DAILY CLOSE: Markets divided over Trump 2.0 impact

** As per expectations there was no activity at all in European capital markets in the wake of the US election results. That means, so far this week, we have seen just EUR1bn of issuance with that coming from French covered bond issuer BPCE SFH in the shape of a new 6yr line. In sterling, a GBP250m 3yr from German regional issuer Land NRW (no books and priced in line with IPTs) on Monday was joined yesterday by Northern Gas which took the opportunity to offload GBP150m of retained bonds. With the election outcome seemingly sorted the issuance window is theoretically back open, albeit with BoE and FOMC decisions to contend with tomorrow (Thurs).

** Key take-aways with respect to issuance in October are highlighted below. For the full report with insights from our analysts around the globe, please see IGM's Global Credit Snapshot - October 2024

• European Issuance slowed as FIG and high-grade corporates paused during earnings blackouts after a busy September. High yield issuance hit a record EUR15.96bn, driven by strong investor demand, while SSA volumes were robust at EUR51.95bn, led by Italy and the EU.
• APAC USD-denominated bond supply dropped to USD22.26bn amid rising US yields, though IG activity remained strong. Chinese issuers took 37% of total volume, and high yield supply grew, especially from Indian names.
• In the US, October was the slowest issuance month of 2024, totaling USD95bn but supported by major FIG deals. High yield issuance was robust, with USD23.39bn raised, more than doubling last year’s October total.

Wednesday's broader market developments

** US stocks embraced Trump victory (S&P500 hit all-time highs) with gains led by banks. In contrast, initial gains in Europe faded with markets fretting over implications of a Trump 2.0 presidency while Hang Seng also stuck out with a 2.23% loss as markets ponder the potential impacts on Chinese growth. US yields surged and inflation expectations rose with the reverse seen in Europe. While underlying US yields rose sharply, views on what the Fed may do Thursday were little changed where markets see a 97.7% probability the Fed will cut 25bps (CME data). German coalition at risk of collapse this evening

** Stoxx600 down as much as 0.7% in late trade, reversing an early gain of +1.91%. Utilities weakest sector

** Govvies: Bull steepening in Europe vs. bear steepening in US

** Key Data:

• GE Sep Factory Orders MoM beat at 4.2% (exp 1.5%, prev rev to -5.4%)
• SP Oct HCOB Composite/Services PMIs missed at 55.2/54.9 (exp 56.3/56.6)
• IT Oct HCOB Composite/Services PMIs beat at 51.0/52.4 (exp 50.0/50.2)
• FR Oct F HCOB Composite/Services PMIs revised up to 48.1/49.2 (flash 47.3/ 48.3)
• GE Oct F HCOB Composite/Services PMIs revised up to 48.6/51.6 (flash 48.4/51.4)
• EC Oct F HCOB Composite/Services PMIs revised up to 50.0/51.6 (flash 49.7 51.2)
• EC Sep PPI YoY matched f/c at -3.4% (prev -2.3%)

What to watch Thursday - BoE rate decision, ECB speakers, tonnes of earnings and FOMC to wrap it up

** Key Data: GE Sep Industrial Production (07:00), GE Sep Exports (07:00), GE Oct HCOB Germany Construction PMI (08:30), EC Sep Retail Sales (10:00), UK Nov 7 BoE Bank Rate (12:00), US 3Q P Nonfarm Productivity (13:30), US 3Q P Unit Labor Costs (13:30), US Nov 2 Initial Jobless Claims (13:30), US Oct 26 Continuing Claims (13:30), US Sep F Wholesale Inventories (15:00), US Nov 7 FOMC Rate Decision (19:00), US Sep Consumer Credit (20:00), JN Sep Household Spending (23:30)

** Key Events: ECB's Stournaras (07:35, 14:30), Schnabel (08:10), Elderson (10:45), Escriva (12:00), Knot (12:00), Lane (13:30 and 14:30)

** Government Auctions: Japan to sell JPY2,600bn 10yr bonds (03:35), Spain to sell up to EUR4.5bn 2030 & 2054 bonds and up to EUR750m 2033 linkers (09:30), France to sell up to EUR12.5bn 2034, 2035, 2044 and 2055 bonds (09:50)

** Earnings: 38 Stoxx600 and 34 S&P500 companies release results

All times GMT

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