CREDIT BULLETS: Gilts under pressure after CPI update
- European stocks opened higher but have since relinquished some of that momentum, especially in the last hour. That comes on the back of a positive session for US stocks despite concerns surrounding heightened Ukraine/Russia tensions remaining very much in place. The market appears content to consider comments surrounding the use of nuclear force as 'posturing'. Out earlier today and having an immediate impact on UK Gilt yields (and EGBs) were UK CPI/RPI/PPI numbers. The former came at 2.3% and therefore higher than the 2.2% estimate (from a previous level of 1.7%). The services component remains a sticking point with a 5% YoY reading up 10bp on September. The ECB's Financial Stability Review showed that economic growth is still fragile & trade adds to the uncertainty. Vulnerabilities remain elevated not helped by a surge in wage growth to 5.4% in Q3, up sharply from 3.6% in Q2. Looking ahead a key focal point will be Nvidia earnings which will be a major driver for sentiment for AI-driven Tech stocks (on the back of a +1.04% return for Nasdaq overnight)
- Stoxx600: Earlier gains largely pared back. IT advancing the most (+0.83% pre-Nvidia earnings) with Real estate the worst performer (-0.77%)
- Govvies: Gilts underperforming but with yields higher (all jurisdictions and across tenors). 10yr portion of curves appears to be bearing the brunt
- Primary: The pace of issuance remains brisk Wednesday with another mix of corp, FIG and SSA names making euro funding plays and making the most of the remaining 2024 issuance window (see details below)
- CORP SNAPSHOT: Three more jump in with euro trades
- SSA SNAPSHOT: Taps continue to drip feed new supply
- Performance checker of EUR benchmark deals (bp spread change from reoffer):-
- Ahead: Very light on the US data front with only Weekly Mortgage Applications due for release. Speakers from all three major CB's (Fed, ECB and BoE) are on hand to provide updates across the entire session. S&P futures +0.1%, Nasdaq futures +0.11%
Live deals/updates
| Issuer | Deal Type | CCY | Amount (mn) | Maturity | Initial Price Talk | Latest Px Talk | Final Pricing | Book Size (mn) |
| Banca Monte dei Paschi di Siena (MPS) | Senior preferred | EUR | 750 | 6NC5 | m/s+180a | - | m/s+145 | 3,000 |
| De Volksbank N.V. | Green, Tier 2 | EUR | 500 | 11NC6 | m/s+215a | - | m/s+190 | 1,450 |
| Deutsche Telekom AG | Senior unsecured | EUR | TBD | 04/06/2035 | m/s+125a | m/s+95-100 WPIR | - | 2,600 |
| Flemish Community (De Vlaamse Gemeenschap) | Tap | EUR | 1,000 | 22/06/2034 | OLO+28a | - | OLO+24 | 6,300 |
| GELF Bond Issuer I SA (Goodman European Partnership) | Green Bond | EUR | 300 | 27/11/2031 | m/s+180a | m/s+145a | - | 2,200 |
| Land Baden-Wuerttemberg | LSA | EUR | 1,000 | 27/11/2030 | m/s+34a | - | m/s+33 | 1,800 |
| OP Corporate Bank | Senior preferred | EUR | 500 | 27/11/2029 | m/s+100a | - | m/s+70 | 2,100 |
| Smurfit Kappa Treasury Unlimited Company | Green Bond | EUR | TBD | 27/11/2036 | m/s+175-180 | - | - | Awaiting Update |
| Smurfit Kappa Treasury Unlimited Company | Green Bond | EUR | TBD | 27/11/2032 | m/s+145-150 | - | - | Awaiting Update |
| pbb Deutsche Pfandbriefbank AG | Senior preferred, Green Bond | EUR | 500 | 27/01/2028 | m/s+180a | - | m/s+180 | 500 |
| Saltaire Finance plc | Tap | GBP | 84 | 01/12/2033 | UKT+55a | UKT+47-50 | - | 310 |
| International Development Association (IDA) | Sustainability Bond | USD | TBD | 27/11/2029 | SOFR m/s+48a | - | SOFR m/s+47 | 4,100 |
Added to the pipeline
| Issuer | CCY | Notes |
| Bayerische Landesbank (BLB) | GBP | Calls 20-Nov; debut bmk Nov-2029 SNP |
Already out today
- GE Oct PPI lower than expected at -1.1% (exp -1.0%, prev -1.4%)
- UK Oct CPI YoY higher than expected at 2.3% (exp 2.2%, prev 1.7%)
- UK Oct RPI YoY in line at 3.4% (prev 2.7%)
- EC Sep Construction Output MoM came in lower at -0.1% (prev revised down to 0.0%)
Auctions
- GE allotted EUR1.618bn of 2052 & 2053 Bunds at 2.51% (2.41x) and 2.55% (3.65x) yields respectively
Ahead
- 4 S&P600 companies release results
- US Weekly MBA Mortgage Applications (12:00)
- Fed’s Barr (15:00), Cook (16:00), Bowman (17:15) & Collins (21:00)
- BoE’s Ramsden (16:00)
- ECB’s Guindos (18:00), Stournaras (18:30) and Makhlouf (19:00)
- USto sell USD16bn 20yr Bonds (18:00)
All times GMT
---- Subscribe to read more ----
To receive this analysis plus much more, subscribe to IGM. Request your free trial of the service today.