CREDIT OPEN: Event packed session ahead

EU stocks look set to start today’s event-packed session with gains as the dust settles on yesterday’s momentous session where Trump’s election victory provoked some sharply contrasting moves in markets.

Having initially risen, Stoxx50 ended 1.43% in the red on a day when S&P500 (+2.53%) and Nasdaq (+2.95%) both scaled record peaks with the former led higher by a big surge of enthusiasm in financials.

In the rates complex, bear steepening dominated the US rates complex, seeing the US 10yr yield rise by 16bps with the silver lining of higher yields being solid demand at Wednesday’s 30yr sale. That contrasted with the aggressive bull steepening in the German curve as markets upped ECB easing bets.

Following that, it's been a mixed session in Asia with US index futures and USTs fairly stable. Nikkei gave up early gains although it’s a better day for HK and mainland China markets despite the obvious concerns over US tariffs. On the data front, China’s export figures for Oct impressed at +12.7% YoY, well above the 5.0% BBG survey consensus.

Looking at the day ahead and a decisive result in the US presidential election clears away considerable event risk for those contemplating a funding foray but today’s packed schedule of events provides plenty of distractions.

Attention is firmly on the Fed where markets are currently ascribing a 97.5% probability to a 25bps cut today and a 67% chance of a further 25bps reduction in Dec (CME data).

Ahead of that comes the BoE’s verdict where a 25bps cut is virtually fully priced. The Riksbank also issues its monetary policy decision and is expected to cut its policy rate by 50bps.

Earnings also feature very heavily where 38 Stoxx600 and 34 S&P500 companies release results.

It's also a busy day for speakers which include ECB eco Lane, and also supply which comes from Spain and France (see below).

German domestic politics are in focus where a snap election is now anticipated in March following the collapse of Chancellor Scholz’s coalition.

For more on latest developments see the European Breakfast Briefing.

Thursday’s supply prospects

Coming into Thursday’s session and the weekly euro issuance total stands at just EUR1bn thanks to a Monday covered bond from BPCE SFH. With the US election outcome now sorted, the issuance window is theoretically back open, albeit with BoE and FOMC decisions to contend with today. Feedback suggests we will see at least a couple of opportunistic deals go live today, but the majority of near-term projects are being teed up for next week when the market is expected to be very busy indeed.

We may not see another US high-grade corporate bond deal this week as Wednesday marked the twentieth "zero" ex-SSA issuance day of the year. There has only been one, Videotron Ltd’s USD700m 10yr note offering priced on Monday, meaning this week is on course to be the slowest of the year. For more colour see THE ENDGAME.

What to watch today

** Key Data: SP Sep Industrial Output (08:00), GE Oct HCOB Germany Construction PMI (08:30), EC Sep Retail Sales (10:00), US 3Q P Nonfarm Productivity (13:30), US 3Q P Unit Labor Costs (13:30), US Weekly Initial/Continuing Jobless Claims (13:30), US Sep F Wholesale Inventories (15:00), US Sep Consumer Credit (20:00)

** Key Events: ECB's Stournaras (07:35, 14:30), Schnabel (08:10), Elderson (10:45), Escriva (12:00), Knot (12:00), Lane (13:30 and 14:30). BoE Verdict (12:00) and FOMC Rate Decision (19:00)

** Government Auctions: Spain to sell up to EUR4.5bn 2030 & 2054 bonds and up to EUR750m 2033 linkers (09:30), France to sell up to EUR12.5bn 2034, 2035, 2044 and 2055 bonds (09:50)

** Earnings: 38 Stoxx600 and 34 S&P500 companies release results

All times GMT

---- Subscribe to read more ----

To receive this analysis plus much more, subscribe to IGM. Request your free trial of the service today.