CREDIT OPEN: A few names still in the pipe at end of a slower week
EU stocks are set to give back a portion of Thursday’s sizeable gains at the open although markets are still potentially set for weekly gains after Stoxx600 closed 1.38% higher on Thursday, or 1.11% higher for the week.
That comes after S&P500 (+1.7%) and Nasdaq (+2.51%) both rallied hard Thursday, taking the former to a record high, loosely chalked up to increased hopes for a soft landing. It seems hard to really pinpoint an exact catalyst though given that Wall Street stocks had closed lower Wednesday in the immediate aftermath of the Fed's decision and presser.
In any case, Asian markets have been running with the positive Wall Street handover with notable exception of mainland China. In contrast to the Fed’s outsized cut, the BoJ held rates steady today while China left LPR rates unchanged, both as widely expected.
Today’s data slate kicks off with UK Aug Retail Sales and public borrowing data and comes after UK Sep Gfk Consumer Confidence sank overnight to -20 (from -13), chalked up to expectations of a painful October budget. Also due today is German Aug PPI, French Sep Business/Mfg Confidence and EC Sep Preliminary Consumer Confidence.
Central bank speak comes from ECB President Lagarde and the Fed's Harker.
Rates markets get a break from supply following the steepening move seen Thursday.
Elsewhere, it will be worth watching synthetic credit markets after the cost of default protection fell to a fresh long-term low in Europe on Thursday (iTraxx Crossover hits the tightest level since Feb 2022)
For more on latest developments see the European Breakfast Briefing.
Friday’s supply prospects
A handful of names remain lurking in the public pipeline ahead of Friday’s open and could add to what has been a slower overall week for single currency issuance. Thursday’s quartet of issuers brought EUR6.36bn to put the overall weekly total at EUR24.01bn and well short of last week’s final EUR41.075bn haul. IG issuers have contributed EUR21.35bn to the latest flurry, less than the average EUR24bn which contributors to our weekly issuance poll predicted.
** Gemeinsame NRW Kommunen EUR 9yr sub-benchmark bond (Staedteanleihe No. 8)
** Spar Nord Bank inaugural EUR250m (exp) 6nc5 green senior non-preferred
** Grenke EUR300-500m long 4yr social
** KHFC EUR long 3yr or 5yr social covered
Thursday’s USD2.8bn brought US ex-SSA issuance for the month to USD133.2bn, still below the average monthly estimate of USD137bn, though we still have a week to go, which, in all likelihood, should afford us ample time to not only top the average estimate, but reach the highest monthly estimate of USD146bn. For more colour, see THE ENDGAME.
What to watch today
** Key Data: UK Aug Retail Sales (07:00), UK Aug PSNB ex Banking Groups (07:00), GE Aug PPI (07:00), FR Sep Business/Manufacturing Confidence (07:45) and EC Sep P Consumer Confidence (15:00)
** Key Events: ECB’s Lagarde (16:00) and Fed’s Harker (19:00) speak
** Auctions: No major term auctions scheduled for Friday 20th Sep
All times BST
---- Subscribe to read more ----
To receive this analysis plus much more, subscribe to IGM. Request your free trial of the service today.