CREDIT OPEN: Busy week far from over but pipeline currently thinner
The initial focus for European players this morning is on unpacking Nvidia’s Q2 earnings update, following which the AI darling’s stock is down after hours despite a beat on revenue, EPS and Q3 revenue guidance. That reaction has prompted a degree of head-scratching although seems likely to be a reflection of overly lofty expectations and excessively bullish positioning in a stock that has already rallied over 150% this year.
Whatever the case, given its bellwether status, weakness has spread to other chipmakers overnight although whether that turns out to be another buying opportunity remains to be seen.
Ahead of that, S&P500 (-0.60%) and Nasdaq (-1.12%) both closed in the red on Wednesday to leave the indexes a respective 1.4% and 6.4% beneath their record highs.
Looking to the day in prospect and following a couple of lean sessions on the data front, attention turns to German & Spanish inflation for August where annual readings are expected to slow, thereby supporting the case for another rate cut by the ECB at its September meeting.
US data highlights comprise US Q2 GDP and Jobless Claims.
Central bank-speak will be headlined by ECB eco Lane and Nagel, joined by Fed’s Bostic, while auction supply comes from Italy and US.
Otherwise to consider is that US attendance is likely to thin out from today ahead of the holiday weekend (Labour Day) meaning that Friday’s key PCE inflation reading is likely to be released into a thinner than usual market.
Recall that we had a reminder in early August of how thin conditions can magnify volatility when a surprise hike by the BoJ on the final day of July triggered huge deleveraging and a 3-day/19.6% plunge in the Nikkei, the fallout from which rippled out across the globe.
For more on latest developments see the European Breakfast Briefing.
Thursday’s supply prospects
An already busy week for the European bond market is not done yet, with another batch of issuers across the IG asset classes sat in the pipeline with single currency trades. Backing up Tuesday’s 22 euro tranches were another 24 lines on Wednesday, which was the fourth most single currency deals of any day so far this year. The day's overall volume came in at EUR26.95bn (versus EUR20.3bn on Tuesday), marking the sixth biggest day of 2024. It also means we have already matched the highest combined weekly average estimate of EUR47.5bn.
** Swedish Export Credit EUR500m no grow 7yr green
** Land NRW EUR 10yr LSA
** Siauliu bankas exp EUR300m 4.25NC3.25 snr pref
** CRH EUR 6yr covered
** Lloyds Bank GmbH debut EUR500m no grow 5yr covered
** IMCD EUR500m no grow Apr 2030s
** CEZ EUR 7yr SLB
We just may have seen the last of ex-SSA US issuance for the month of August, as no deals were priced today making it the fifteenth “zero” issuance day of the year – there were 32 last year. That left ex-SSA issuance for the month at USD106.995bn, USD3bn shy of the highest monthly estimate of USD110bn. For more colour, see THE ENDGAME.
What to watch today
** Key Data: SP Aug P CPI (08:00), EC Aug Consumer/Industrial/Services Confidence (10:00), GE Aug P CPI (13:00) – with individual states reporting from 09:00, US Q2 S GDP Annualized (13:30), US Q2 S Personal Consumption (13:30), US Q2 S Core PCE Price Index (13:30), US Weekly Continuing/Initial Jobless Claims (13:30), US Jul Wholesale Inventories (13:30) and US Jul Pending Home Sales (15:00)
** Key Events: ECB’s Lane (10:15) and Nagel (18:00) speak, as does Fed’s Bostic (20:20)
** Auctions: IT to sell up to EUR7.75bn 2029 & 2035 BTPs, as well as EUR1.5bn 2032 FRNs (10:00). US to sell USD44bn 7yr Notes (18:00)
** Earnings: 4 Stoxx600 & 8 S&P500 companies report
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