CREDIT OPEN: Primary set for another frenetic week
EU stocks look set to remain on the backfoot at Monday’s open as attention remains on the shifting outlook for US monetary policy following Friday’s bumper NFP print.
The “good news” of a 256k job gain in Dec was certainly bad news for S&P500 (-1.54%) and Nasdaq (-1.63%) with US index futures currently suggesting those losses will extend when cash trading gets underway later today.
The closure of Japan for a holiday kept cash USTs shuttered overnight although US debt futures extended Friday’s losses today after 2yr and 10yr US cash yields closed the day higher by 11.5bps and 7.0bps respectively. European yields, meanwhile, also rose Friday meaning that the 10yr German yield has moved higher in every session of 2025, making for a cumulative rise of 23bps.
Overnight, China trade data was in the spotlight where exports jumped by 10.7% YoY in Dec, chalked up to companies rushing out orders ahead of Trump’s second term in the White House.
Elsewhere, an already buoyant dollar remains biased higher with DXY touching a fresh 26-month peak in Asian hours. Also to note, Brent crude hit its highest level since August on Monday as fresh US sanctions on Russia add support to a market which is already being supported by concerns over dwindling US inventories. That in turn adds another inflationary impulse with thoughts very much on Wednesday's key US CPI update.
In terms of the day in prospect, Monday’s data schedule is devoid of any top-tier releases on either side of the pond while auction supply comes from just Italy.
For more on latest developments see the European Breakfast Briefing.
Monday’s expected supply
The brisk pace of issuance is predicted to continue this week where a EUR71.5bn average combined estimate was put forward by our survey participants (ex-HY), with SSAs expected to (once again) account for the bulk of issuance, That after the overall weekly single currency haul finished up at EUR101.7bn last week and the second largest ever, only beaten by the all-time high of EUR112.445bn recorded in the corresponding week last year. The ex-HY total of EUR100.8bn was way above the average supply estimate of EUR68.5bn. For the full breakdown of last week’s activity by asset class and maturity see IGM's WEEKLY VOLUME. One borrower known to be readying a deal for Monday is SSA borrower ADB which on Friday hired leads for a EUR 10yr sustainable, whilst we expect all other asset classes to be active over the next few sessions.
** AFD EUR 10yr sustainable
US issuers should come out swinging again this week, with a good possibility of an appearance from one or more “big six” banks. While the group doesn’t start reporting until the middle of the week, they are famous for issuing bonds immediately after reporting quarterly results. Over the past seven years the “big six” have contributed on average USD20bn to January’s bottom line – last January, they combined to raise USD28.75bn. For a more comprehensive look at the blowout week in the USD primary bond market last week (USD65bn+ raised) and a look ahead to this week’s expectations for supply, see the IG WEEKLY WRAP UP.
What to watch today (and for the week)
** Key Data: No key data due for release on Mon 13th Jan
** Key events/speakers: No key events or speakers are scheduled on Mon 13th Jan
** Auctions: IT to sell EUR5.75bn 2027 & 2031 Bonds (10:00)
** Holidays: Japan Coming-of-Age Day
** Viewpoint - The week ahead:
- US December PPI (Tuesday), CPI (Wednesday), import/export prices & retail sales (Thursday)
- BoJ Himino speaks (Tuesday). December Eco Watchers (Tuesday). December PPI (Thursday)
- UK December CPI (Wednesday), November GDP (Thursday), December retail sales (Friday)
- China IP, retail sales, new/used home prices & Q4 GDP (Friday). BoK decision (Thursday)
- November Italy (Tuesday), EMU (Wednesday) IP. German 2024/Q4 GDP estimates (Wednesday)
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.