CREDIT PRE-MARKET: EUR Market Wrap
- 2y/10y bunds closed -5bp/-6bp at 2.08%/2.42% - rates were lower from the morning on tariff concerns, while treasury yields were also lower post PPI. USTs closed -5bp/-10bp at 4.31%/4.53%.
- Main/XO ended -1bp/-4bp at 51.6bp/281bp while €IG was -1.8bp at 0.89% (Corps -1.3bp at 0.86%, Fins -2.4bp at 0.93%, €HY -1bp at 2.88%). $IG was -0.6bp at 0.78% (Corps -0.5bp at 0.78%, Fins -0.8bp at 0.78%, $HY flat at 2.62%).
- SX5E/SPX futures closed +1.7%/+1% at 5507pts/6135pts. €IG movers included Forvia SE (+11%), Euronet Worldwide Inc (+10%), Molson Coors Beverage Co (+10%), Legrand SA (+9%), Neste Oyj (-11%), British American Tobacco PLC (-9%).
- SX5E/SPX futures are -0.4%/+0.1% this morning. Broader market moves have been limited in the first part of Friday trade. Relief that we are unlikely to see reciprocal tariffs in the near term (with an early April date touted), hasn't weighed much further on the USD while UST futures have been relatively steady,
- Looking ahead, we have EU GDP, while in the USD retail sales is likely to be the main focus point. We also hear from the Fed's Logan.
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EUROZONE ISSUANCE: EGB Supply
Germany and Spain both still look to hold auctions this week. We also pencil in syndications from Austria, Ireland and France, although we may only get one or two of these this week with no countries holding syndications today with UK and US CPI upcoming – we will be looking out for mandates for these countries today as well as a possible RFP from the EFSF ahead of a potential transaction next week. The EU and Greece have already held syndications while Italy, the Netherlands and Germany have held auctions this week. We pencil in estimated gross issuance for the week at E51.3bln, down from E62.5bln last week.
- Today, Germany will return to the market to sell E1bln of the 1.80% Aug-53 Bund (ISIN: DE0001102614) alongside E1.5bln of the 30-year 2.50% Aug-54 Bund (ISIN: DE000BU2D004).
- Tomorrow, Spain will hold a Bono/Obli auction, to sell a combined E5.0-6.0bln of the on-the-run 2.70% Jan-30 Bono (ISIN: ES0000012O00), the 0.85% Jul-37 Obli (ISIN: ES0000012I24) and the 1.00% Oct-50 Obli (ISIN: ES0000012G00).
For more details on issuance this week and next week see the full document here: EZ250115.pdf
UK DATA: Inflation Data Due at 7:00GMT
- UK markets have been volatile but this week’s data is still very much in focus, with CPI data headlining at 7:00GMT.
- The median from the previews that we have read look for headline CPI to come in at 2.60%Y/Y (mean 2.61%Y/Y, Bloomberg consensus is 2.6%Y/Y). This is 14 hundredths above the BOE’s 2.46%Y/Y forecast.
- In terms of services CPI, the median of the previews we have read is 4.75%Y/Y (mean 4.79%Y/Y; Bloomberg median 4.8%Y/Y).
- The main drivers in the slowdown in headline CPI in December versus November are air fares, core goods and tobacco, with petrol prices expected to offset these moves to some extent.
- The factor with the potential to have the largest impact on CPI is the choice of price collection date. This is widely expected to be Tuesday 10 December (quite early in the month and quite far away from Christmas). However, there is a chance that the ONS selects Tuesday 17 December. We discuss the impact of the collection date on the release in our preview.
EUROZONE T-BILL ISSUANCE: W/C January 13, 2025
Portugal is due to sell bills today, whilst Germany, France, Spain and Belgium already came to the market. We expect issuance to be E18.1bln in first round operations, down from E37.9bln last week.
- Today, Portugal will issue E1.0-1.25bln of the new 12-month Jan 16, 2026 BT.
For more on future auctions see the full MNI Eurozone/UK T-bill auction calendar here.
