EU BASIC INDUSTRIES: Week in Review
Feb-07 13:18
- Industrial spreads underperformed slightly at +2 on the week. Verallia (+11) gave back some of last week’s tightening; BWSA confirmed interest but the implied CoC probability priced in last week looked aggressive.
- Honeywell took its separation plans a step further and will now split into three rather than two. It sounds like it will seek similar credit outcomes for both remaining businesses and is committed to strong IG for both, but capital structure uncertainty remains. S&P moved it to watch negative following the announcement.
- Agricultural OEMs had a mixed week with AGCO (-4) helped by margins beating low expectations. CNH (+9) on the other hand missed on margins and gave weaker-than-expected guidance. Deere (+5) widened in sympathy.
- ArcelorMittal reported a solid EBITDA beat and optimistic outlook; this still looks one of the better value names in the sector.
- UPM-Kymmene reported soft results and outlook due to ongoing subdued pulp prices. Amcor was largely in-line.
- Capital goods names Emerson Electric, Illinois Tool Works and Veralto reported largely in-line results. Timken EBITDA beat, but soft guidance saw spreads underperform at +8. Johnson Controls posted a small beat and raise. Assa Abloy, KION and Vestas Wind produced beats.
- In Chemicals, results from Air Products and Linde were close to in-line with further evidence of no imminent macro recovery.
- Smiths Group was put on outlook negative by S&P in response to break up plans.
Parker-Hannifin printed a new issue 5bp through our theoretical FV, although it lacks a secondary curve.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EURGBP TECHS: Breaches Resistance
Jan-08 13:15
- RES 4: 0.8448 High Oct 31 and reversal trigger
- RES 3: 0.8400 High Nov 5
- RES 2: 0.8376 High Nov 19 and a bull trigger
- RES 1: 0.8348/56 Intraday high / High Nov 27
- PRICE: 0.8338 @ 13:14 GMT Jan 9
- SUP 1: 0.8284 Intraday low
- SUP 2: 0.8263/23 Low Dec 31 / 19
- SUP 3: 0.8203 Low Mar 7 2022 and a major support
- SUP 4: 0.8188 1.00 proj of the Oct 31 - Nov 11 - 19 price swing
EURGBP has traded sharply higher today and in the process breached resistance at the 50-day EMA, at 0.8311. The cross is also through the December highs. This undermines the recent bearish theme and suggests scope for a stronger short-term recovery. A continuation of the bull leg would expose 0.8376, the Nov 19 high and the next important resistance. Initial support lies at 0.8284, today’s intraday low.
STIR: Waller Helps Unwind Remainder Of ISM Services Boost
Jan-08 13:15
- Gov. Waller (permanent voter) seeing more rate cuts as appropriate has seen Fed Funds implied rates dip 1-2bps across the near-term path.
- In doing so, it’s reversed the impact from yesterday’s ISM services beat (primarily on its particularly strong prices paid component) with help from President-elect Trump yesterday also wanting to see lower rates.
- Cumulative cuts from 4.33% effective: 1bp Jan, 10.3bp Mar, 15.5bp May, 25bp Jun, 28bp Jul and 38bp Dec.
GILT PAOF RESULTS: The PAOF for the 4.375% Mar-30 Gilt was not taken up.
Jan-08 13:04
- GBP1.0625bln had been on offer.
- This leaves GBP 4.250bln of the gilt in issue.
