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** The European primary market got off to a strong start on the first full trading day of 2017 where EUR7.5bn priced courtesy of 7 separate deals, with all asset classes represented. For the breakdown please see IGM's Daily EUR Supply Report

** Covered supply dominated on the day with LBBW, CAFFIL and CaixaBank all issuing in the single currency for a total of EUR4bn. For more detail on Tuesday's deals including relative value please see IGM's Covered Snapshot. ABN Amro looks set to be the next to issue a covered deal with the issuer hiring leads for a EUR 15yr Legislative Covered

Bond transaction

** There was more senior non-preferred issuance courtesy of BNP Paribas (inaugural Euro and USD issues) while Credit Agricole tapped the dollar market after it sold Euros in December. In a sign of further healing toward Italian financial risk, Intesa Sanpaolo is poised to become the first issuer to sell a Euro denominated public AT1 deal since June 2016 after mandating banks Tuesday

** BNG and Lower Saxony tapped the single currency in the SSA space whilst France mandated banks to manage an investor roadshow next week ahead of a long-dated EUR Green OAT. See earlier IGM SSA Preview for more

** SSA supply looks set to continue on Wednesday with Ireland and KfW having hired leads for respective EUR 20yr and EUR 7yr Global issues, whilst away from the single currency ADB is taking IoIs for a USD Global dual-tranche 3/10yr deal and Kommunekredit is working a USD1bn 3yr

** RCI Banque printed the first EUR corporate deal of 2017 and the first issue from the sector since 6th December, with the EUR750m deal attracting healthy demand of around EUR1.9bn. For more on the RCI trade see IGM's Corp Snapshot

** German health care company Fresenius SE & Co. KGaA hired banks on Tuesday to lead manage an investor roadshow next week ahead of an M&A driven multi-tranche Euro issue. See IGM's more in depth preview here


Broader market developments on Tuesday

** European risk sentiment was buoyed by stronger than expected data/surveys and a rise in commodities, which ultimately saw govvies get hammered with yields rising across the board and across all maturities with the exception of GGBs

** FTSE100 posted a new all-time high (7205.21), led higher by financials

** Data-wise, German EU Harmonised CPI was much stronger than expected at a 3-year high of 1.7% YoY (exp 1.3%, prev 0.7%), skewing risk to the upside for Wednesday's flash pan-EZ version, seen at 1.0% from 0.6% previously

** Otherwise, German unemployment fell by the most since Jan 2016 and UK's Markit Mfg PMI touched its highest level since June 2014 (both for Dec)

** A closer look at govvies saw IGBs underperform/bear steepen on speculation of syndicated supply, with a 20yr mandate announced in PM trade. PGBs also get beaten, price action aligned to upcoming supply pressures

** Brent rallied, peaking at its highest level in well over a year, as Kuwait and Oman deliver on their OPEC output cut pledge

** iTraxx indices extend tightening during course of day with Crossover breaking below key levels to touch its tightest level since July 2015


Market Snapshot (14.39)

SXXP +0.76% / SX7P +2.96%

Brent +2.38% at USD58.17, having closed flat on Monday

iTraxx Main -2.8 at 69.79 / Crossover -8.5 at 280.36


Watch to watch Wednesday

** Data: It's Services PMI day in Europe, which follows Japan's Final Mfg PMI overnight as well as the Dec Monetary Base YoY. Also on the agenda are UK Nov Mortgage Approvals and Eurozone flash CPI YoY. Risk for the latter lies to the upside following Tuesday's stronger than expected aggregate German read. Italy also reports Dec inflation numbers. Spain's unemployment (for Dec) is expected to deliver the first decline since July 2016

** Events: Fed Minutes form the only scheduled event of the day, due after European hours

** Supply: There are no significant term auctions scheduled in Europe or US on Wednesday 4th January, although it may be worth watching for any further pressure ahead of Thursday's auctions from France (up to E9.5bn), Spain (up to EUR4bn) and UK (GBP2.25bn)


SSA Priced / SSA Pipeline

CORP Priced / CORP Pipeline

FIG + Covered Priced / FIG + Covered Pipeline


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