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CREDIT OPEN: Tone improves, variety of deals in the pipeline

EU stocks are set for an opening rebound with help from a positive overnight lead from US markets which also extended into Asia.

Wall Street stocks were back to their record setting ways Tuesday, taking heart from Powell's comments that the Fed had made "quite a bit of progress" in bringing inflation down. With that, S&P500 (+0.48%) and Nasdaq both posted record closing highs while US index futures currently suggest those gains are holding ahead of today's pre-holiday session.

That dynamic also brought relief to a recently beaten up UST complex where the 10yr yield closed 2.9bps lower following a 2-day/17.5bps jump.

Overnight, Asian stocks have mostly piggybacked on the positive Wall Street handover while on the data front, the Chinese service sector grew by less than expected in June with the Caixin PMI index falling to 51.2 from 54.0 in May and was also below the 53.4 forecast.

For today, peripheral and core eurozone countries report a mixture of first-time and final readings for service PMIs in June.

Stateside, ADP employment is seen improving to 165k in June (prev 152k) while ISM services is seen slowing to 52.6 (prev 53.8). Also out, initial and continuing claims are both expected to edge higher in what marks an accelerated schedule of data releases ahead of Thursday's 4th July holiday.

Markets will be closely watching OATs again which outperformed yesterday on expectations that tactical withdrawals of third place candidates from centrist and left parties will help to block a far-right majority, and boost the chances of a hung parliament.

The ECB's forum in Sintra continues where speakers include chief Lagarde while FOMC meeting minutes will be released after the European close.

For more on latest developments see the European Breakfast Briefing

Wednesday's supply prospects

Following Monday's flurry of mandates, supply resumed Tuesday but the pace was measured as markets fretted over residual and hard to fathom political risk and ongoing doubt over the timing & magnitude of ECB rate cuts going forward. In total, EUR5.25bn of single currency debt priced across the asset classes vs. this week's average estimate of EUR9bn (ex HY corp). Today's potential line-up is as follows;

** The City of Madrid EUR128m no grow Oct-2034

** REC Limited USD long 5y Rule 144A/Regulation S senior green

** Deutsche Bank AG inaugural EUR500m no grow 4NC3 Reg S, Social SNP

** Eesti Energia AS EUR300m exp PerpNC5.25, Reg S Bearer, hybrid green

** RAI Radiotelevisione Italiana S.p.A. EUR300m exp 5y Reg S Bearer, Senior

** Banca Popolare dell Alto Adige SpA EUR300m no grow 7y Reg S covered

** Amber Finco PLC a EUR795m 5NC2 144A for life / Reg S Senior Secured

** Greenalia S.A. EUR220m 5y senior secured green

** KIKO MILANO EUR500m 7NC1 (par) Reg S/144A Senior Secured FRN

** Phoenix PIB Dutch Finance B.V EUR400-500m 5y Reg S bearer, senior unsecured

Stateside, the week currently sits at USD5bn, not yet enough to reach the average estimate, but sufficient to match the lowest weekly estimate of USD5bn. Should that be it for the week, this will be the slowest issuance week of the year, unseating the week of June 10th when a mere USD5.75bn came to market. For more colour see IGM's THE ENDGAME.

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