CREDIT OPEN: A Monday to Wednesday week for primary?
EU stocks are expected to start Monday’s month-end session on a fairly neutral footing as European markets look to retain gains notched up Friday which propelled the Stoxx600 index to a fresh all-time peak.
Overnight, China markets remained in full risk-on mode ahead of this week’s national holidays with the easing of homebuying rules in major cities unveiled over the weekend helping to keep the party going to the extent that CSI300 jumped over 8% with the 5-day move worth more than 24%. Going in the other direction today, Nikkei fell by up to 5.1% as markets assessed the potential rate and fiscal path amid the choice of Ishiba as the new PM who indicated he may call a snap election in October.
Ahead of that, Wall Street closed lower on Friday despite PCE data which affirmed the downward trajectory on US inflation which left the chances that the Fed go with another 50bps cut at their next meeting as slightly better than a coin toss.
Geopolitics remain very much in mind even if the impact on global markets is so far limited as the conflict in the Middle East continues to broaden out with Israel having widened its assault on Iran-backed militants via strikes in Yemen on Sunday.
Today sees Italy and Germany as the latest EU countries to release their flash CPI data for September, just ahead of the euro area CPI due Tuesday. Individual German states report their CPI readings from 09:00 ahead of the national figure this afternoon.
Already out, UK Sep Nationwide House Prices showed a bigger than expected MoM rise of 0.7% (exp 0.2%, prior -0.2%), lifting the YoY rise to 3.2% (prior 2.4%).
US data is second tier leaving thoughts on Friday’s key employment update which will be preceded by the usual round of labour market anecdotes over the course of the week.
Today’s speakers include ECB and Fed chiefs.
Elsewhere, attention is also on company news after VW issued its second profit warning in three months and Stellantis cut its profit margin forecast for the year, citing its US struggles and a global slowdown in the auto industry.
For more on latest developments see the European Breakfast Briefing.
Monday’s supply prospects
The consensus is that supply will slow this week as we transition into October, and as issuers start to enter earnings enforced blackout periods. Market participants in our weekly issuance poll are calling for an average EUR22.5bn of euro paper to cross the tape (excluding HY corps), after the total finished at EUR42.5bn last week, or EUR44.25bn when including HY names. Whatever comes this week is likely to be in the first half, with German investors out Thursday for the Unity Day holiday and that then followed by the week’s key data point in the form of Friday’s US Payrolls.
** Romgaz EUR 5yr debut
** Gemeinsame NRW Kommunen EUR 9yr sub-benchmark bond (Staedteanleihe No. 8)
According to the results of our impromptu US weekly issuance poll, on average, the Street is looking for USD22bn in new ex-SSA supply, with the guesses ranging from a low of USD20bn to a high of USD30bn. We'll just have to wait and see how much of that adds to September's totals. See the IG WEEKLY WRAP UP.
What to watch today (and for the week)
** Key Data: UK Aug Mortgage Approvals (09:30), UK Aug M4 Money Supply (09:30), IT Sep P CPI (10:00), GE Sep P CPI (13:00), US Sep MNI Chicago PMI (14:45) and US Sep Dallas Fed Manufacturing Activity (15:30)
** Key Events: ECB’s Lagarde (14:00), Fed’s Powell (18:00) and BoE’s Greene (21:10) speak
** Auctions: No major term auction supply due on Monday 30th Sep
** Viewpoint - The week ahead:
- US August JOLTs (Tuesday), September ADP (Wednesday), September Employment report (Friday)
- Riksbank minutes (Tuesday). BoE DMP (Thursday)
- German/Italian (Monday), EMU (Tuesday) August prelim CPI. EMU August PPI (Thursday)
- EMU/Italy unemployment rate, Spain September unemployment change (Wednesday)
- UK Aug mtg approvals/mtg lending/consumer credit/effective rates (Mon). Sep BRC shop prices (Tuesday)
- Japan August prelim IP & retail sales (Monday). August jobless rate & Q3 Tankan (Tuesday)
All times BST
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