CREDIT OPEN: Big week in store for primary
EU stocks look set for a steady start to the new month after the Stoxx600 index hit a fresh all-time peak on Friday before losing some steam into the close.
Ahead of today’s Labor Day holiday, US stocks closed Friday’s session, and the month, in the green after the soft landing narrative for the US economy got a further lift as core PCE inflation came in lower than expected to follow the upward revision to Q2 GDP.
With that, S&P500 (+1.01%) and Nasdaq (+1.13%) both ended higher with the former posting its best close since 16th July when the index touched what currently marks its all-time peak.
That positive handover failed to buoy Asian markets today though where Chinese stocks are on the defensive after the official PMI report for August came out over the weekend showing the manufacturing sector contracting at a slightly faster pace than expected, amplifying eco worries. That saw Aug Manufacturing PMI fall to 49.1, missing the BBG forecast at 49.5 and below July's 49.4.
Today's PMI updates will bring final data at the pan eurozone & core level and fresh info on the periphery.
There are no key events or significant auctions scheduled for today's session while cb rhetoric is off the menu too.
Residual month-end flows could make for some potentially disjointed and erratic price action in markets that may lack the usual degree of depth given today’s US holiday.
Elsewhere, markets will be unpacking weekend political developments in Germany after German Chancellor Scholz’s ruling coalition struggled in regional elections. AfD claimed victory in the eastern state of Thuringia with a projected 32.8% of the vote, marking the first win for a far-right party since WWII. The AfD also came a close second in Saxony.
For more on latest developments see the European Breakfast Briefing.
Monday’s supply prospects
Another batch of issuers are already lining up ahead of what is expected to be a busy week for single currency issuance. An average of EUR38.5bn of single currency supply is forecast to come to fruition according to participants in our weekly issuance poll. That after a frenetic post-vacation splurge last week produced the fourth highest weekly euro volume of 2024. The final single currency total finished up at EUR55.9bn thanks to 59 separate tranches, beating even the highest combined issuance prediction of EUR47.5bn. SSAs led the way in terms of volume (EUR21.65bn) but deal numbers were dominated by IG corporates (30). See the IGM WEEKLY VOLUME for a full breakdown.
** ESM EUR issue
** DBJ EUR 4yr sustainability
** UK GBP Jan 20240 syndicated gilt
** Kerry Group EUR1bn no grow 8.5yr and 12yr two-part
** Loomis inaugural EUR300m (exp) 5yr SLB
** Macquarie Bank EUR short-to-intermediate green snr
** Lloyds Bank GmbH debut EUR500m no grow 5yr covered
Respondents to our US weekly issuance poll are looking for an average USD52bn to come to market this week, with the least optimistic calling for USD40bn, while the most bullish of the group seems to think we could see as much as USD68bn. For more details, see the IG WEEKLY WRAP UP.
What to watch today (and for the week)
** Key Data: SP Aug HCOB Manufacturing PMI (08:15), IT Aug HCOB Manufacturing PMI (08:45), FR Aug F HCOB Manufacturing PMI (08:50), GE Aug F HCOB Manufacturing PMI (08:55), EC Aug F HCOB Manufacturing PMI (09:00) and UK Aug S&P Global Manufacturing PMI (09:30)
** Key Events: No key events scheduled for Monday 2nd Sep
** Auctions: No major term auctions scheduled for Monday 2nd Sep
** Holidays: US Labor Day
** Viewpoint - The week ahead:
- US July JOLTS (Wed). August Challenger/ADP, weekly claims (Thu). August Employment Rpt (Fri)
- BoC to cut 25bp (Wednesday). Canadian Q2 productivity (Thursday). August labour market Rpt (Friday)
- EMU Q2 compensation per employee/final GDP with details (Friday)
- EMU July retail sales/German July factory orders (Thursday). German July IP/trade (Thursday)
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.