CREDIT OPEN: Friday deals look set to lift week further above expectations
By David Corbell November 15 2024 at 06:53
EU stocks set for a negative start to Friday’s session courtesy of a weaker overnight handover seen as markets trim Fed rate cut bets following hawkish comments from Fed’s Powell who said he was in no “hurry” to lower rates.
With that, the probability of a 25bps reduction at the Fed’s December meeting currently sits at around 60% (BBG data) having been above 80% yesterday morning. US index futures have been continuing to fall overnight, suggesting that yesterday’s losses on S&P500 (-0.6%) and Nasdaq (-0.64%) will extend when cash trading gets underway later today. US yields are holding near NY closing levels to follow bear flattening which saw the 2yr UST yield end Thursday’s session 8bps higher.
Following all that, Asian stocks traded mixed today with China stocks lower following some mixed data although Chinese retail sales for Oct were notably stronger than expected, hinting at a potential rebound in consumption.
This morning’s data highlight will be the UK Q3 GDP report with the market consensus seeing growth cooling to a modest +0.2% QoQ (from 0.5%).
Stateside, the spotlight is on the US Oct retail sales report where the monthly pace of expansion is expected to ease slightly both on a headline and ex-auto basis.
Otherwise, it’s another relatively busy day for speakers while rates markets get a break from auction supply.
For more on latest developments see the European Breakfast Briefing.
Friday’s supply prospects
Coming into this week and bankers, on average, were expecting EUR20.5bn (ex-HY) of euro supply, but it turns out that was on the low side. Ahead of Friday’s session the total already stands at EUR24.5bn, mainly thanks to IG corporate names which have accounted for EUR16.45bn of that in what is the sector’s third biggest week of 2024. We don’t look to be done yet either with a couple of French corps readying euro deals for as early as Friday’s business, while another duo of SSAs are also in the pipeline (details below).
** Roquette Freres inaugural EUR 7yr senior & PNC5.25 hybrid
** La Francaise des Jeux EUR1.5bn no grow 6yr, 9yr, and 12yr three-part debut
** EIB EUR 3yr digital bond
** Schleswig-Holstein EUR250m Oct 2028 FRN LSA tap
While maybe not as active as the previous two sessions (21 deals/45 tranches/USD41.65bn), five issuers still managed to raise USD4.7bn in the US on Thursday, bringing ex-SSA issuance for the week to USD46.35bn, enough to rank this week as the tenth busiest ex-SSA issuance week of the year. For a more comprehensive look at Thursday’s issuance trends in the US primary bond market see THE ENDGAME.
What to watch today
** Key Data: UK Q3 P GDP (07:00), UK Q3 Imports/Exports (07:00), FR Oct F CPI (07:45), IT Oct F CPI (09:00), US Nov Empire Manufacturing (13:30), US Oct Retail Sales (13:30), US Oct Import Price Index (13:30), US Oct Industrial Production (14:15) and US Sep Business Inventories (15:00)
** Key Events: Fed’s Collins (14:00) & Williams (18:15) speak along with ECB’s Lane (15:00) & Cipollone (15:15)
** Auctions: No major term auctions scheduled for Friday 15th Nov
** Earnings: 5 Stoxx600 companies report
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