CREDIT OPEN: Buoyant mood continues to dominate
After the European close yesterday the three major US equity benchmarks went on to carve out gains of between +0.6% to +1.0% apiece, with NASDAQ leading the way as tech once again fuelled the rally (every major subgroup in the S&P 500 also rose). The buoyancy carried through (mostly) to Asian bourses with a similar gain for Hang Seng (+0.97% at present), although the Nikkei was weaker by -0.35% (after its 3.41% jump in the prior session). European futures currently point to a robust open.
Overnight President Xi is reported to have spoken to government officials in Asia highlighting a need to “strive to achieve the full-year economic and social development goals” and comes on the back of increasing doubts on whether the nation can hit its economic goal of "about 5%" in 2024. The timing of the comments coincides with the recent weeks of soft economic data, including CPI which was just marginally above zero, weak PMI numbers, subdued consumer sentiment and domestic demand.
As a quick recap from Thursday, the US Producer Prices Index for August picked up marginally on a MoM basis, but at 1.7% YoY the annual gauge was the lowest annual reading since February '24. Perhaps more importantly and beneath the headline numbers, the gauges that feed into the Fed's PCE inflation were muted, pointing to an optimistic view of the disinflationary trend in the US. Treasury yields rose in the wake of the data, but an overnight rebound sees the current 2yr yield almost 5bp lower than at the time of yesterday's PPI release.
French final inflation data due this morning (07:45) is a final update on Aug CPI with the expected figure at 1.9%. For context, the Spanish equivalent released yesterday was marginally higher than the previous estimates. Later in the morning we have the latest update on Industrial Production in the eurozone area which is expected to show a MoM fall (-0.3%). Finally, US data comes in the form of the Uni of Michigan survey with the consumer sentiment gauge expected to edge up slightly after four consecutive months of drifting lower.
Central bank-speak will be headed up by ECB president Lagarde (in what is a quick turnaround following yesterday's ECB decision/presser) and Governing Council member Rehn.
For more on latest developments see the European Breakfast Briefing.
Wednesday’s supply prospects
Issuers stayed away amid the ECB distraction on Thursday, but a few names remain in the pipeline after recent mandates and could decide to make a Friday issuance play. If so, they would top up the weekly euro haul that currently sits at EUR40.675bn and beyond both the average estimate of EUR34bn and the previous week’s final EUR36.57bn.
** Gemeinsame NRW Kommunen EUR 9yr sub-benchmark bond (Staedteanleihe No. 8)
** Munich EUR250m debut green
** Mediocredito Centrale EUR300m 5yr snr pref social
Thursday’s US ex-SSA total volume came to USD14.6bn, bringing issuance for the week to USD37.825bn, enough to top the average weekly ex-SSA estimate of USD35bln, for the twenty-eighth week this year. Ex-SSA issuance is now running at a 27.6% quicker pace than this time last year. For more colour, see THE ENDGAME.
What to watch Friday
** Key Data: FR Aug F CPI (07:45), EC Jul Industrial Production (10:00), US Aug Import Price Index (13:30) and US Sep P Uni of Michigan sentiment (15:00)
** Key Events: ECB’s Rehn (09:30) and Lagarde (10:30) speak
** Auctions: No major term auctions scheduled for Friday 13th Sep
All times BST
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