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CREDIT OPEN: Primary looks set for relative breather at end of busier than expected week

By Matthew Barrett March 22 2024

European stock markets look set to open a bit lower on Friday and give back some of the chunky gains seen during Thursday's session.
In the end that saw the Stoxx600 close 0.9% higher at a fresh record high, whilst the S&P500 also advanced another 0.32% on the day, with both hitting fresh year-to-date highs after the Fed on Wednesday signalled it remains on course to cut 75bps off rates this year.

Following that, conviction for a June cut has continued to strengthen with markets currently indicating a 74% probability of a 25bps reduction (CME data) in June.
Sticking with central banks and as a reminder the Swiss National Bank surprised with a 25bp rate cut yesterday whilst it was seen as an overall dovish outcome at the Bank of England meeting where rates were kept unchanged.

The more subdued open on Thursday in European equities comes after a mixed session in Asia where China stocks underperformed amid weak corporate guidance and signals that Beijing is relaxing its grip on the currency. At the time of writing the Hang Seng and CSI 300 were 2.15% and 0.85% lower respectively.

On today's agenda, UK February retail sales expected to give back relatively small portions of January's stellar outturns.

At the same time, German January import prices is due ahead of the March German Ifo. The climate and expectations are seen higher (but still at weak levels) and the current assessment fractionally lower (another worst since July 2020).

Already out, UK Mar GfK Consumer Confidence came in unchanged from Feb at -21 and was lower than the -19 forecast.
Away from data and it's a big session for central bank speakers with four ECB and three FOMC members slated to speak, including Powell (details below).
For more on latest developments see the European Breakfast Briefing.

Friday's supply prospects
This week has already smashed passed all supply expectations with EUR48.85bn of euro paper having crossed the tape, more than even the highest combined issuance guess of EUR48bn given by participants in our estimate report conducted last Friday. Coming into today's session and the pipeline is sparse but we can't rule out anything opportunistic popping up amid what remain strong issuance conditions.
** Nova Kreditna banka Maribor EUR300m 4NC3 snr pref
** Northumbrian Water GBP 13yr snr & GBP100m 15-17-year CPI-Linked snr
** Telereal Securitisation PLC GBP255m Dec 2031 senior secured Class B
High-grade corporate issuers returned to the US primary market Thursday after a one-day hiatus the third ex-SSA zero issuance day of the year - but hardly with what could be a vengeance. Only three borrowers chose to tap the market the day after the Fed teased a rally out of the broader markets, by intimating that it was still on track to cut interest rates three times this year. Those three raised a mere USD2.9bn, though it was enough to bring ex-SSA issuance for the week to USD28.05bn, topping the average weekly estimate of USD27.5bn.

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