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CREDIT OPEN: Calm before the storm

EU stocks look set to get Monday’s holiday impacted session underway with gains, taking a back a portion of losses seen Friday which stood in contrast to gains seen on Wall Street which appear to be holding where US index futures are currently in the green.

Over in Asia, Nikkei fell by up to 1.6% in its first trading session of the year while the tough start to 2025 for Chinese equities has continued today, taking cumulative YTD losses for the CSI300 to as much as 4.9%. China’s Caixin service PMI unexpectedly rose to 52.2 in Dec from a prior 51.5 although had little impact with markets continuing to await more details on potential stimulus measures while fretting over growth and trade worries.

In terms of the day in prospect, the data schedule delivers final service PMI data for Dec from the UK, euro-area, Germany and France while peripheral countries report for the first time. Germany will also report flash CPI for Dec this afternoon, preceded by updates from individual states this morning.

US data is unlikely to be market moving, leaving thoughts on this week's run of labour markets updates which culminates in the release of NFPs on Friday.

On the auction front, a USD58bn 3yr UST sale gets the latest US supply cycle underway, ahead of which US yields have been rising during Asian hours.

While there’s no major term auction supply on tap in Europe, it will be worth watching the European rates complex after yields moved higher Friday. That came ahead of what is expected to be a big week for syndicated SSA supply, to the extent that 10yr French yields hit their highest level since July at 3.30% with the spread against Germany closing out just below 86bps.

For more on latest developments see the European Breakfast Briefing.


Monday’s expected supply

Following a slow start to the year where just EUR5.25bn crossed the tape in two sessions, the euro supply floodgates 2025 look set to open this week. Euro supply isn’t set to get going until tomorrow though given the Epiphany Day holiday on parts of the continent today, but despite another short week the respondents in our weekly issuance survey are calling for an average EUR68.5bn of euro paper to come to fruition this week across all asset classes (ex-HY). Whilst there is unlikely to be any live single currency deals on Monday, we do expect some mandates to be announced, and we can’t rule out some more early 2025 sterling activity after we saw four deals price for GBP1.75bn last week.

Stateside, in what was apparently an attempt to get ahead of what is expected to be a very busy week in the US high-grade primary market this week, a week that could produce upwards of USD55bln in new supply, 10 borrowers wasted no time getting their 2025 financing underway last week. For a comprehensive look at last week’s issuance trends in the US corporate bond market and a look ahead to this week’s supply prospects, see THE ENDGAME.


What to watch today (and for the week)

** Key Data: SP Dec HCOB Spain Composite / Services PMI (08:15), IT Dec HCOB Italy Composite/ Services PMI (08:45), FR Dec F HCOB France Composite / Services PMI (08:50), GE Dec F HCOB Germany Composite / Services PMI (08:55), EC Dec F HCOB Eurozone Composite / Services PMI (09:00), UK Dec F S&P Global UK Composite / Services PMI (09:30), GE Dec P CPI (13:00), US Dec F S&P Global US Composite / Services PMI (14:45), US Nov Factory Orders (15:00) and US Nov F Durable Goods Orders (15:00)

** Key events/speakers: Fed’s Cook speaks (14:30)

** Auctions: US to sell USD58bn 3yr Notes (18:00)

** Holidays: Epiphany Day in parts of Europe

** Viewpoint - The week ahead:

  • EZ CPI estimate on Tuesday the main event (Tues), Dec confidence survey & Nov PPI (Weds)
  • UK Dec Services/Composite PMIs (Mon), Dec construction PMI(Tues), Dec DMP Inflation expectations (Thurs)
  • German Dec Services/Composite PMIs & CPI (Mon), factory orders (Weds), Nov Industrial Production(Thurs)
  • Swiss November retail sales (Mon), December CPI (Tues), December unemployment rate (Fri)
  • US FOMC minutes (Weds), December Employment Report (Fri) are the main events
  • China inflation metric (Thursday)


All times GMT


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