CREDIT BULLETS: Markets jittery, issuers stay away
- EU stocks and yields are falling (both for a fourth day) on final approach to US NFPs where markets are looking increasingly jittery following the weaker ADP Employment report and over 3yr low print on JOLTs. Going into today’s number, markets are ascribing a 41%/59% probability in favour of a more conservative 25bps cut by the Fed at its next meeting (CME data) while Brent has edged off its 9m lows hit on Wednesday at USD72.35 (today’s high USD73.25). German and French industrial production fell by more than expected in Jul. Eurozone Q2 GDP was revised lower while compensation per employee was 4.3% YoY, 50bps lower than in Q1
- Stoxx600 -0.69% at worst, currently heading for a potential fourth straight loss. Energy underperforming
- Govvies: 10yr bund yield up to 4.8bps lower today, and up to 17.8bps lower vs Mon’s close
- Primary: Single currency issuance remains stuck at EUR36.57bn and short of the EUR38.5bn average weekly estimate. A couple of names have joined the pipeline though, ahead of what is likely to be a front-loaded week next week amid the ECB verdict and US CPI data
- Performance checker of Wed’s EUR benchmark deals (bp spread change from reoffer) –
- Corp: BNFP 3.2% 09/31 -1.5, AKEFP 3.5% 09/34 -1.5, SDZSW 3.25% 09/29 unch
- FIG: BAERVX (Snr) 3.875% 9/29 n/a, ISPIM (SNP) 3.85% 8NC7 unch, NWG (Snr) 3.575% 8NC7 +1, PKOBK (SNP) 3.875% 3NC2 -1
- Ahead: BBG consensus calls for NFPs at 165k in Aug. S&P futures -0.6% and Nasdaq futures -1.1%
Fresh in the pipeline
Issuer | CCY | Notes |
EUR | Calls 9-10 Sep; bmk 7yr | |
EUR | Calls 16-17 Sep; 500m wng 5yr cvd | |
GBP | Calls 9-10 Sep; bmk 10yr Sustainability |
Key economic data / events so far
- GE Jul Industrial Production MoM missed at -2.4% (exp -0.5%, prev rev to 1.7%)
- GE Jul Exports/Imports MoM both beat at 1.7% & 5.4% (exp 1.1% & 0.7%, prev to -3.3% & 0.4%)
- FR Jul Industrial Production MoM missed at -0.5% (exp -0.3%, prev rev to 0.8%)
- EC Q2 F GDP QoQ revised down to 0.2% (from 0.3% and follows 0.3% in Q1)
Auctions
- No significant term auctions on 6th Sep
Ahead
- US Aug Change in Nonfarm Payrolls (13:30)
- US Aug Unemployment Rate (13:30)
- US Aug Average Hourly Earnings (13:30)
- Fed’s Williams (13:45) and Waller (16:00)
All times BST
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