CREDIT OPEN: Primary set for another active week
EU stocks are set for a mildly constructive open on Monday and US index futures are in the green as markets look to stabilise following a weaker run into the weekend in Europe, and more notably the US, where Trump trades were pared back.
Recall that Wall Street weakness also came amid further doubts over the pace of Fed rate cuts following robust retail sales data where October readings beat estimates while September was revised sharply higher. The data followed hawkish comments from Fed’s Powell on Thursday who said he was in no “hurry” to lower rates. With that, the probability of a 25bps cut by the Fed at its Dec meeting is currently seen at around 65% (CME data) versus a 35% chance of rates being held steady.
Over in Asia, markets have been trading mixed today with Nikkei falling, led by weakness in healthcare, while China/HK stocks are firmer. UST yields have continued to ease back with the 10yr yield falling to 4.42% from the 4.50% multi-month peak seen on Friday in the aftermath of the retail sales data.
Turning to the day ahead, data is second tier on both sides of the pond although central bank speakers are plentiful and include ECB chief eco Lane and also President Lagarde although the latter comes after European markets close.
On the auction supply front, Belgium brings up to EUR2bn via sales of 2034 & 2043 OLOs.
For more on latest developments see the European Breakfast Briefing.
Monday’s supply prospects
Issuance is set to continue at a decent pace this week with respondents predicting an average print of EUR24bn across the euro market (ex-HY). The EU’s scheduled deal will likely help SSAs regain pole position after corps did the heavy lifting last week. As a reminder and the final weekly single currency haul last week came in at EUR26.45bn (40 lines), with EUR17.95bn (25 tranches) coming via IG corporates (more details here).
** Roquette Freres debut EUR 7yr snr & PNC5.25 hybrid two-part
Stateside, the Street widely expects the barrage of US issuance to continue this week as the window of opportunity for issuance this year begins to close. Theoretically, there are only four more weeks - one being Thanksgiving week - of issuance remaining in 2024. Historically, issuance shuts down around the seventeenth of December. With that in mind, the Street is looking for, on average USD30bn to cross the tape this week, with the estimates ranging from a low of USD20bn to a high of USD40bn. See the IG WEEKLY WRAP UP.
What to watch today (and for the week)
** Key Data: EC Sep Trade Balance (10:00) and US Nov NAHB Housing Market Index (15:00)
** Key events/speakers: ECB’s Guindos (08:00), Nagel (08:00), Makhlouf (09:00), Lane (13:00), Stournaras (13:00), Lagarde (18:30) & Vujcic (18:30) all speak, along with Fed’s Goolsbee (15:00) and BoE’s Greene (18:30)
** Auctions: BE to sell up to EUR2bn 2034 & 2043 Bonds (11:00)
** Earnings: 2 Stoxx600 companies report
** Viewpoint - The week ahead:
- Plenty of central bank talk. Waiting for the US Treasury Secretary appointment
- EMU Q3 negotiated wage growth (Tuesday). Nov EMU prelim consumer confidence (Thursday), PMIs (Friday)
- UK October CPI/PPI (Wednesday), public finances (Thursday), retail sales (Friday)
- US October housing starts/permits (Tuesday), existing sales (Thursday). Jobless claims (Thursday)
- China prime rates (Wednesday)
All times GMT
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