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CREDIT OPEN: Pipeline points to another active day

EU stocks look set for a modest rebound at the open to follow a rough day on Tuesday which saw European markets lose further ground into the close. In contrast, US stocks stayed bid, resulting in S&P (+0.07%) and Nasdaq (+0.14%) scoring their fifth and sixth respective record closes, following which US index futures are currently sitting in the green. Notably, Tesla stock rose another 3.7%, making for an amazing 10-day/43.7% winning run.

Overnight, China June CPI undershot already low expectations with the annualised rate slipping to just 0.2% (exp 0.4%, prev 0.3%) while PPI was in line at -0.8% (prev -1.4%). With the data keeping deflation worries in mind, mainland Chinese and HK stocks drifted lower today although the Nikkei remains on the front foot, notching another record high.

Turning to the day ahead and the data schedule is light where this morning's only release of note is Italian industrial production for May which leaves thoughts on Thursday's key US CPI print.

Fed Chair Powell speaks again at 15:00 BST and follows comments made to the Senate Banking Committee yesterday that easing too much too soon could harm the inflation process but easing too little too late could unduly weaken the economy.

Also speaking are ECB's Nagel, BoE's Pill & Mann and Fed's Goolsbee & Bowen.

Auction supply today comes from Germany (2036 & 1% 2038 bunds) and the US (10yr notes) with the latter coming after a solid sale of USD58bn 3yr notes on Tuesday.

Markets will be watching OATs closely which came under pressure Tuesday (10yr yield +7.8bps on the day and 3.8bp wider vs bunds) as fiscal concerns weighed against a backdrop of expected policy gridlock.

For more on latest developments see the European Breakfast Briefing.

Wednesday's supply prospects

It looks set to be another busy session on Wednesday with loads more names already sat in the pipeline after the primary bond market seemed to find its mojo again Tuesday with issuers out in force and finding plenty of buyers for their deals. As a reminder, the EU's EUR9bn two-part spearheaded a EUR18.64bn 15 tranche euro session, making it the biggest day in terms of number of tranches since 4-Jun and the largest daily volume since 29-May. Tuesday's deals were enough to push 2024 single currency issuance beyond EUR1tn, which is the second fastest we have ever hit the milestone having been pipped by 2020 when we surpassed it a day earlier.

** EBRD EUR 7yr green

** Baden-Wuerttemberg EUR500m no grow 4yr LSA FRN

** Sharjah EUR500m no grow 6.5yr

** Silfin NV EUR500m no grow 6yr

** ITM Entreprises from the Groupement les Mousquetaires EUR300-500m 5yr debut

** Piraeus Bank EUR 5NC4 green snr pref

** Banca Sella EUR300m 5NC4 snr pref

** La Mondiale EUR PNC10 RT1

** Aareal Bank EUR May 2029 covered

** Banca Popolare dell Alto Adige EUR300m no grow 7yr covered

** Bendigo and Adelaide Bank EUR long 5yr covered

US ex-SSA high grade issuance this week appeared to be more of a sprint than a marathon after seven borrowers raced to market Monday, raising USD15.25bn, more than the Street thought would price during the entire week, followed by only two additional issuers finishing the race Tuesday. Not that the race is over, but it remains to be seen just how many more limp across the finish line before US CPI due Thursday. For more colour see THE ENDGAME.

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