A mild risk-on tone this morning has seen US Treasury yields drift higher and equity futures regain strength. Better news from virus hotspots including Italy, Spain and France has supported the positive sentiment. However, across the pond, the US appears to be nearing the “very horrendous” phase of the virus this week, according to Trump, who added that, on a positive note, “We hope we’re seeing a levelling off” of cases in New York. Further hope could come from the broad antiviral vaccine, remdesivir, which Gilead Sciences Inc. is reportedly donating 140,000 doses. The experimental drug will be offered for compassionate use, for clinical trials and given to those with the worst symptoms according to Bloomberg. Gilead hopes to produce more than 500,000 more doses by October with an aim to have ~1 million treatment courses available by the end of the year. With cases in Japan set to surge once more, Japan’s PM Abe is expected to declare a state of emergency. One to watch as Japan was one of the few countries which felt it had the outbreak under control, a second wave could see market sentiment whipsaw.
This week the US’ largest banks are to begin the submission of their stress test data to the Fed; the results are expected to be published by the central bank in June. Staying with the Fed, a temporary repurchase agreement facility will open, allowing foreign central banks to sell USTs for cash, thus providing US dollar liquidity to the global financial system. The Fed’s March minutes, due on Wednesday may give some further insight, however, may not be relevant due to their backward looking nature. Before that, EU finance ministers are due to speak on Tuesday to discuss further plans on targeting the virus outbreak. The Eurogroup meeting is expected to determine whether or not member countries have sufficient fiscal scope to protect their nations. Any agreement may require approval from the European Council as combined issuance and sovereignty sharing may be required. Meanwhile, China may look to lift its quarantine on the originating city, Wuhan. According to Bloomberg studies, economic activity in China has picked up to 85% of pre-crisis levels. Oil could find some further support this week as a tentative OPEC meeting to “stabilize the oil market” is set for Thursday, with oil diplomats looking to speak to G20 energy ministers to end an Easter holiday shortened week for some on Friday.