CREDIT OPEN: Any takers?
By recent standards, today’s session looks distinctly pedestrian in terms of scheduled events, and with the week’s major risks now negotiated, one could make a case for betting on the path of least resistance remaining to the upside for risk assets into the weekend.
With that, EU stocks look set to open higher this morning to follow a positive Wall Street handover where stocks rose into, and after, the Fed’s announcement of a fully priced 25bps reduction. The chance of a further 25bps cut at the Dec meeting currently sits at 71% (CME data), slightly up from the 67% seen this time yesterday. S&P (+0.74%) and Nasdaq (+1.51%) notched record highs for a second straight day and currently look in with a chance of making it three in a row where US index futures suggest a marginally positive Wall Street open.
Over in Asia, China stocks initially rose but subsequently slipped into the red ahead of this evening's anticipated stimulus reveal but it's still been a corking week for the CSI300 which is currently up around 6% on the week.
In terms of the day ahead, this morning’s data releases won’t be market moving while the afternoon delivers prelim UoM consumer sentiment which also comprises readings on 1yr and 5yr inflation expectations that are expected to hold steady from prior readings. Otherwise, our rates team are flagging the Canadian October labour market report as one to watch.
Speakers comprise the BOE's Chief Economist Pill which follows yesterday’s BoE cut while Fed’s Bowman is today’s sole Fed speaker.
It’s a slower day for earnings which come from just 9 Stoxx600 & 3 S&P500 members.
In the rates complex, while US yields eased back from their mid-week extremes on Thursday, weakness at the long end of the German curve took both 10yr and 30yr yields to fresh multi-month highs. The silver lining of that could be the activation of deeper demand from absolute yield buyers for credit although we may need to wait until next week to gauge what that means in terms of demand for primary product.
For more on latest developments see the European Breakfast Briefing.
Friday’s supply prospects
Two FIG issuers and a sole corporate jumped in on Thursday and raised EUR3.75bn via well-received single currency deals, making the most of the post-election issuance window which opened earlier than most expected. Added to Monday’s EUR1bn covered from BPCE SFH they put the weekly single currency total at EUR4.75bn and still short of the average EUR5.5bn estimate given by participants in our weekly issuance poll. However, given that Thursday’s deals went smoothly, and with the week’s key risk events now in the rear-view mirror, we wouldn’t be surprised to see another issuer or two adding to this week’s haul on Friday.
As expected, the US high-grade new issue market remained in “wait till next week” mode – Thursday was the third straight session without a trade and the twenty-first “zero” issuance day of the year. For more colour, see THE ENDGAME.
What to watch today
** Key Data: IT Sep Industrial Production (09:00), IT Sep Retail Sales (11:00) and US Nov P Uni of Michigan Sentiment (15:00)
** Key Events: ECB’s Vujcic (09:00), BoE’s Pill (12:15), Fed’s Bowman (16:00)
** Auctions: Belgium sells 2033 & 2040 OLOs via ORI
** Earnings: 9 Stoxx600 & 3 S&P500 companies report
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.