUSTRALIA MAR WESTPAC CONSUMER CONFIDENCE 111.8; FEB 109.1

• The Index is now just 0.2 points below the December level which was a ten-year high. The main factors driving the Index are improving economic conditions and prospects, both domestically and abroad, particularly as they relate to our labour market. Australia's success in containing COVID-19, the promise of vaccine rollouts bringing an end to the pandemic, and support from stimulatory government policies have all contributed to the sustained lift. However, the survey shows evidence of tensions emerging in the housing market. Every quarter, the survey includes additional questions around news recall that give a clearer indication of the topics influencing sentiment. Responses this quarter indicate that positive news around the economy, jobs and budget/tax policy have been most influential. Some 57% of respondents assessed news on 'economic conditions' as favourable (up from 47% in December); while 51% assessed news on 'employment conditions' as favourable (up from 33% in December). There was a marginal deterioration in assessments of news around 'budget/tax policy' – 48% seeing this as favourable down from 57% in December, although the previous read was an eleven-year high. Overall, these proportions of favourable assessments are very strong by historical standards with the assessment of economic conditions near a ten-year high. (Westpac)

NEW ZEALAND FEB RETAIL CARD SPENDING -2.5% M/M; MEDIAN -1.0%; JAN -0.4%
NEW ZEALAND FEB TOTAL CARD SPENDING -3.2% M/M; JAN -1.2%

SOUTH KOREA FEB HOUSEHOLD LENDING KRW1003.1TN; JAN KRW996.4TN

CHINA MARKETS

PBOC INJECTS CNY10 BN VIA OMOS; LIQUIDITY UNCHANGED WEDS

• The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rate unchanged on Wednesday. The liquidity in the banking system is unchanged given the maturity of CNY10 billion of reverse repos today, according to Wind Information. The operation aims to maintain reasonable and ample liquidity, the PBOC said on its website.

CHINA SETS YUAN CENTRAL PARITY AT 6.5106 WEDS VS 6.5338 TUES

• The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 6.5106 on Wednesday, compared with the 6.5338 set on Tuesday.

MARKETS

UP TODAY (Times GMT/Local)