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CREDIT OPEN: Spain set to boost volumes as window narrows

EU stocks are set for a softer open as the countdown continues to this week's key inflation updates from the euro area and US on Friday.

After European markets closed on lower on Tuesday, US markets posted selective gains with Nvidia powering Nasdaq 0.59% firmer to a fresh record although S&P500 closed virtually flat with industrials and healthcare stocks offsetting gains in tech and energy.

US yields rose and have continued to nudge higher overnight following yesterday's strong US consumer confidence data which further dented rate cut hopes while extra upward pressure on yields came from disappointing sales of 2- and 5yr notes.

Otherwise to note overnight, and playing into the general higher for longer narrative, Australia's annual CPI unexpectedly sped up in April to 3.6% (exp 3.4%, prev 3.5%) while the IMF upgraded its China growth forecast and now expects 2024 and 2025 GDP at 5.0% & 4.5 (from a prior 4.6% & 4.1%). With that, Asian stocks are mostly weaker today with Hang Seng shedding up to 1.8% amid weakness in tech while US index futures are also in the red.

Turning to the day ahead and this afternoon delivers an important warm up for Friday's inflation data in the form of German prelim CPI for May with individual states reporting from 09:00 BST. Ahead of the data, June Bund futures are trading at fresh contract lows.

Also on tap is eurozone M3 for April along with French and Italian consumer confidence readings for May. Already out, German GfK consumer confidence improved to -20.9 in Jun from a prior -24.0 and beat the -22.5 forecast.

Stateside, the focus is on the Fed's Beige Book while speakers comprise ECB's Villeroy and Fed's Williams.

This morning's auction supply comes from Germany & UK that will compete for attention with today's syndicated sales which include a new 10yr offering from Spain (see below).

For more on latest developments see the European Breakfast Briefing.

Wednesday's supply prospects

With another holiday (Corpus Christi) on Thursday the remaining issuance window this week looks like it may be limited to just today, with a host of issuers already lining up including the Kingdom of Spain whose Oct 2034 syndicated line will boost volumes along with a four-part from corporate borrower Medtronic. That after the European bond market was back up to near full speed on Tuesday as UK and US players returned following the long holiday weekends. Eight issuers spanning all the IG asset classes issued euro paper on the day, with the ten tranches to price totalling a combined EUR7.95bn, whilst a couple of sterling deals were also on the menu (full recap here).

** Spain EUR Oct 2034s

** NWB Bank EUR 7yr water bond

** Land NRW EUR 5yr

** Wallone EUR 30yr social

** EDC USD 10yr green global at SOFR m/s +55 area IPTs

** CPI Financial USD 5yr at SOFR m/s +56 area IPTs

** Medtronic EUR 5.5/12.5/19.5/29.5yr four-part

** ISS Global EUR500m n/g 5yr

** HOWOGE EUR300-500m 6yr

** Raiffeisenbank a.s EUR500m n/g 6NC5 sustainable

** Danske EUR 4yr floating and 7yr fixed covered two-part

** ICCREA Banca EUR500m 10yr covered

** Maybank Singapore EUR500m n/g 3yr covered

Stateside, even another a sell-off in the Dow (-217) and a jump in Treasury yields could not keep high grade borrowers from tapping the primary market Tuesday in what is expected to be a lower than normal volume four-day week. Five borrowers managed to raise USD7.05bn bringing ex-SSA issuance for the month to USD123.4bn, edging closer to the average monthly estimate of USD125bn, with three viable trading sessions left in the month. For more colour see THE ENDGAME.

What to watch today

** Key Data: FR May Consumer Confidence (07:45), SP Apr Retail Sales (08:00), IT May Consumer/Manufacturing Confidence (09:00), EC M3 Money Supply (09:00), US Weekly MBA Mortgage Applications (12:00), GE May P CPI (13:00) with individual GE States to report from 09:00 and US May Richmond Fed Manufacturing Index (15:00)

** Key Events: ECB's Villeroy (08:00) and Fed's Williams (18:45) speak. Fed's Beige Book (19:00)

** Auctions: UK to sell GBP1bn 2039 Linkers (10:00), GE to sell EUR2bn 2038 & 2041 Bunds (10:30) and US to sell USD28bn 2yr FRNs (16:30) & USD44bn 7yr Notes (18:00)

** Earnings: 2 Stoxx600 and 3 S&P500 companies release results

All times BST

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