CREDIT OPEN: Primary week to be front-loaded ahead of ECB
By Matthew Barrett October 14 2024 at 07:13
European stocks look set for a neutral start to the week which will be headlined by the latest ECB verdict and expected 25bps cut which is all but a slam dunk.
That follows a mostly positive session for Asia bourses overnight with CSI300 up 2% and Hang Seng a smaller 0.1% at the time of writing.
Gains come despite the widely anticipated Finance Ministry briefing over the weekend falling short of expectations.
While Finance Minister Lan Fo’an pledged more support for the ailing property sector and indicated at more government borrowing to bolster the economy, there was little actual detail as to how those promises would be delivered.
Note that Japanese bourses were closed Monday due to the Health-Sports Day holiday.
US markets are also closed today for the Columbus Day holiday, which comes after Wall Street equities extended gains to hit fresh record highs on Friday.
Latest gains were underpinned by a rally in top tier banking stocks after JP Morgan and Wells Fargo got the Q3 earnings season off to a positive start.
Earnings will be more prominent this week and will likely help shape the tone, with 18 Stoxx600 companies and 44 S&P500 members scheduled to report across the week, whilst more would-be bond issuers will be entering enforced blackout periods before also reporting.
Elsewhere and it is a slow start to the week in terms of data, with China trade numbers for Sep due at 08:00 BST and nothing else scheduled thereafter.
Auction supply is also off the menu, whilst a handful of central bank speakers are scheduled to speak (as detailed below).
On Friday, the Fed's Logan said a less restrictive policy will still cool inflation and the recent data was 'very welcome'. Logan added that it is important to adjust policy gradually towards neutral.
For more on latest developments see the European Breakfast Briefing.
Monday’s supply prospects
A fairly packed pipeline belies the results of our survey where a quiet week is expected. An average combined estimate of just EUR14bn (ex-HY) was put forward by respondents with SSAs leading the pack as Land NRW and Met Tokyo are all already primed to hit the market. Some issuers are still conducting or are yet to start roadshows, but a handful could pull the trigger as early as Monday. Whatever does come out this week is likely to be in the first three days of the week given then distraction of a key ECB meeting on Thursday.
** Land NRW EUR 5yr sustainable
** Tokyo Metropolitan Govt EUR300m exp 3 or 5yr sustainable
** Kreissparkasse Ludwigsburg EUR250m no grow 5yr covered
** Kookmin Bank EUR 3.25yr sustainable covered
On average, the Street is looking for USD30bn to cross the tape in the US this week. The least bullish of the group is looking for no more than USD10bn to price next week, while the bulls are looking for as much as USD40bn to come to market. There are two things in mind, (1) it’s only a four-day week given today’s holiday, and (2) the “big six” tend to keep their financing plans close to the chest, so this week’s estimates could be a bit off kilter. See the IG WEEKLY WRAP UP.
What to watch today (and the week)
** Key Data: CH Sep Imports/Exports (08:00)
** Key Events/Speakers: ECB’s Nagel (07:15) & Villeroy (08:00), BoE’s Dhingra (07:30) and Fed’s Kashkari (14:00 & 22:00) and Waller (20:00)
** Auctions: No major term auctions scheduled for Monday 14th Oct
** Holidays: US Columbus Day, Japan Health-Sports Day
** Viewpoint - The week ahead:
- ECB to cut 25bp (Thursday). Hint of December follow-up? Q3 BLS (Tuesday). SPF (Friday)
- US September retail sales, IP/manufacturing output CPI (Thursday). September PPI (Friday)
- UK labour market report (Tuesday). September CPI/PPI (Wednesday). September retail sales (Friday)
- Canadian September CPI (Tuesday). September housing starts & August manuf sales (Thursday)
- German Sept ZEW (Tuesday). EMU August IP (Tuesday), trade/final September CPI (Thursday)