CREDIT OPEN: Pipeline currently sparse with a more measured week expected
There’s little sign of “Blue Monday” weighing on sentiment in markets this morning where EU stocks look set to retain pre-weekend gains in opening trade.
Recall that the Stoxx600 advanced for a third straight day on Friday as yields moderated further with the index getting to within just 0.8% of its record peak hit in September.
Ahead of today’s US holiday which will shutter cash UST and equity markets, US index futures are flat after cash S&P500 (+1.0%) and Nasdaq (+1.51%) extended recent gains to produce weekly advances worth a respective 2.91% and 2.45%.
Asian markets are firmly higher following Friday’s positive price action in Europe and the US with upbeat sentiment also being chalked up to a constructive dialogue between China’s Xi Jinping and Trump.
Turning to the day ahead and Monday's session is slow in terms of data and events where German PPI is seen picking up to 1.1% on a YoY basis in Dec (from 0.1%)
Otherwise, the spotlight will be on news flow from the US where incoming president Trump and team are said to be readying around 100 executive orders.
Speakers comprise a couple of ECB members but Fed officials are already in blackout ahead of the FOMC's next verdict on 29th Jan.
There's no major term auction supply.
Elsewhere, the WEF kicks off in Davos (20-24 Jan).
The earnings schedule is blank at the start of a week that will see 13 Stoxx600 and 40 S&P500 firms update investors.
For more on latest developments see the European Breakfast Briefing.
Monday’s expected supply
Respondents in our latest issuance poll are predicting slowing activity in the coming week with an EUR54bn average estimate put forward. That after the weekly IG single currency total came in at a bumper EUR72.75bn last week, meaning it was a pretty good week for participants in our supply forecasts where the average estimate came in at EUR72bn. SSAs are expected to continue to set the pace this week with EFSF and Land Berlin already in the pipeline, where the latter is expected to price today.
** Land Berlin EUR500m no grow 6yr LSA floater
For the first time since 2018, all "big six" banks tapped the market in January after reporting (stellar) fourth quarter earnings results and, for the first time in recent memory, or maybe ever, five converged on the market on the same day. Collectively, they raised USD36.9bn, bringing ex-SSA issuance for the week to USD58.45bn, enough to top not only the average weekly estimate of USD40bn, but also the highest one of USD50bn. For a more comprehensive look at last week’s issuance trends in the US primary market see the IG WEEKLY WRAP UP.
What to watch today (and for the week)
** Key Data: GE Dec PPI (07:00) and EC Nov Construction Output (10:00)
** Key events/speakers: ECB’s Vujcic (14:00) and Holzmann (14:30) speak
** Auctions: No major term auctions scheduled for Monday 20th Jan
** Holidays: Martin Luther King Day in the US
** Viewpoint - The week ahead:
- Donald Trump inaugurated (Mon). FOMC enters quiet period. Jobless claims (Thu)
- BoC Q4 Business Outlook (Mon). Canada December CPI (Tue). November retail sales (Thu)
- BoJ to hike 25bp (Fri). Japan December CPI (Fri)
- Norges Bank to hold (Thu). Signal March cut? ECB Governor’s last speech before January meeting
- UK labour market report (Tue). December public finances (Wed). January prelim PMIs (Fri)
- Jan German ZEW (Tue). Jan France business/EMU consumer confidence (Thu). Prelim Jan PMIs (Fri)
All times GMT
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