CREDIT OPEN: Event packed schedule to sideline primary
EU stocks look set to start the final day of July with gains although an event-packed schedule, not to mention heightened Middle East tensions, makes it very hard to say with any certainty where markets will be by the close of play.
That comes after tech stocks led Wall Street to a lower close although US index futures have subsequently turned higher with help from an after-hours beat by chipmaker AMD.
Overnight, the BoJ hiked rates to 0.25% (from 0.00% to 0.10%) and announced plans to eventually almost halve monthly bond buys.
Pointing to a weak start to Q3, China manufacturing activity contracted for a third month in July where official PMI eased to 49.4 (prev 49.5) while non-manufacturing PMI fell to 50.2 (prev 50.5).
Otherwise to note are rising Middle East tensions where Hamas said its leader Ismail Haniyeh was killed by an Israeli air strike in Tehran which came just hours after Israel claimed it had killed a senior Hezbollah commander in Beirut.
Looking at the day in prospect and it’s another huge day for corporate news where earnings come from 55 S&P500 and 38 Stoxx600 members.
Preliminary CPI data from the eurozone, France and Italy comes after German CPI unexpectedly sped up on Tuesday.
US data comprises another warm-up act for Friday's NFPs in the form of ADP Employment,
On the supply front is a 2030 sale from Germany which follows a further drop in yields on Tuesday that saw the 10yr German yield break and close below its mid-June low at 2.342%, leaving bund bulls eyeing the next major yield low at 2.317% hit in April.
Ahead of this evening’ Fed verdict, markets are ascribing a negligible probability to any policy move today while a 25bps reduction in September remains more than fully priced.
For more on latest developments see the European Breakfast Briefing.
Wednesday’s supply prospects
It is unlikely that many issuers will go live today given the headline distractions elsewhere, with this week’s optimum issuance window having been seen on Monday and Tuesday. Six issuers made the most of that window, pricing a combined seven tranches worth EUR4.85bn – versus the previous week’s full-week total of EUR1.375bn. One borrower which could add to that today is HY name Stonegate Pub Company which hit the road earlier this week with a EUR/GBP two-part.
** Stonegate Pub Company EUR Jun 2029 NC2 & GBP Jul 2029 NC2 two-part
Stateside, in what could be the last hurrah for the month, Tuesday saw six issuers raise USD8.7bn. For more colour, see THE ENDGAME.
What to watch today
** Key Data: FR Jul P CPI (07:45), GE Jul Unemployment Change (08:55), EC Jul P CPI (10:00), IT Jul P CPI (10:00), US Weekly MBA Mortgage Applications (12:00), US Jul ADP Employment Change (13:15), US Jul MNI Chicago PMI (14:45) and US Jun Pending Home Sales (15:00)
** Key Events: FOMC verdict (19:00)
** Auctions: GE to sell EUR3bn 2030 BOBLs (10:30)
** Earnings: 38 Stoxx600 & 55 S&P500 companies release results
All times BST
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