CREDIT OPEN: Supply set to pick up
A negative Asian handover is setting up EU stocks for a significantly weaker start which currently looks likely to scrub out most of Monday’s gains that were seen in the holiday impacted session, not exactly ideal for those with a go/no-go call scheduled for this morning.
Cash USTs reopened overnight with yields nudging higher as markets position for higher inflation associated with promised tax cuts and tariffs aligned with a Trump presidency. US equities are evidently taking higher yields in their stride for now, but it will be interesting to see the extent to which higher yields and elevated stocks can coexist on a longer-term basis.
Monday’s US stock gains were perhaps more symbolic than significant though where modest rises for S&P500 (+0.10%) and Nasdaq (+0.06%) were sufficient to produce record closes on both indices with S&P closing above 6k for the first time ever. US index futures currently suggest a muted start.
In Asia, negative sentiment has gripped markets today, with attention and thoughts on tighter restrictions of chip shipments to China.
Today’s session features lots of central bank speak but relatively limited data besides already released UK labour market data which showed an unexpected rise in headline earnings in the three months to Sep but weaker than expected employment gains.
Still to come is German ZEW data where the Expectations and Current Situation readings are both seen improving in Nov.
That leaves the data spotlight and near-term thoughts on Wednesday’s US CPI print, ahead of which markets are currently ascribing around a 70% probability to 25bps rate cut at the Fed’s next meeting in December (CME data).
On the auction front are sales from Germany, Netherlands & UK (details below).
For more on latest developments see the European Breakfast Briefing.
Tuesday’s supply prospects
Single currency supply is expected to return on Tuesday, although the pipeline offers little visibility as to just how busy it will be with only one name (Eurofima) currently present. As a reminder, an average combined supply estimate of EUR20.5bn was put forward by respondents in our latest issuance survey, but we drew a blank on Monday amid the holiday. Sterling supply was on the menu at the start of the week though thanks to NatWest (GBP500m 5yr Senior OpCo) and KfW (GBP300m Dec 2026 tap), with a recap here.
** Eurofima EUR500m no grow Jan 2035 green
Stateside, according to the results of our weekly issuance poll, now that the dust has settled after Trump’s convincing victory, the Street is looking (on average) for USD30bn in new supply to hit the US market this week, despite the fact that it will be a four-day work week. For more details see the IG WEEKLY WRAP UP.
What to watch today
** Key Data: GE Oct ZEW Survey (10:00) and US Oct NFIB Small Business Optimism (11:00)
** Key Events: ECB’s Rehn (08:00), Centeno (09:00) & Cipollone (14:00), BoE’s Pill (09:00), as well as Fed’s Waller (15:00), Barkin (15:15 & 22:30), Kashkari (19:00) & Harker (22:00) speak
** Auctions: NE to sell up to EUR2.5bn 2029 Bonds (09:00), UK to sell GBP2.25bn 2043 Gilts (10:00) & GE to sell EUR5bn 2026 Schatz (10:30)
** Earnings: 13 Stoxx600 & 6 S&P500 companies report
All times GMT
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