CREDIT OPEN: Eyes down for ECB
EU stocks look set for a mixed start on Thursday with little sign that the overnight upswing seen in US and Asian markets will spill over into Europe as players mark time ahead of today's ECB verdict and all-important presser.
The go-to excuse for robust gains on S&P500 (+0.82%) and Nasdaq (+1.77%) was the in-line outcome of the US CPI report which is seen as locking in a Fed rate cut at next week’s meeting. Maybe, but those look like pretty sizeable gains for a consensus-matching data print and are probably just as much a product of simple bullish sentiment in the US mega-cap tech sector which led Wednesday’s push to record highs for Nasdaq.
Following the positive Wall Street handover, the only way was up for Asian stocks with Hang Seng rising over 1.5% amid ongoing hopes for looser policy in China as Beijing’s 2-day eco summit wraps up. US yields have been continuing to rise overnight at the longer end as markets brace for this evening’s 30yr UST sale which follows Wednesday’s 10yr auction.
Moving on to today's main event and a 25bps cut by the ECB is fully priced in with a tail risk seen of a larger 50bps move while the focus will be very much on the 2025 outlook and updated forecasts. The SNB is also on deck today where the consensus calls for a 25bps cut.
There’s no market-moving data on tap in Europe today while US releases comprise PPI data and the usual weekly release of jobless claims.
Frech political developments remain a focal point where President Maron is reportedly aiming to name a new PM today.
On the supply front, Italy brings up to EUR8.5bn 2027, 2031, 2035 and 2054 BTPs.
For more on latest developments see the European Breakfast Briefing.
Thursday’s expected supply
Given it's December and also ECB day, we don’t expect anything to come out in terms of supply today, and perhaps for the rest of the year given seasonal factors. That after we recorded the second straight blank for euro investment grade issuance on Wednesday although there were signs of activity in the HY market on the sterling side of the tracks. Virgin Media O2 Vendor Financing Notes V Designated Activity Company brought a GBP400m 7.25NC3, with details here.
Three borrowers defied the odds and decided to tap the US market after a rather benign November CPI report. The three collectively raised USD2.65bn bringing issuance for the week to USD17.6bn, and the month to USD41.4bn. For more colour, see THE ENDGAME.
What to watch today
** Key Data: IT 3Q Unemployment Rate Quarterly (09:00), US Nov PPI Final Demand (13:30), US Dec 7 Initial Jobless Claims (13:30), US Nov 30 Continuing Claims (13:30)
** Key Events: ECB Rate Decision (13:15), ECB President Christine Lagarde holds press conf (13:45)
** Government Auctions: IT to sell up to EUR8.5bn 2027, 2031, 2035 and 2054 bonds (10:00), US to sell USD22bn 30yr bond (18:00)
** Earnings: 1 Stoxx600 and 2 S&P500 companies release results
All times GMT
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