CREDIT OPEN: Next batch line up
EU stocks look set for a softer open that will reverse a portion of Tuesday’s gains which came as easing bets were ramped up to the extent that the probability of a 25bps cut by the ECB in October is now seen above 60% (via BBG data), up sharply from ~25% at the start of the week.
Overnight, HK & China stocks have been extending yesterday’s huge rally sparked by the PBoC’s stimulus blitz which has been followed up today by a 30bps cut in the one-year MLF rate to 2.0%. Elsewhere, Australian inflation cooled to a 3yr low of 2.7% in Aug (from a prior 3.5%) although was helped by government subsidies in energy that will be regarded by the RBA as a temporary influence.
Ahead of that, Wall Street stocks exhibited resilience by shrugging off a sharp slide in consumer confidence with S&P500 (+0.25%) posting a second straight record close although just failed to challenge the all-time intraday peak set last Thursday seen in the aftermath of Wednesday’s outsized Fed cut. A challenge to that all-time high doesn't currently look like an immediate prospect though with S&P futures sitting around 0.2% in the red.
Today’s schedule is free of top tier data in Europe with this morning delivering French Sep consumer confidence and Spain Aug PPI while later comes US Aug new home sales which are expected to soften significantly.
Auction supply is a key feature and comes from Italy, Germany, UK and US (details below) while speakers comprise BoE’s Greene this morning and Fed’s Kugler after European markets close.
The OECD is due to publish its Interim Economic Outlook.
Geopolitics remain in mind amid escalating tensions in the Middle East with Hezbollah having reportedly asked Iran in recent days to launch an attack against Israel.
For more on latest developments see the European Breakfast Briefing.
Wednesday’s supply prospects
It looks set to be another busy session for the European credit market Wednesday. That after Tuesday saw EUR13.365bn priced in the euro market to put the overall weekly total at EUR26.915bn. That is already more than the previous week’s EUR25.01bn and we are far from done either, with a host of names still waiting in the pipeline including sovereigns China and Denmark after Spain boosted Tuesday’s volumes with a EUR4bn Linker (recap here)
** Denmark EUR 2yr
** China EUR 3yr & 7yr at m/s +45 area & +65 area IPTs; jt-books EUR8.6bn+
** ASFINAG EUR 10yr
** Ile-de-France Mobilites EUR500m no grow 15yr green
** Gemeinsame NRW Kommunen EUR 9yr sub-benchmark bond (Staedteanleihe No. 8)
** PSP Capital USD 5yr at SOFR m/s +59 area IPTs
** Kesko Corp EUR300m (exp) long 5yr green
** Harbour Energy dual-tranche EUR 5yr and 8yr
** Bunzl plc inaugural EUR500m no grow 5yr
** ALTAREA SCA EUR300m no grow 7yr
** NEPI Rockcastle EUR500m no grow Jan 2032 green
** Proxiums EUR500m no grow PNC7 hybrid
** Criteria Caixa EUR500m no grow 5yr senior
** Pozavarovalnica Sava d.d EUR50m 5yr Tier 3
** Standard Chartered Bank EUR500m no grow 4yr covered
While the US high-grade primary market was dominated by SSA offerings, there was still enough room for nine ex-SSA issuers to add to not only this week’s, but also to the monthly total volume that could very well break all September records. In a final push to get ahead of their self-imposed earnings blackouts, those nine raised USD8.3bn Tuesday, bringing issuance for the week to USD20.45bn, and that much closer to the average weekly estimate of USD24bn. For more colour, see THE ENDGAME.
What to watch today
** Key Data: FR Sep Consumer Confidence (07:45), SP Aug PPI (08:00), US Weekly MBA Mortgage Applications (12:00) and US Aug New Home Sales (15:00)
** Key Events: BoE’s Greene (09:00) and Fed’s Kugler (21:00)
** Auctions: IT to sell up to EUR2.75bn 2026 BTPs, as well as up to EUR2.5bn 2029 & 2031 Linkers (10:00), UK to sell GBP3.75bn 2031 Gilts (10:00), GE to sell EUR3bn 2030 Bobls (10:30) and US to sell USD28bn 2yr FRNs (16:30) and USD70bn 5yr Notes (18:00)
All times BST
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