** The only supply in Europe on Tuesday came courtesy of KfW which tapped it's outstanding 2% Dec 2018 issue for GBP100m at UKTs +30, bringing the new total issue size to GBP1.9bn. Full pricing details of the tap are here
** Fresh EUR supply looks to be concluded for 2016, leaving FIG issuance on course to record its lowest yearly total since 2013. See IGM's FIG Snapshot for more analysis
** In contrast, the corporate market has already made 2016 a record breaker with the year's supply smashing the previous record set in 2015. This was again led by US issuers although it is up for debate whether the jurisdiction will be able to maintain its position at the top of the Euro supply tree in 2017. See earlier IGM COMMENT: US corp supply to ease in 2017 despite busy start?
Broader market developments on Tuesday:
** Govvies retreat marginally following Monday's rally aligned to geopolitical tensions, which saw the 2yr Schatz yield touch a fresh record low for the 4th consecutive day on Monday (-0.809%). See IGM's Fixed Income Close for more details
** EU risk sentiment improves, despite no major game changing news. Stoxx600 eyes new 2016 high. UK CBI Distributive trades beat expectations, while German PPI posted the first positive YoY print since June 2013
** Brent recovers Monday's 0.53% loss and more as bulls have the upper hand in low volume trade in the final week before Xmas, Gold succumbs to selling pressure though following a two day-winning streak
** iTraxx Main touches tightest level since Oct, Crossover on course for 8th straight day of tightening following Mon's 289.875 close, which was the lowest so far in 2016. See earlier COMMENT: iTraxx Crossover breaks some key levels
** EUR/USD weakens to fresh 2016 low after the BoJ stood pat on policy but lifted its economic outlook overnight, while remarks from Fed's Yellen that the US jobs market was at its "strongest level in nearly a decade", with some signs of wage growth also provided support
Market Snapshot (15.16)
** SXXP +0.34% / SX7P +0.91% / FTSE MIB +0.78%
** Brent +1.62% at USD55.81, Gold -1.10% at 1127.79
** iTraxx Main -0.5 at 71.1 / Crossover -1.2 at 290.1
** EUR/USD at 1.0384, follows Mon's 1.0444 close
What to watch Wednesday
** Data: UK Nov public finances form the key morning highlight, and will be followed by Belgian and Eurozone confidence indicators as well as US Existing Home Sales.
** Events: Riksbank announces its latest policy decision with the benchmark interest rate seen steady at -0.5%. Press conference to follow at 10.00 GMT.
** Supply: There are no significant term auctions scheduled on Wednesday 21st December, although watch for any concession going into Thurs USD14bn 5yr US TIPs auction.
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