CREDIT OPEN: Primary market gearing up for a more measured week
EU stocks look set to start the St. Patrick’s Day session on a neutral footing, offering some hope that gains seen Friday at the end of a tough week for global markets could hold, and that at least some appetite exists to buy into the dip.
Helping the tone is a constructive handover from Asian markets where regional stocks are mostly higher following today’s monthly data dump from China where industrial production, retail sales and fixed asset investment were all stronger than the BBG consensus in Feb. Note that Chinese policymakers from the PBOC, NDRC, Ministry of Finance, Ministry of Commerce, and other agencies/ministries will be speaking at a presser later at 3pm local time (07:00GMT) on the topic of government efforts to boost consumption.
The better tone in Asian stocks hasn’t floated all boats though with US index futures in the red with weakness partly chalked up to comments by Treasury Secretary Bessent that market corrections were a healthy development.
Also during Asian hours, US president Trump announced that he will be speaking to Russian president Putin on Tuesday, with a possible Russia-Ukraine ceasefire likely to be top on the agenda of that call. He said that issues over land and power plants will be the focus of talks towards a Russia-Ukraine deal, and that he may have more to announce on the division of those assets by Tuesday.
Turning to today and there’s little to interfere with a go/no-go call this morning where the European schedule is devoid of top tier data.
Stateside, the spotlight is on the Empire State Manufacturing survey for Mar and advance retail sales data for Feb. Forecasts are currently calling for a decent rebound in consumption across categories.
Rates markets get another day off from major auction supply although players will be keeping a close eye on the long end of the EGB curve after 30yr yields in Germany, France and the periphery rose to long term highs Friday following reports that Germany’s CDU/CSU, SPD and importantly the Greens had agreed on a debt-fuelled financial package.
For more on latest developments see the European Breakfast Briefing
Monday’s expected supply
According to the average combined estimate in our survey, bankers expect EUR28.5bn in single currency supply this week (ex-HY). That would mark a substantial drop on the EUR36.325bn of new paper priced last week which comfortably topped the EUR33.3bn combined average guess. For a summary of last week’s volumes split by asset class see IGM's WEEKLY VOLUME report
** Danish Ship Finance EUR500m no grow 6yr Ship covered bond
Stateside, rising Treasury yields, widening credit spreads, more discerning investors, tariff paranoia and recession fears weighed heavily on issuers decisions to tap the primary market last week. Many of those issuers who chose to tap the high-grade primary market had to pay dearly to get their deals across the finish line. On average, last week’s crop of ex-SSA issues (29) priced with an average NIC of 7.93bp, far and away higher than the year-to-date average of 3.01bp. For more colour, see IGM's IG WEEKLY WRAP UP.
What to watch today (and for the week)
** Key data: IT Feb F CPI (09:00), US Feb Retail Sales (12:30), US Mar Empire Manufacturing (12:30), US Jan Business Inventories (14:00) and US Mar NAHB Housing Market Index (14:00)
** Key events/speakers: No major events scheduled for Monday 17th Mar
** Auctions: No major term auctions scheduled for Monday 17th Mar
- Bundestag votes on German debt plan (Tuesday). Bundesrat convenes (Friday).
- FOMC on hold (Wednesday). New SEP and Powell Presser.
- BoJ steady (Wednesday). Watch post-decision communications for further hawkish shift.
- BoE to hold at 4.5%. SNB to cut 25bp to 0.25%. Riksbank to hold at 2.25% (Thursday).
- US February retail sales (Monday), IP housing starts/permits & import prices (Tuesday)
- China 1/5-yr Prime rates (Wednesday)
All times GMT
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