CREDIT OPEN: Mind those ladders
** Please note this will be the final CREDIT OPEN of 2024, with the report to resume on Thursday 2nd Jan. Merry Christmas and a Happy New Year from all the IGM Credit team **
EU stocks look set for a mildly negative start to the Friday 13th session to follow a choppy and narrowly mixed performance on Thursday as markets absorbed the ECB’s latest policy verdict.
Over in Asia, Chinese stocks have been leading a weaker session following the conclusion of economic policy meetings in Beijing following which markets have been amping up rate cut bets while displaying some apparent disappointment to the various pledges made.
Ahead of that, S&P500 (-0.54%) and Nasdaq (-0.66%) both saw modest retreats as jobless claims jumped and PPI came in hotter than expected with the US rates complex seeing another day of bear steepening.
On today’s docket, UK monthly GDP will take centre stage. UK GDP is expected to expand 0.1% m/m in October, a 20bp rebound vs. September. The all-important services index is seen growing 0.1% m/m. Also due is German October trade where exports are projected to drop 2.6% m/m.
ECB speak for the day includes Governing Council members Villeroy, Holzmann, and Centeno. Note that there are no Fed speakers scheduled due to the ongoing pre-FOMC media blackout.
Elsewhere, it will be worth keeping a close eye on the rates complex after yesterday's substantial rises in 10yr yields in Germany (+7.8bps) and France (+9.8bps) but even bigger increases in southern Europe where Italian yields surged by 15.9bps.
For more on latest developments see the European Breakfast Briefing
Friday’s expected supply
It was no surprise to see issuers staying away from the European bond market on Thursday, given seasonal factors and the distraction of a key ECB verdict which ultimately saw the central bank cut by 25bps as expected. Thursday’s blank left the yearly single currency total at EUR1.487tn, the highest ever, above the previous record of EUR1.485bn set in 2020. Nothing is expected today but this year’s total may not be quite done yet though with SCOR SE starting a roadshow today for a EUR500m PNC10 RT1 trade which could emerge next week.
Our US team are almost sure that Thursday’s deal from Will Cousins Properties will be the last deal of the week, today being Friday, with that bringing ex-SSA issuance for the week to USD18bn, topping all weekly estimates, including the highest one of USD15bn. For more colour see THE ENDGAME.
What to watch Friday
** Key Data: UK Oct Industrial/Manufacturing Production (07:00), UK Oct Monthly GDP (07:00), UK Oct Trade Balance (07:00), GE Oct Imports/Exports (07:00), FR Nov F CPI (07:45), SP Nov F CPI (08:00), EC Oct Industrial Production (10:00) and US Nov Import Price Index (13:30)
** Key Events: ECB’s Villeroy (08:00), Holzmann (09:00) & Centeno (11:00) speak
** Auctions: BE to sell bonds via Ori Auction (11:00)
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.