CREDIT BULLETS: Risk reduction continues

• Risk assets remain under heavy pressure and yields are continuing to fall as US recession fears remain palpable following yesterday’s weak ISM manufacturing data and jump in jobless claims. Over in Asia, Nikkei dumped 5.81% as ongoing JPY strength weighs on exporters (index now well into correction territory, down over 15% from its 11th July peak). US index futures have been moving deeper into the red during the European morning as Intel and Amazon updates fan tech worries ahead of today’s US employment report where bad news is likely to be taken at face value if the reaction to yesterday’s US data is any guide. The BBG consensus calls for NFPs to slow to 175k in Jul from a prior 206k. Gold still in the ascendancy, up 3.2% on the week and is closing in on July’s record peak
• Stoxx600 -1.74% at worst, losses led by tech. Index breaches July low at 503.78 (today’s low 502.83), a close below which could reinforce a bias to sell strength
• Govvies: 10yr German yields falls by up to 4.6bps to 2.199%, making for a 7-day/25bps drop
• Primary: The only live deal Friday amid the risk-off tone is a debut EUR100m Jul 2027 blockchain-based digital mortgage covered bond issue that is already priced after being marketed via a roadshow last week
• CORP WEEKLY: Handful steal a march on post-summer rush
• FIG WEEKLY: Trio get solid reception as novelty, rarity and ethical tag pulls in buyers
• Performance checker of Thur’s EUR benchmark deals (bp spread change from reoffer) –
  • FIG: CABKSM (T2) 4.375% 12NC7 +4
• Ahead: Pace of US job creation seen slowing in Jul. S&P futures -1.1% and Nasdaq futures -1.7%

Live deals/updates

Key economic data / events so far

• FR Jun Industrial Production MoM missed at 0.8% (exp 1.0%, prev rev to -2.2%)
• IT Jun Industrial Production MoM above f/c at 0.5% (exp 0.0%, prev 0.5%)

Auctions

• BE sold a total of EUR501m 4/33 & 6/33 OLOs at 2.69% & 2.728%

Ahead

• 7 S&P500 companies report
• BoE’s Pill (12:15)
• US Jul Change in Nonfarm Payrolls (13:30)
• US Jul Unemployment Rate (13:30)
• US Jul Average Hourly Earnings (13:30)
• US Jun Factory Orders (15:00)
• US Jun F Durable Goods Orders (15:00)
• Fed’s Barkin speaks (17:00)

All times BST

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