Primary market bullets:
** Primary activity slowed somewhat on Wednesday with just EUR2.2bn of issuance pricing in the single currency which is down significantly on the EUR7.025bn which printed Tuesday. See IGM's Daily EUR Supply Snapshot for more details of the day's four Euro deals.
** Corporates once again dominated, with the sector accounting for EUR1.7bn of the total supply thanks to a trio of issuers, namely Uniper, ChemChina and Telekom Finanzmangement. For a more in depth look at Wednesday's corp deals please see IGM's CORP SNAPSHOT.
** There is set to be more corporate issuance on Thursday after US conglomerate Ecolab Inc held an investor call on Wednesday via BAML, JPMorgan and MUFG ahead of a potential 7yr Euro issue, while Germany's Knorr-Bremse AG is targeting a debut EUR500m 5yr issue after wrapping up an investor roadshow Wednesday. For more on the potential Knorr-Bremse deal, including the official comps list, please see IGM's earlier preview here.
** After drawing a supply blank Wednesday, the FIG sector could also reopen on Thursday courtesy ofAegon N.V which has hired Barclays, BofA Merrill Lynch, Citi, Credit Agricole CIB and RBC CM as joint lead managers for a EUR500m (no grow) 7yr senior issue.
** There was no Covered supply in the single currency on Wednesday but there was some in the USD and GBP currencies thanks to National Australia Bank (NAB) and Swedbank respectively. For more background and relative value analysis on the two trades please see IGM's COVERED SNAPSHOT.
Broader market price action on Wednesday:
** Main developments were a reported deal by OPEC (to cut production by 1.2m bpd to 32.5m) and a very strong US ADP employment report which follows upwardly revised US GDP on Tues.
** That propelled oil (Brent) up to 8.8% higher while 30yr USTs led the bear steepening rout in govvies as yields rose up to 14bps to flirt with the YTD peak of 3.09% recorded last week.
** Resulting energy driven gains sent stocks higher with Stoxx600 +0.50% as at 15:01 GMT, with the index breaking the top end of the range of the past two weeks, with the energy component up 2.86%.
** Synthetic credit indices edged tighter through Wednesday's month-end session amid lighter supply with iTraxx Main and Crossover tighter by 0.45 and 0.94 as at 15:17 GMT.
** Schatz options - Massive down side interest seen over the last two sessions in particular with puts accounting for 95% of the combined 827k lots traded (788k). For more see here.
What to watch Thursday:
** Data: It's Nov Manufacturing PMI day in Europe. The UK version is expected to maintain solid expansion, while some divergence is seen in the Eurozone. Unemployment in the single currency bloc is seen steady at 10.0% for the 4th consecutive month. Italian Q3 Final GDP should affirm the flash print at 0.3% QoQ. In the US, watching jobless claims, Markit Mfg PMI, ISM Mfg and Construction Spending.
** Events: ECB's Nowotny and Coeure remarks could be skewed to the dovish side ahead of next week's ECB policy meeting, while Fed's Mester and Kaplan also speak with the latter to engage in a moderated Q&A.
** Supply: Watch out for any final concessions going into bond auctions. Spain sells EUR2-3bn 2021, 2026, 2041 SPGBs and EUR200-750m 2019 Linkers. France sells EUR2.5-3.5bn 2031 & 2041 OATs and the UK GBP2.75bn worth of 2022 Gilts.
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