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Primary market highlights on Tuesday

** Primary IG issuance stepped up a gear on Tuesday where EUR16.55bn printed in the single currency on the back of combined demand exceeding a whopping EUR48.17bn, headlined by well-received jumbo deals from The Kingdom of Belgium and Fresenius Finance Ireland (more on these below). For a full list of bonds in the single currency on the day see IGM's DAILY EUR NICS & BOOKS

** SSAs led the way on the day with the asset class accounting for EUR9.3bn (56.19%) of total supply, dominated by a syndicated EUR6bn Jun 2027 (OLO 81) from The Kingdom of Belgium which attracted blowout demand of EUR21.5bn (pre-rec). See earlier IGM SSA Preview for more on all of Tuesday's SSA issues

** Fresenius Finance Ireland hogged the limelight in the corporate market with the German health care company amassing blowout demand of over EUR12.5bn for its well flagged EU2.6bn multi-tranche issue. For more details on the deal see earlier IGM COMMENT here

** FIG saw fresh senior supply from DVB BK SE and China Development Bank while Rabobank priced its perpetual unrated certificates. See IGM's FIG SNAPSHOT. Our technical team also looked at prospects for a continuation of the 6-month rally in European bank stocks, see CHART WATCH

** AXA Bank Europe SCF kept covered supply ticking over with a EUR250m 15yr (26 January 2032) Obligations Foncieres. For more on this and a recap on Tuesday's covered bonds see IGM's COVERED SNAPSHOT

Wednesday set to be another busy one for Primary

** A further raft of SSA's are prepping deals for Wednesday. Corporacion Andina De Fomento (CAF) is taking IoIs for a EUR 5yr bmk at m/s +low/mid 40s IPTs whilst State Hessen has hired banks for a EUR500m no grow 7yr LSA and EIB is readying a new EUR 10yr EARN. Republic of Italy is also expected with a long 15yr BTP by syndication

** Aareal Bank is poised to become the latest to tap the covered bond market having mandated Commerzbank, DekaBank, DZ BANK, LBBW and UniCredit for a EUR500m no grow Hypothekenpfandbrief

** Away from the single currency, the World Bank has begun marketing a USD 5yr Global at m/s +22 area IPTs whilst Kommunalbanken (KBN) is also touting a USD 5yr at m/s +37 area IPTs. Elsewhere, Oesterreichische Kontrollbank AG (OKB) and FMS Wertmanagement are both set to test the 3yr part of the Dollar curve

** Looking longer term, British multinational tobacco company British American Tobacco p.l.c. (BAT) is to hit the bond market to help finance its USD49.4bn acquisition of the remaining 57.8% of U.S. rival Reynolds American Inc that it doesn't already own. For more details on the merger see COMMENT: BAT agrees to acquire remaining stake in Reynolds

Broader market developments on Tuesday

** UK PM May's speech provided a bit more clarity on Brexit stance, sending the pound soaring which was already rising on a hawkish Carney, Trump rhetoric that USD was too strong and firmer UK CPI print

** Data-wise: UK CPI at 1.6% YoY was the highest since July 2014 and German ZEW current situation hit its highest level since July 2011

** Early risk-off tone gave way to recovery with PM May's speech the catalyst. FTSE an exception as stronger GBP weighed

** Commodities rise on weaker USD while US yields fell amid ebbing enthusiasm on Trump-flation trades. Fed's Dudley said �inflation is simply not a problem"

** Otherwise, Chinese President Xi Jingping championed globalisation (Davos speech) and Morgan Stanley became latest Wall Street bank to report rising FI revenues

Market snapshot (15.35)

GBP/USD +2.61% at 1.2362

SXXP +0.06% / SX7P +0.5% / FTSE100 -1.12%

GER 2yr +0.04bps / 10yr -1.0bps

Brent +0.70% at USD56.25 / Spot gold+0.9% at 1213.45

iTraxx Main +0.4 at 70.1 / Crossover +0.6 at 291.8

What to watch Wednesday

** Data: German and Eurozone Final Dec CPIs are seen matching flash estimates, leaving focus on the UK where latest labour market data dominates the European agenda. In the US, watching inflation and industrial production figures

** Events: Markets will be looking for any fresh policy clues from ECB's Nouy ahead of Thur's ECB policy meeting. Fed's Yellen speaks before US Pres-elect Trump's official inauguration (Fri), joining Kaplan and Kashkari who are due to speak earlier in the day

** Supply: Gilts could come under pressure ahead of the GBP2.75bn 2022 UK gilt auction. Also watch out for any concession going into chunky supply Thurs (EUR4-5bn 2019, 2022 & 2023 bonds from Spain, EUR7-8bn 2020 and 2022 OATs and EUR1.5-2bn 2021 OATi and 2027 and 2047 OATeis from France)

** Earnings: 2 Stoxx600 and 8 S&P500 companies report. Among the latter are GSI, Citi, US Bancorp and Northern Trust Corp. Some self-led supply could follow.

SSA Priced / SSA Pipeline

CORP Priced / CORP Pipeline

FIG + Covered Priced / FIG + Covered Pipeline

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