CREDIT OPEN: Pace to ramp up as UK players return
EU stocks look set for modest opening gains this morning as UK based players rejoin proceedings to follow Monday’s holiday during which European and US markets put in a mixed performance.
That saw S&P500 (-0.32%) and Nasdaq (-0.85%) both lose ground although Dow Jones (+0.16%) eked out a record close.
In Asia, the mixed theme has continued with Nikkei set to close higher following opening weakness while HK and mainland China stocks are underperforming. On the data front, Chinese industrial profits for July rose at the fastest pace in five months on a YoY basis, rising 3.6% vs 3.5% in June.
In terms of immediate event risks, there’s little to interfere with a go/no-go call this morning where the European schedule starts with Q2 final GDP from Germany. That’s followed by UK Aug CBI Retaling Reported Sales while the afternoon session delivers US Jun S&P CoreLogic CS 20-City home prices and Aug Conf. Board Consumer Confidence.
Auction supply comes from Italy, Germany and US (details below).
A brace of ECB speakers come in the form of Knot & Nagel. No Fed speakers are scheduled.
After yesterday's close, Fed’s Daly (via BBG) agreed with Fed Chair Powell's view that the time to trim interest rates has arrived, and that the Fed would not want to keep "policy highly restrictive" when the economy is "slowing". However, she declined to specify if she supported a 25bps cut or a 50bps cut, saying that it is too early to discern the exact path of monetary policy.
For more on latest developments see the European Breakfast Briefing.
Tuesday’s supply prospects
It looks set to be an active session for the European bond markets on Tuesday as UK players return following the long Bank Holiday weekend. A handful of names are already sat in the pipeline (below) to follow Monday mandates, whilst many others are known to be looking in the background. They will add to Monday’s sole EUR250m Mar 2031 tap deal from Sachsische Aufbaubank – Forderbank which kicked off a week that is expected to yield an average EUR35bn in euro supply according to our weekly issuance poll. That will back up the busiest week since the w/e 12-Jul last week, as we saw EUR31.1bn cross the tape in the single currency.
** Bpifrance EUR May 2029 Social
** Thuringia EUR 5yr LSA
** EFSF possible EUR
** Mandatum Life Insurance EUR250-300m 15.25NC5.25 T2
** Lloyds Bank GmbH debut EUR500m n/g 5yr covered
US high grade corporate issuance was kept to a bare minimum Monday as expected with only one deal, Associated Banc-Corp’s USD300m 6nc5 fixed-to-floating rate note, crossing the finish line. For more colour see THE ENDGAME.
What to watch today
** Key Data: GE F Q 2 GDP (07:00), UK Aug CBI Retaling Reported Sales (11:00), US Jun S&P CoreLogic CS 20-City (14:00), US Aug Conf. Board Consumer Confidence (15:00)
** Key Events/Speakers: ECB’s Knot (11:45), Nagel (15:00)
** Auctions: IT to sell up to EUR2.5bn BTPs (10:00), GE to sell EUR4bn 2029 OBLs (10:30), US to sell USD69bn 2-Year Notes (18:00)
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