CREDIT OPEN: Cautious start eyed to event packed session

EU stocks look set for a modestly defensive start to today’s event and data-packed session which comes in the wake of four straight days of gains seen despite the intense political drama unfolding in France.

That follows a cautious Asian session where attention remained on the political unrest revolving around South Korea with President Yoon declaring martial law late Tuesday, claiming that it would prevent the opposition from trying to paralyze his administration and eradicate the influence of North Korean supporters. Martial law was subsequently lifted today with Yoon bending to pressure from the opposition who are now seeking to impeach President Yoon, saying in a statement that the declaration was done illegally.

With all that, the Korean won plunged to a near 15-year low today before paring losses while Korean equities also fell. Meanwhile, the BOK pledged to increase short-term liquidity supply through repo after its extraordinary board meeting earlier. The risk-off mood also swept the global markets, with risk-sensitive currencies such as the AUD/USD and NZD/USD plunging.

From one political crisis to another where the French government stands on the brink of collapse ahead of a no-confidence which is tabled for this afternoon. Prior to the vote, OATs clawed back a portion of recent underperformance on Tuesday with the 10yr OAT/Bund spread narrowing by circa 3bps while French stocks closed in the green, albeit lagging gains in the broader EU equity complex.

Otherwise, the data focus today falls on a swathe of PMI updates in the eurozone, UK & US while the latter releases ISM services. The Fed also publishes its latest Beige Book.

It’s also another busy day for speakers where the schedule includes ECB and Fed chiefs (see below).

Auction supply comes from the UK (2031s) and Germany (2034s) while markets will also be mindful of looming ultra-long OAT supply which is due on Thursday.

For more on latest developments see the European Breakfast Briefing.

Wednesday’s supply prospects

Single currency supply is set to continue ticking over in what is expected by many to be the last week of meaningful supply this year given seasonal factors. One each from the SSA, Corp and FIG sectors are already lining up euro trades for Wednesday, whilst more opportunistic supply can't be ruled out. That after Tuesday saw pockets of activity (totalling EUR1.8bn) across the various asset classes (barring SSAs), led by a surprise and ultimately very successful outing from French-domiciled corporate Veolia Environnement (full recap here).

** Achmea Bank EUR500m no grow 3yr green SNP

** Citycon EUR300m (exp 5.25yr green)

** BADWUR EUR500m no grow Oct 2027 floating LSA

In a concerted effort to jam in as much issuance as possible before fixed-income investors begin to close their books for the year, which normally occurs around the fifteenth of the month, eight borrowers raised USD9.4bn in new supply in the US on Tuesday. That brought the total number of deals for the week to 20, which have raised USD17.45bn week-to-date. For more colour see THE ENDGAME.

What to watch today - PMIs, ISM services, a tonne of CB speakers and plenty besides

** Key Data: SP Nov HCOB Spain Composite / Services PMI (08:15), IT Nov HCOB Italy Composite/ Services PMI (08:45), FR Nov F HCOB France Composite / Services PMI (08:50), GE Nov F HCOB Germany Composite / Services PMI (08:55), EC Nov F HCOB Eurozone Composite / Services PMI (09:00), UK Nov F S&P Global UK Composite / Services PMI (09:30), EC Oct PPI (10:00), US Nov 29 MBA Mortgage Applications (12:00), US Nov ADP Employment Change (13:15), US Nov F S&P Global US Composite / Services PMI (14:45), US Nov ISM Services Index (15:00), US Oct Factory Orders (15:00), US Oct F Durable Goods Orders (15:00)

** Key Events: ECB's Cipollone (09:00), BOE's Bailey (09:00), ECB's Lagarde speaks in EU Parliament (13:30), Fed's Musalem (13:45), ECB's Makhlouf (14:00), Fed's Barkin (14:00), ECB's Nagel speaks at ESM (17:10), Fed's Powell (18:40), Federal Reserve Releases Beige Book (19:00), Fed's Daly (23:00)

** Government Auctions: UK to sell GBP4bn 4% 2031 bonds (10:00), Germany to sell EUR3.5bn 2.6% 2034 bonds (10:30)

** Earnings: 4 S&P500 companies release results

All times GMT

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