CREDIT OPEN: Primary market in the grip of pre-payroll paralysis
EU stocks look set for a softer start to payroll Friday where its probably not a big surprise to see a few chips come off the table. That follows a string of recent gains and as markets turn attention to today’s big US data release.
A similar dynamic appeared to be at work in US markets on Thursday as S&P500 (-0.19%) and Nasdaq (-0.17%) both pulled back into the close having hit record highs earlier in the session with US index futures narrowly mixed as we go to print.
Following that, Asian markets saw a mixed session overnight with HK & mainland Chinese stocks rising in a move chalked up to stimulus hopes, while the Nikkei fell as markets continue to ponder what the BoJ will do at its Dec meeting.
Looking at the day ahead and the much-anticipated US labour market report for Nov is expected to show the pace of job creation picked up to 220k to follow the strike & weather impacted print of 12k seen in Oct. Also due is the prelim UoM sentiment index for Dec.
Already out this morning, German industrial production was weaker than expected in Oct -1.1% MoM vs. the 1.0% f/c and revised print of -2.0% in Sep.
Away from the data, a quartet of Fed speakers take to the airwaves before officials go into blackout ahead of the Fed’s next verdict on 18th Dec.
The EGB complex gets a break from supply today although markets will be keeping a close eye on French debt which enjoyed a much better day on Thursday, suggesting markets are holding out hope that a budget deal can be struck soon. With that, the 10yr OAT yield eased by 0.8bps vs. a 5.2bps rise for the German equivalent, narrowing the 10yr FR/GER yield spread to below 78bps vs the long term high above 88ps hit on Monday.
For more on latest developments see the European Breakfast Briefing
Friday’s supply prospects
The pipeline is empty at the start of payroll Friday. That comes after the slow December pace continued Thursday where two FIG names along with a single corp and one SSA issuer jointly raised EUR1.6bn. With that, the weekly total (ex-HY) stands at EUR4.45bn (EUR5.55bn including HY), just less than the previous week’s EUR4.95bn but above the average weekly supply estimate of EUR3.5bn given in our latest issuance poll.
Stateside, this week’s ex-SSA issuance stands at USD23.8bn, just shy of the lowest weekly estimate of USD25bn, with nothing expected to price today. For more colour see IGM's THE ENDGAME
What to watch today
** Key Data: EC Q3 F GDP (10:00), US Nov Change in Nonfarm Payrolls (13:30), US Nov Unemployment Rate (13:30), US Nov Average Hourly Earnings (13:30) and US Dec P Uni of Michigan Sentiment (15:00)
** Key Events: Fed’s Bowman (14:15), Goolsbee (15:30), Hammack (17:00) & Daly (18:00) speak
** Auctions: No major term auctions scheduled for Friday 6th Dec
All times GMT
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