CREDIT OPEN: Primary set for a relative day of rest?
EU stocks look set for a relatively steady open to Friday's payroll session having advanced on Thursday with the Stoxx600 posting its best close of the year so far.
That’s a somewhat counterintuitive development given all the headlines hitting screens surrounding the ongoing rise in yields which has been a major feature of early 2025. Indeed, the 10yr German yield has risen in every session of 2025 so far, increasing by a not insignificant 20bps over the past six sessions, during which global bond markets have been hit by a tsunami of supply.
Some yields, namely the UK, have risen more of course where an unpalatable mix of fiscal and inflation concerns have driven the 10yr gilt yield 24bps higher ytd as of last night’s close although was up to 35bps higher at one stage yesterday before some semblance of calm was restored.
Overnight, Asian stocks have been on the backfoot while US index futures have been putting in a mixed performance as markets engage in final positioning ahead of today’s US employment update. Elsewhere, attention was on a move by the PBOC to suspend bond buying in order to defend the yuan. USD/CNY notched a fresh 16-month high while cash USTs reopened with a modest bid, but this has unwound as the Asian session progressed.
US NFPs are expected to slow to 165k in Dec (BBG) from a prior 227k with the unemployment rate seen holding steady at 4.2% and average hourly earnings growth expected to ease to 0.3% from 0.4%.
Ahead of that, EU data comprises Nov French and Spanish industrial production.
Battered rates markets get a welcome break from auction supply while the syndicated sovereign pipeline is also currently empty (see below).
For more on latest developments see the European Breakfast Briefing.
Friday’s expected supply
The single currency public pipeline is empty at the end of what has been a frenetic week for sales. Another EUR23.6bn (22 tranches) priced yesterday and lifted the weekly euro haul to over EUR100bn (EUR100.4bn to be precise) and up to the second largest ever having only been beaten by the all-time high of EUR112.445bn recorded in the corresponding week last year. This week’s total is also above the average supply estimate of EUR68.5bn put forward by participants in our issuance poll, but still short of the highest combined forecast of EUR110bn. We can’t rule out some opportunistic supply to get us closer to that highest guess, but issuance is likely to be more measured on the whole given the US payroll distraction. Sterling supply is certainly on the menu though from IFC having released IPTs yesterday for a 3yr global.
** IFC GBP 3yr global at SONIA m/s +33 area IPTs
The recent rise in interest rates has spurred high-grade borrowers to rush to the US market before they go any higher. Week-to-date 39 issuers through 81 tranches have raised USD62.7bn in ex-SSA debt. Added to the USD16.05bn that priced last week, and the ex-SSA month-to-date total comes to USD78.75bn. But while there may have been a little break in the action on Thursday, next week issuers should hit the ground running, led by the “big six” banks. For more colour, see THE ENDGAME.
What to watch today – US NFPs
** Key Data: FR Nov Consumer Spending (07:45), FR Nov Industrial/Manufacturing Production (07:45), SP Nov Industrial Output (08:00), IT Nov Retail Sales (09:00), US Dec Change in Nonfarm Payrolls (13:30), US Dec Unemployment Rate (13:30), US Dec Average Hourly Earnings (13:30) and US Jan P Uni of Michigan Sentiment (15:00)
** Key Events/Speakers: Fed's Goolsbee (15:04)
** Auctions: No major term auctions scheduled for Friday 10th Jan
All times GMT
---- Subscribe to read more ----
To receive this analysis plus much more, subscribe to IGM. Request your free trial of the service today.