CREDIT OPEN: Primary set for pre CPI/ECB rush
European stocks staged a welcome rebound on Monday but there’s not much sign of that continuing into today’s session where EU and US index futures are currently small down ahead of the respective opens for cash markets.
Overnight, Asian markets struggled to fully capitalise on the more constructive Wall Street handover where mainland China stocks have been churning in the red although Nikkei did manage to reverse an opening slump.
China exports grew at their fastest pace since March 2023 in August at a YoY pace of 8.7% although imports rose by only 0.5%, pointing to a depressed domestic demand and comes after PPI and CPI both undershot forecasts on Monday, adding to deflation/growth concerns.
Ahead of Wednesday’s key US CPI update, today’s limited data docket gets underway with an update on the UK labour market where average weekly earnings for the three months to July are widely expected to show further cooling in wage gains. The unemployment rate, however, is likely to fall slightly to 4.1% (vs 4.2% prior).
Auction supply is back on the agenda where this morning's sales from Netherlands, Germany & UK will compete for attention with a substantial pipeline of syndicated SSA sales (see below) while a 3yr UST sale gets the latest US supply cycle underway.
US presidential candidates Trump and Harris clash later this evening in the first and potentially the only debate ahead of the 5th November election.
For more on latest developments see the European Breakfast Briefing.
Tuesday’s supply prospects
The European Union (EUR new long 7yr & 2050 green tap) and Italy (EUR 30yr BTP) will provide the backbone of a busy session today ahead of looming the ECB verdict, with them having been amongst a deluge of names across all asset classes announcing mandates on Monday. Alongside the mandates we had live supply and, in the end, saw EUR4bn cross the tape in euros yesterday, thanks to four IG corp names and a singular non-covered FIG name. Alongside those were a quartet of sterling bonds worth a combined GBP2.55bn across corps, FIG and SSA sectors. Recap here.
** European Union EUR new Dec 2031s & Feb 2025 green tap
** Italy EUR 30yr BTP
** ICO EUR 6yr
** BGK EUR long 10yr & 20yr two-part
** Munich EUR250m debut green
** AfDB USD 5yr social at SOFR m/s +42 area IPTs
** IADB USD 7yr global SDB at SOFR m/s +52 area IPTs
** IDB Invest USD750m n/g Feb 2027 global at SOFR m/s +39 area IPTs
** Ontario USD 5yr global at SOFR m/s +58 area IPTs
** CDC GBP Jul 2027s
** Terega EUR500m (exp) 10yr
** Royal Schiphol Group EUR 12yr
** Carrefour EUR 8.1yr sustainability-linked bond
** Bayer AG EUR 30NC5.25 hybrid
** Hellenic Bank EUR100m no grow 2NC1 snr pref
** Hamburg Commercial Bank EUR 3.5yr snr pref
** BAWAG EUR500m n/g PNC5.5 AT1
** Piraeus EUR 11NC6 T2
** Macquarie Bank EUR 5yr green snr
** Just Group GBP400m (exp) 10.5yr sustainability T2
Stateside, coming into this week, the respondents to our weekly US high-grade issuance poll, on average were looking for USD35bn in new supply, with the estimates ranging from a low of USD25bn to a high of USD41bn. Well, after eight investment grade borrowers raised a collective USD7.1bn Monday, we appear to be right on target. For more colour see THE ENDGAME.
What to watch today
** Key Data: GE Aug F CPI (07:00), UK Jul ILO Unemployment Rate (07:00), UK Jul Average Weekly Earnings (07:00), UK Aug Employment Change (07:00), SP Jul Industrial Production (08:00), IT Jul Industrial Production (09:00) and US Aug NFIB Small Business Optimism (11:00)
** Key Events: Fed’s Barr speaks (15:00)
** Auctions: NE to sell EUR2bn 2052 Bonds (09:00), UK to sell GBP900m 2045 Linkers (10:00), GE to sell EUR500m 2029 Bobls & EUR500m 2050 Bunds (10:30) and US to sell USD58bn 3yr Notes (18:00)
All times BST
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