CREDIT OPEN: Pipeline suggests pick up but backdrop uncertain

EU stocks look set for a weaker start with attention falling on the latest trade war developments with China announcing retaliatory tariffs in response to US levies which take effect today.

Prior to that, Trump had delayed the imposition of 25% tariffs on Mexico and Canada for 30-days, bringing some transient relief to markets, although that has subsequently faded following China’s latest actions which include levies on US coal and LNG, and an anti-trust probe into Google.

Away from global trade developments, markets will also be heavily influenced by company news today where the pace of earnings releases picks up sharply, especially in the US where 43 S&P500 firms will report later today to follow the 15 Stoxx600 firms releasing results this morning.

Data-wise, today’s European releases are mostly second tier while across the pond we get the first of this week’s US labour market anecdotes in the form of Dec JOLTs where a mild slowdown is expected.

Auction supply comes from UK and Austria to follow the hefty drop in yields seen Monday as investors prioritised safety over returns.

Speakers comprise ECB’s Villeroy, as well as Fed’s Bostic & Daly.

For more on latest developments see the European Breakfast Briefing.

Tuesday’s expected supply

It is hard to predict just how much supply we will see on Tuesday given the uncertain broader market backdrop amid ongoing trade worries. As a reminder, the dump in stocks seen Monday limited new supply to just Romania which pulled the trigger on a EUR and USD three-part trade, whilst German State of Saarland tapped an existing May 2027 LSA for EUR200m without any public marketing. We also saw a few mandates on the day, and we expect the majority of those to go today, with SSAs lining up in euros and dollars.

** Rentenbank EUR May 2032s

** KfW EUR3bn no grow 2.875% Mar 2032 green tap

** EIB USD3bn no grow 10yr global at SOFR m/s +60 area IPTs

** L- Bank USD 2yr FRN at SOFR +30 area and USD 5yr FXD at SOFR m/s +47 area IPTs

** BNG Bank USD 3yr at SOFR m/s +38 area IPTs

** Ausgrid EUR 8yr secured

** Stedin EUR500m no grow 12yr green

** Whitbread Group GBP long 7yr

Stateside, Monday’s rotation away from risk assets kept at least nine potential US high-grade borrowers on the sidelines to kick off the week that is expected to see USD32bn price. That resulted in the third “zero” ex-SSA issuance day of the year. For more colour, see THE ENDGAME.

What to watch today

** Key Data: SP Jan Unemployment Change (08:00), US Dec JOLTS Job Openings (15:00), US Dec Factory Orders (15:00) and US Dec F Durable Goods Orders (15:00)

** Key Events: ECB’s Villeroy (13:30) speaks, along with Fed’s Bostic (16:00) & Daly (19:00)

** Auctions: UK to sell GBP4.25bn 2030 Gilts (10:00) and AS to sell EUR1.725bn 2030& 2039 Bonds (10:00)

** Earnings: 15 Stoxx600 & 43 S&P500 companies report

** Holidays: China Spring Festival

All times GMT

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