CREDIT OPEN: Primary set for a slow end to the week
EU stocks look set for a neutral open this morning as the dust settles on yesterday's key data releases and factor in a mixed overnight handover.
Ahead of Saturday’s finance ministry presser, more of those pesky stimulus doubts have been weighing on mainland Chinese stocks today although Hang Seng was shielded from such concerns given the public holiday.
Prior to that, US stocks closed a shade weaker following the hotter-than-expected Sep CPI data and 14-month high on jobless claims, following which the Fed’s Bostic (via the WSJ) said he was open to a rate pause in November “if the data suggests that’s appropriate”.
The comments added a bit of weight to USTs with the 10yr yield hitting a fresh multi-month peak of 4.11% on Thursday but yields have since subsided to below 4.06% during Asian hours in the wake of yesterday's well-received 30yr UST sale which concluded the latest US supply cycle.
Turning to today and earnings look set to add an additional dimension to trading where JPMorgan Chase and Wells Fargo kick off the current reporting cycle for US banks.
Data-wise, today’s main European releases are already out where UK Aug monthly GDP rose by 0.2% both on a MoM and 3m/3m basis to follow prior readings of 0.0% & 0.3% while UK Aug Industrial Production rose by 0.5% MoM, reversing most of the 0.7% fall seen prior.
Over in the US, Sep PPI and the prelim UoM Sentiment Survey for Oct are the main data highlights.
ECB’s Holzmann speaks but the ECB is already in its quiet period ahead of next Thursday’s meeting which markets currently see as a racing (96%) certainty to deliver another 25bps rate cut.
Fed speakers comprise Goolsbee, Logan and Bowman.
Auction supply comes from Italy while markets will also be watching OATs this morning following yesterday evening’s unveiling of the 2025 French budget which aims to deliver an over EUR60bn package of spending cuts and tax rises.
For more on latest developments see the European Breakfast Briefing.
Friday’s supply prospects
Coming into Friday's session and the weekly single currency total is at EUR30.15bn (ex-HY) and beyond the average estimate of EUR27.5bn given by participants in our latest issuance poll. A couple of covered deals are still in the pipeline and could add to that today, but it is likely that they will be next week’s business.
** Kreissparkasse Ludwigsburg EUR250m no grow 5yr covered
** Kookmin Bank EUR 3.25yr sustainable covered
In the US high-grade primary market, where earnings blackouts continue to impact issuance, only one issue came to market on Thursday via a USD300m long 5yr note offering from Carlyle Secured Lending. That brought ex-SSA issuance for the week to USD16.05bn, close to, but still shy of, the average expectation of USD17bn. For more colour, see THE ENDGAME.
What to watch today - US bank earnings begin
** Key Data: US Sep PPI Final Demand (13:30) and US Oct P Uni of Michigan Sentiment (15:00)
** Key Events: ECB’s Holzmann (08:00) speaks, along with Fed’s Goolsbee (14:45,), Logan (15:45) and Bowman (18:10)
** Auctions: IT to sell up to EUR9.5bn of 2027, 2031, 2039 & 2048 BTPs (10:00)
** Earnings: 1 Stoxx600 & 5 S&P500 companies report. Latter includes JPM and Wells Fargo
All times BST
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