CREDIT OPEN: Trump trades energised, primary sidelined
There’s only one game in town this morning as markets react to incremental updates on the US presidential race which looks increasingly certain to deliver a Republican win. Crucial swing states of Georgia, North Carolina and Pennsylvania have been called for Trump.
With polls closed, current projections put team Trump at 265 Electoral College votes versus 194 for Harris vs the 270 needed for victory. With that, Trump trades are very much in the ascendancy to the extent that the 10yr US yield jumped by up to 19.4bps to a fresh YTD peak of 4.465% overnight with DXY and US index futures also firmly higher. Whatever the case, a clear victory would be a welcome outcome.
Over in Asia, dollar strength and associated JPY weakness has jolted Nikkei firmly higher but Hang Seng is down over 2.5% as markets consider the trade implications of a potential Trump win.
Turning to the day ahead and away from the still unfolding political story, Wednesday is a big day for earnings which come from 35 Stoxx600 & 28 S&P500 firms.
Auction supply is a long-duration affair and is on tap from Germany (EUR1.5bn 2041 & 2046 Bunds) and the US (USD25bn 30yr Bonds (18:00) and comes with the benefit of an extra concession courtesy of the ongoing rise in yields.
Data comprises final service PMI readings for the euro-area and core countries which also reveals fresh information on the periphery.
ECB speakers include chief Lagarde while Fed officials remain in blackout ahead of tomorrow’s FOMC verdict where markets are currently ascribing a 97.5% probability of 25bps cut (CME data). Ahead of the latter, US inflation forwards have jumped today with the 5y5y US rate at its highest level since June.
For more on latest developments see the European Breakfast Briefing
Wednesday’s supply prospects
The US election ‘elephant in the room’ has proved to be almost unassailable so far this week keeping EUR issuers completely sidelined. There was some bond activity on Tuesday though, coming courtesy of Northern Gas, which conducted a GBP150m sale of 6.125% Jun 2033 retained bonds. Given the ongoing events and the potentially open-ended nature of the results procedure the current pipeline in Europe is empty.
Stateside, while the markets await the results of the presidential election and the Fed’s two-day policy meeting on Thursday, the US high-grade primary market, much as expected, marked its nineteenth blank day of the year on Tuesday – for context, there were 32 last year. That left issuance for the week at a mere USD700m. See IGM’s THE ENDGAME
What to watch today – US election results & PMIs
** Key Data: SP Oct HCOB Composite/Services PMIs (08:15), IT Oct HCOB Composite/Services PMIs (08:45), FR Oct F HCOB Composite/Services PMIs (08:50), GE Oct F HCOB Composite/Services PMIs (08:55), EC Oct F HCOB Composite/Services PMIs (09:00), UK Oct S&P Global Construction PMI (09:30), EC Sep PPI (10:00) and US Weekly MBA Mortgage Applications (12:00)
** Key Events: ECB’s Escriva (11:00), Vujcic (12:00), Lagarde (14:00), Guindos (14:30) & Villeroy (17:00) all scheduled to speak. US Presidential Election results
** Auctions: GE to sell EUR1.5bn 2041 & 2046 Bunds (10:30) and US to sell USD25bn 30yr Bonds (18:00)
** Earnings: 35 Stoxx600 & 28 S&P500 companies release results. Former includes Commerzbank, Credit Agricole & UniCredit
All times GMT
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