CREDIT OPEN: Primary pace to remain brisk despite weak tone
European stocks look set to extend Tuesday’s large losses seen in the wake of trade worries, where the Stoxx600 shed an eye-catching 1.98% to close beneath its 31st Oct low.
The mood remained defensive in Asia on Wednesday with Nikkei (-1.66%) leading regional losses, whilst the recent US equity rally ran out of steam on Tuesday, with the three major Wall Street equity benchmarks closing between -0.1% to -0.9% in the red.
US futures are also lower at the time of writing ahead of the week’s key data release in the form of US Oct CPI.
While core CPI is expected to remain largely unchanged from the Sep report, components within the release are expected to spur optimism towards a continued, gradual drift lower in price pressures. Having said that, the headline YoY inflation is expected to inch higher.
Ahead of the print, Fed's Kashkari said he thinks upside inflation surprises could prompt a pause in Dec, adding that he wouldn't opine on the impact of possible tariffs on inflation and it might take 'a year or two' to achieve 2% inflation.
The only data release of note in Europe today is already out where France Q3 ILO Unemployment Rate rose slightly to 7.4% (from 7.3%) as expected.
It is a big day for govvie supply with the UK selling GBP4bn gilts and Italy, Germany and Portugal selling up to EUR13.5bn in the single currency. Those sales will likely benefit from an extra concession courtesy of the ongoing rise in yields.
Central bank chat will again be in focus Tuesday with Fed's Kashkari, Williams, Logan, Musalem and Schmid all speaking along with BoE's Mann.
For more on latest developments see the European Breakfast Briefing.
Wednesday’s supply prospects
Another handful of names are sat in the pipeline and ready to go with euro deals today, with them set to be buoyed by the strong reception which Tuesday’s flurry of deals received. As a reminder, the European primary market got back into its groove yesterday with issuers (predominantly from the IG corporate and non-covered FIG sectors) making funding plays with Monday’s holiday and last week’s key risk events in the rear-view mirror. The day’s euro total finished up at EUR9.9bn and the highest since the 22-Oct (EUR17.3bn), with cover ratios high and NICs low – full recap here.
** Land Bremen EUR500m no grow 5yr LSA
** Otis Worldwide Corp EUR 3yr
** Zimmer Biomet EUR 8yr
** KION GROUP EUR500m no grow 5yr
** Athora EUR300m (exp) PNC7 RT1
** Aareal Bank GBP Mar 2028 covered
After being held in check last week by the Presidential election, the Fed’s interest rate decision and the last remnants of earnings blackouts, US high grade corporate borrowers made up for lost time Tuesday, flooding the market with supply. After only three borrowers were brave enough to ward off last week’s headwinds, raising a grand total of USD1.9bn to kick off the month, 13 raised USD30.15bn on Tuesday. That made it (1) the third busiest ex-SSA issuance day of the year (2) the most high-grade issuance we have seen in one session since Labor Day (3) more than enough to top the average weekly estimate of USD30bn. For a detailed look see THE ENDGAME.
What to watch today - US CPI & Fed speak
** Key Data: US Weekly MBA Mortgage Applications (12:00) and US Oct CPI (13:30)
** Key Events: BoE’s Mann speaks (09:45), along with Fed’s Kashkari (13:30), Williams (14:40), Logan (14:45), Musalem (18:00) and Schmid (18:30)
** Auctions: IT to sell up to EUR8.25bn 2027, 2031, 2032 & 2039 BTPs (10:00), UK to sell GBP4bn 2028 Gilts (10:00), GE to sell EUR4bn 2034 Bunds (10:30) and PO to sell EUR1-1.25bn 2034 & 2045 PGBs (10:30)
** Earnings: 15 Stoxx600 companies release results
All times GMT
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