11th June, 2025

European equities are set for a softer open Wednesday, with EuroStoxx50 futures down 0.369% despite Wall Street gains where S&P500 and Nasdaq closed higher by 0.55% and 0.63% and advances across the board in APAC markets (led by Hang Seng which was +0.86% at the time of publication). Investors worldwide await crucial US inflation figures due later today.

Treasury yields and the dollar edged higher during Asian trading, maintaining familiar ranges ahead of May US Consumer Price Index data. Gold has recovered some ground, rising to approximately USD3,334 per ounce, though still below pre-jobs report levels. Crude prices drifted lower despite progress in US-China diplomatic discussions.

These bilateral talks yielded what US Treasury Representative Lutnick described as a "framework" for trade implementation, though that suggests falling short of a comprehensive deal. Both President Trump and Chinese President Xi must approve the framework before negotiations continue. Market reaction has been muted, suggesting investors had modest expectations from the outset.

European Central Bank officials signal comfort with their current policy stance. Governing Council member Vujcic indicated the ECB hopes for greater clarity on US tariff policies by Sep 2025, while Villeroy described monetary policy and inflation as being in a "favourable zone."

The UK will command attention as Chancellor Rachel Reeves delivers her spending review in Parliament. Reeves has warned that "not every department will get everything they want," with most sectors bracing for cuts while health and defence appear prioritised.

All eyes now turn to the US CPI release, with forecasts suggesting a modest acceleration in inflation. Any upside surprise could reinforce expectations that the Federal Reserve will maintain its cautious stance on monetary policy adjustments. With European economic data virtually absent today, market direction will likely hinge on US inflation figures and the UK spending review.

For more on latest developments see the European Breakfast Briefing.

Wednesday's supply prospects

It’s set to be a crowded primary bond market on Wednesday with issuers across all asset classes sat waiting with new trades following recent mandates. That after we sprung back into life on Tuesday following the long weekend in Europe, with EUR13.925bn pricing in the single currency from an array of issuers. Overall demand was extremely strong Tuesday, and NICs were negligible at best, something that is likely to tempt more opportunistic issuers on Wednesday along with the names already sat in the public pipeline (details below).

** EIB EUR 10yr EARN CAB
** AfD EUR Sep 2030 sustainable
** Galicia EUR500m Apr 2032 sustainable
** Urenco EUR500m no grow 10yr
** Alfa Laval EUR300m no grow 6.25yr
** Amphenol Corporation EUR 7yr SEC-registered
** ABP Finance GBP 12yr secured
** Julius Baer EUR500m no grow 6yr snr
** Investec EUR500m no grow 3yr OpCo FRN
** Malakoff Humanis Prevoyance EUR 10yr T2
** FMO EUR300m no grow 11NC6 T2
** Gothaer Allgemeine Versicherung EUR250m (exp) 20NC10 T2
** GA Global Funding Trust EUR 7yr FABN
** Pacific Life Global Funding II EUR 6yr green FABN
** Nord/LB EUR500mSep 2029 covered
** Bank of New Zealand EUR 5yr covered
** OTP Mortgage Bank EUR500m no grow 5yr covered
** Mehilainen Yhtiot Oy EUR two-part 7NC3 FXD & 7NC1 FRN secured. IPTs are 5.5-5.75% & 3mE+375-400 respectively
** Deutsche EuroShop EUR500m no grow long 5yr green
** Bausch & Lomb EUR600m 5.5NC1 secured FRN at 3mE +425-450 IPTs

After a slow start to the week where only three borrowers raised USD2.25bn in US ex-SSA issuance, in an effort to get out in front of the upcoming inflationary data, 10 issuers raised USD10.4bn Tuesday, led by a couple of chunky deals from foreign borrowers. For more colour, see THE ENDGAME.

What to watch Wednesday – US CPI

** Key Data: US Weekly MBA Mortgage Applications (12:00) and US May CPI (13:30)

** Key Events: ECB’s Lane (10:30) & Cipollone (13:00) speak

** Auctions: UK to sell GBP4.25bn 2035 Gilts (10:00), GE to sell EUR3bn 2035 Bunds (10:30), PO to sell EUR1-1.25bn 2035 & 2054 PGBs (10:30) & US to sell USD39bn 10yr Notes (18:00)

All times BST

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