CREDIT OPEN: More Trump headlines on tariffs
European stock futures point to a modestly weaker open coming on the back of a mixed picture in Asia. Overnight, Chinese and Korean benchmarks performed well (CSI300 +0.42% and KOSPI +1.74% at time of writing) but with the Nikkei falling in conjunction with shares in Hong Kong (on the back of a slide for Baidu Inc after a drop in revenue and a weaker capex outlook).
Asian markets were otherwise muted, with the RBNZ’s policy decision in focus, while Australia’s weaker-than-expected wage growth fuelled expectations of further RBA rate cuts. In Japan, BOJ Board member Takata signalled more rate hikes ahead, boosting the yen and JGB yields.
Meanwhile, Trump announced plans for 25% tariffs on key imports (pharmaceuticals, autos and semi-conductors) although markets showed little immediate reaction and are likely awaiting more certainty.
Markets will today focus on key economic data releases, including UK inflation figures (CPI, PPI, RPI) in the morning, followed by US housing data and mortgage applications later in the day. The UK's CPI YoY is expected to tick up to 2.8% from it’s prior 2.5%. Core CPI YoY is expected to tick up to 3.7% from its prior 3.2%. A pick up in headline CPI is not expected to deter the BOE from easing further as the economy remains weak.
Investors will also watch for the FOMC January meeting minutes and a speech from Fed’s Jefferson for insights into future policy direction.
In auctions, the UK (GBP4.25bn 3yr), Germany (EUR4.5bn 10yr) and the US (USD16bn 20yr) will conduct sovereign bond auctions. Meanwhile, corporate earnings continue, with 19 Stoxx600 and 10 S&P500 companies set to report their results.
For more on latest developments see the European Breakfast Briefing.
Wednesday's supply prospects
Coming into the mid-week session and the single currency issuance total stands at EUR18bn versus the average EUR34bn forecast by participants in our weekly supply survey. A host of names are sat in the pipeline ahead of Wednesday, including Carlsberg and Johnson & Johnson which are set to go head-to-head with jumbo M&A-driven multi-tranche trades and could rival IBM (EUR3.5bn four-part) for the biggest euro IG corporate deal year-to-date.
** Carlsberg EUR 2yr floating, 4.5, 7 & 10yr fixed tenors and GBP multi-tranche
** Johnson & Johnson EUR 4/8/12/20/30yr multi-tranche
** TCC Holdings EUR500m exp 5yr green
** CCF Holding EUR250mn no grow 10.25NC5.25 Tier 2
** Mitsubishi HC Capital debut GBP 3yr senior unsecured
** Joint Laender #66 EUR1bn no grow 5yr
** Basque Gov EUR Apr 2035 sustainable
** Slovak Republic EUR 15yr
** Bank of England USD 3yr at UST +12 area IPTs
Not since the first trading day of this year had we seen as much US high-grade issuance in one session as Tuesday. Eighteen borrowers, through 39 tranches, raised USD31.5bn in new ex-SSA supply, making this the second busiest day of the year since 23 borrowers through 50 tranches raised USD38.45bn on 6-Jan. Tuesday's haul was also enough to top the lowest weekly estimate of USD25bn, and just shy of the average weekly estimate of USD35bn. For more colour see THE ENDGAME.
What to watch Wednesday – UK inflation & FOMC minutes
** Key Data: UK Jan CPI/PPI/RPI (07:00), US Weekly MBA Mortgage Applications (12:00), US Jan Housing Starts (13:30) and US Jan Building Permits (13:30)
** Key Events: FOMC Jan Meeting Minutes (19:00) and Fed’s Jefferson speaks (22:00)
** Auctions: UK to sell GBP4.25bn 2028 Gilts (10:00), GE to sell EUR4.5bn 2035 Bunds (10:30), US to sell USD16bn 20yr Bonds (18:00)
** Earnings: 19 Stoxx600 & 10 S&P500 companies release results
All times GMT
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