CREDIT OPEN: Opportunistic supply still possible but year-end shadows lengthening
Based on current indications, the winning run in EU stocks looks in danger of coming to an end today where index futures are in the red ahead of the cash open.
That comes after Monday’s slender gain of 0.15% for the Stoxx50 which was sufficient to produce an 8th straight gain. However, a ninth currently looks doubtful following a weaker Wall Street lead where S&P500 (-0.61%) and Nasdaq (-0.62%) both closed in the red with the former weighed down by financials while Nasdaq fell amid weakness in Nvidia in response to an anti-trust probe launched by China.
Asian markets, or more specifically HK and mainland China stocks, have been dancing to a different beat though with both posting gains today as markets position for a looser monetary policy stance that was telegraphed by the country's leadership on Monday.
The need for looser policy was evidenced by today’s Chinese trade data where exports slowed by more than expected in Nov to 6.7% YoY from 12.7% in Oct while imports unexpectedly shrank by 3.9% following a 2.3% fall in the prior month.
Elsewhere, the RBA opted to keep its cash rate unchanged at 4.35%, as had been widely expected, but delivered a stance that was unexpectedly more dovish than expected. The Board said that "some of the upside risks to inflation appear to have eased", and took out its longstanding line that it wasn't ruling anything in or out on policy - potentially signalling a pivot toward an easing cycle.
In terms of today's European session, data is once again second tier. In the US, the Nov NFIB small business optimism index is expected to improve in Nov.
There is no central bank-speak on tap where ECB and Fed officials are in media blackout ahead of their respective verdicts on Thursday 12th and Wed 18th Dec.
Auction supply comes this morning from Austria (2034s & 2053s) and the UK (2033 linkers) while the US brings the first leg of the current refunding cycle in the form of a 3yr note sale (USD58bn).
For more on latest developments see the European Breakfast Briefing
Tuesday’s expected supply
The European pipeline is currently empty but with ArcelorMittal showing Monday that there is ample demand ready to support the right deal at the right price, further opportunistic supply cannot be ruled out, even in the second week of December. As a reminder, the issuer priced EUR500m 4yr & EUR500m 7yr lines into final books worth EUR3.4bn & EUR3.8bn respectively. In a further sign that investors remain keen to put cash to work, order book attrition was minimal despite 40bps being slashed from IPTs on both lines where orders had peaked at EUR3.5bn & EUR3.9bn.
Stateside, following an active Monday, the week is at USD7.75bn, already topping the USD7.5bn average estimate. It also brought ex-SSA issuance for the month of December to USD31.55bn, less than the average monthly estimate of USD40bn, but more than the lowest estimate of USD25bn. For more colour see IGM's THE ENDGAME.
What to watch today
** Key Data: IT Oct Industrial Production (09:00), US Nov NFIB Small Business Optimism (11:00), US 3Q F Nonfarm Productivity (13:30), US 3Q F Unit Labor Costs (13:30), JN Nov PPI (23:50)
** Key Events: No major events or speakers scheduled
** Government Auctions: Austria to sell up to EUR1.15bn 2034 and 2053 bonds (10:00), UK to sell GBP1.5bn 2033 Linkers (10:00), US to sell USD58bn 3yr notes (18:00)
** Earnings: 1 Stoxx600 and 1 S&P500 companies release results
All times GMT
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