CREDIT OPEN: Cautious open eyed, volatility persists
EU stocks are set to give back a chunk of Wednesday's gains at the open courtesy of a negative overnight lead.
It appears that the recent bout of volatility is not over for US markets where S&P500 (-0.77%) and Nasdaq (-1.05%) whipsawed to a lower close Wednesday having been up as much as 1.73% and 2.10% in early trade. US slowdown worries still lurk with attention on a move by JPMorgan which upped the chances of recession this year to more than one in three.
US weakness made for a cautious Asian open today although regional stocks have come off early lows with mainland China & HK stocks currently in the green although Nikkei remains in the red having slumped by up to 2.5% early in the day.
Following yesterday's dovish comments from deputy governor Uchida, the BoJ summary of opinions saw one member suggest a 0.25% nominal rate is still 'extremely loose' & that a small hike won't have a tightening effect while a timely rate hike is needed to avoid needing rapid hikes.
Turning to the rates complex and the US yield curve steepened into and after yesterday’s USD42bn 10yr note sale which was deemed poor while the front end of the curve remained better anchored by the prospect of rate cuts. Later comes a USD25bn 30yr sale.
On the data front, there are no top tier releases due this morning while later comes initial and continuing jobless claims which are both seen easing from prior readings.
Released overnight, the UK Jul RICS House Price unexpectedly weakened to -19 vs a prior -17 and BBG survey consensus of -11. That marked the weakest reading since December.
The only scheduled CB speaker is Fed’s Barkin.
Earnings remain a focal point where 20 Stoxx600 and 16 S&P500 companies are updating investors.
For more on latest developments see the European Breakfast Briefing
Thursday’s supply prospects
Supply in the European bond market is struggling to get off the mark this week with the only deal having come via KfW in the form of a GBP650m long 5yr on Tuesday. At the current juncture, the pipeline remains empty.
Standing in stark contrast, Wednesday was the busiest ex-SSA issuance day of the year for US markets. 17 high grade borrowers, through 37 tranches, raised a staggering USD31.8bn, comprising trades from Meta Platform (USD10.5bn 5-pt), BMW US Capital (USD3.7bn), HCA Inc (USD3bn) & Volkswagen Group of America (USD2bn). That brought ex-SSA issuance for the week to USD38.75bn, easily topping not only the lowest weekly estimate of US25bn, but also the average estimate of USD37.5bn. For more colour see IGM's THE ENDGAME.
What to watch today
** Key Data: US Aug 3 Initial Jobless Claims (13:30), US Jul 27 Continuing Claims (13:30), US Jun F Wholesale Inventories (15:00)
** Key Events: Fed's Barkin speaks (20:00)
** Government Auctions: US to sell USD25bn 30yr bonds (18:00)
** Earnings: 20 Stoxx600 and 16 S&P500 companies release results
All times BST
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