CREDIT OPEN: Inflation day
EU stocks are set for a firmer start which comes after Wall Street extended gains into Tuesday’s close and UST yields continued falling to follow soft PPI data which has boosted easing bets ahead of the Fed’s September meeting and also today’s CPI print.
Despite the positive US lead, Asian markets are mostly lower though with HK and mainland China stocks notable losers, pinned in part on China growth worries. Also to note, Japan PM Kishida said he would step down as LDP leader in September. That has provoked a mixed response from Nikkei, which initially rallied on the news before fading. Elsewhere, the RBNZ opted to trim its OCR by 25bps to 5.25% and said its economy was contracting at a faster than expected pace.
Today’s data starts with the UK CPI report for July where headline inflation likely accelerated to 2.3% YoY (prev 2.0%), driven in part by the base effects, although the core is seen easing slightly to 3.4% (prev 3.5%).
Elsewhere, Eurozone reports preliminary Q2 GDP and June industrial production with France also releasing equivalent IP data.
US annual CPI is predicted to hold at 3% but ex-food & energy is seen slowing to 3.2% from 3.3%.
Supply comes from France and Germany (details below) which precedes Thursday’s Assumption Day holiday.
Earnings remain a driver where already reporting this morning was UBS which posted a top and bottom line beat.
For more on latest developments see the European Breakfast Briefing.
Wednesday’s supply prospects
German Federal State of Mecklenburg-Western Pomerania is lining up a EUR500m 9yr LSA for today’s business and will add to Monday’s EUR500m 3yr FRN from compatriot Mercedes-Benz which is the only other deal to price so far this week. It will also mark the first SSA euro deal of any kind since the 24th July, when peer Land Schleswig-Holstein placed a shorter EUR500m 8yr LSA.
** Mecklenburg-Western Pomerania EUR500m no grow 9yr LSA
Only two borrowers tapped the US high grade corporate market yesterday, both REITs. Kite Realty Group (USD350m 7yr) and Cousins Properties (USD500m 10yr debut) combined to add USD850m to Monday’s USD18.1bn. For more colour see THE ENDGAME.
What to watch today
** Key Data: UK Jul CPI (07:00), UK Jul CPI Core (07:00), UK Jul RPI (07:00), FR Jul F CPI EU Harmonized (07:45), FR Jul F CPI (07:45), UK Jun House Price Index (09:30), EC Q2 P GDP (10:00), EC Q2 P Employment (10:00), EC Jun Industrial Production (10:00), US Weekly MBA Mortgage Applications (12:00), US Jul CPI (13:30), US Jul CPI Core Index (13:30)
** Key Events: There are no key events / speakers scheduled for 14th Aug
** Government Auctions: France to sell up to EUR9bn 2027, 2029, 2030 and 2031 bonds (09:50), as well as up to EUR2bn 2029, 2036 OATi, 2036 OATei and 2053 Linkers (10:50). Germany to sell EUR2bn 2050 and 2054 bonds (10:30)
** Earnings: 15 Stoxx600 and 2 S&P500 companies release results
All times BST
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