CREDIT OPEN: The chips are down but primary set to motor on?
EU stocks are set for stiff opening losses as tech and growth jitters fan out across the globe.
The former was stoked by a BBG report that the US DoJ had issued Nvidia with subpoenas in a deepening of its anti-trust case while growth worries were fanned by ISM manufacturing data that was weaker than expected in Aug at a still contractionary 47.2.
At the current juncture, a 25bps cut by the Fed at its September meeting remains the central scenario but the probability of a 50bps cut is rising with FF futures (via BBG) implying that 35bps of easing is now priced in.
Over in Asia, Nikkei has been leading declines amid JPY strength with a loss of over 4%, but it’s notable that weakness is broad-based and stretches well beyond tech.
Crude provides another sign that broader eco worries are in the mix and is down again overnight after Brent sunk by almost 5% on Tuesday reflecting oversupply concerns.
And keeping China growth worries in mind, Caixin services PMI cooled by a tad more than expected in Aug to 51.6 (exp 51.8, prev 52.1).
Today delivers a slew of final services PMI releases from the Eurozone & core countries while Spain and Italy report first time readings.
Turning to NY hours, JOLTS job openings are expected to stabilize, with some anticipating a mild cooling in the numbers. Meanwhile, the Fed's Beige Book for September will likely depict a similar outlook, suggesting modest growth in economic activity.
Speakers comprise ECB’s Villeroy while auction supply comes from Germany via EUR1.5bn of 2038 & 2041 Bunds.
For more on latest developments see the European Breakfast Briefing.
Wednesday’s supply prospects
The fast pace seen already this week looks set to continue Wednesday with the pipeline remaining well-stocked despite another flurry of issuance on Tuesday. Borrowers spanning all IG asset classes are set to go today in euros and/or or sterling, which comes after EUR10.75bn (18 issuers) and GBP9.05bn crossed the tape yesterday. With that, weekly euro supply is currently at EUR20.5bn, versus the average weekly estimate of EUR38.5bn.
** DBJ EUR 4yr sustainability at m/s +33 area IPTs
** Nordic Investment Bank EUR 5yr environmental bond
** NWB BANK EUR 3yr
** Schleswig-Holstein EUR 6yr Landesschatzanweisung
** Munich EUR250m debut green
** CAF USD1bn no grow Jan 2028s at SOFR m/s +90 area IPTs
** Scandinavian Tobacco EUR300m (exp) 5yr
** Pearson Funding GBP 10yr education bond
** Anglian Water GBP 20yr green secured
** Macquarie Bank EUR short-to-intermediate green snr
** MONETA Money Bank EUR300m 6NC5 snr pref
** Aktia EUR70m 10.25NC5.25 T2
** PKO Bank Polski EUR 3NC2 green SNP debut
** TSB GBP500m n/g 5yr SONIA covered
** B2 Impact EUR200m 4yr FRN
In the US we saw 29 borrowers, through 53 tranches, raise a staggering USD43.275bn on Tuesday – already taking out the lowest weekly estimate of USD40bn. That made Tuesday (1) the busiest ex-SSA issuance day in terms of the number of deals on record (2) the busiest day of the year in terms of volume and (3) the third busiest ex-SSA issuance day of all time. For more details see THE ENDGAME.
What to watch today
** Key Data: SP Aug HCOB Composite/Services PMIs (08:15), IT Aug HCOB Composite/Services PMIs (08:45), FR Aug F HCOB Composite/Services PMIs (08:50), GE Aug F HCOB Composite/Services PMIs (08:55), EC Aug F HCOB Composite/Services PMIs (09:00), UK Aug F S&P Global Composite/Services PMIs (09:30), EC Jul PPI (10:00), US Weekly MBA Mortgage Applications (12:00), US Jul Trade Balance (13:30), US Jul JOLTS Job Openings (15:00) and US Jul Factory Orders (15:00)
** Key Events: ECB’s Villeroy speaks (12:00) and Fed’s Beige Book (19:00)
** Auctions: GE to sell EUR1.5bn of 2038 & 2041 Bunds (10:30)
** Earnings: 3 Stoxx600 & 4 S&P500 companies release results
All times BST
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