DAILY CLOSE: Supply continues but risk tone sours

Primary market bullets:

** The primary market remained fairly active on Wednesday where EUR5.15bn of issuance priced in the single currency, to follow the EUR4.775bn which printed Tuesday. For the composition of the day's supply please see earlier IGM Daily EUR Supply Cheat Sheet.

** It was the corporate sector which again saw the highest number of deals, with three issuers printing a joint EUR1.3bn of paper on the back of combined demand topping a healthy EUR5.87bn. The day's benchmark deals from Adecco and ASML both printed with final NICs of 5bps, which is smaller than the average NIC of 13bps seen last week. For more relative value analysis and background on Wednesday's corp deals see IGM's CORP SNAPSHOT.

** UBS Group Funding (Jersey) Limited became the first issue to raise senior funding in more than a week where the response was positive from investors who placed more than EUR2.8bn in orders for the EUR1.25bn sold. Secondary spreads also registered significant tightening versus the prior day's levels. For more detail see IGM's FIG SNAPSHOT

** Caffil kept EUR covered supply ticking over on Wednesday with a EUR Dec 2031 Public Sector Obligations Foncieres to follow Sp Mortgage Bank's 2021 Finnish Covered bond on Tuesday. For a more in depth look at the Caffil deal see IGM's COVERED SNAPSHOT.

Broader market price action

** European stocks opened steady following positive Wall Street handover but then slid for much of the session to leave Stoxx600 0.4% lower as at 15:35 GMT with financials underperforming.

** Oil prices were more sedate following the 3.6% intraday swing in Brent seen Tuesday, holding up well to yet more DXY strength which hit a fresh 13.5yr high as markets solidified bets for a Dec hike.

** Synthetic credit markets were set to end a 2-day tightening run with iTraxx Main +1.6 at 82.0 as at 15:35 GMT and Crossover +3.5 at 344.9. The former hit a fresh multi-month wide intraday.

** A perfect storm for Bonds as ECB sources, UK Chancellor Hammond, the DMO & generally better than expected US data releases all conspired to sharply undermine the bid after 2yr German yields hit a record low at the open. For more details see here.

Look ahead to Thursday's event risk

** The US Thanksgiving holiday will reduce liquidity across the globe which has the potential to magnify price moves should markets encounter any unexpected banana skins. Some players will bridge Thursday's holiday into the weekend.

** Data: Steady is expected to be the watchword. German final GDP will reveal more detail about the fairly tepid 0.2% growth seen in Q3. French Manufacturing Confidence is seen holding steady as are two of the three components of German IFO and ditto for German GFK Consumer Confidence.

** Supply: There's no term government auction supply in Europe or US Thursday

** Events: Just ECB's Praet is scheduled to speak (16.10)

** Watching: Peripheral bonds after 10yr BTPs hit their cheapest level vs Bunds of the year on Wednesday as jitters intensified ahead of the Italian referendum on Senate reform (Dec 4^th).

SSA Priced / SSA Pipeline

CORP Priced / CORP Pipeline

FIG + Covered Priced / FIG + Covered Pipeline