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Wednesday's primary market highlights

** Euro primary issuance slowed somewhat on Wednesday where just EUR2.02bn was issued compared to EUR8.65bn on Tuesday. See the IGM DAILY EUR NICS & BOOKS for the breakdown of Wednesday's supply

** Credit Mutuel Arkea had the FIG market to itself on the day, refreshing its EUR Tier 2 curve with a EUR500m 12yr line which attracted demand of around EUR1.9bn. See IGM's FIG SNAPSHOT for relative value analysis

** The one covered deal to print on Wednesday came courtesy of Deutsche Pfandbriefbank which brought a new EUR500m Aug 2021 Hypothekenpfandbrief at m/s -6 on the back of demand topping EUR1.3bn. See IGM COVERED SNAPSHOT for more on this deal and a look back on January's covered issuance

** The SSA sector was represented by State of Berlin and Asian Development Bank which both targeted the long end of the EUR curve with EUR500m 10yr and EUR520m 20yr transactions respectively. Elsewhere, Province of Ontario picked dollars via a USD2.5bn 5yr line at m/s +42. For more on all these deals see IGM's SSA PREVIEW

** Despite this contained start to February, in January 2017 total EUR-denominated issuance volume totalled EUR173.16bn via 160 deals which was higher than any month in 2016. For a more in depth look at the composition of January's supply see IGM MONTHLY VOLUME REPORT

Thursday's potential primary supply

** After holding an investor call on Wednesday, Norwegian state-owned airport operator Avinor (A1/AA-) could pull the trigger on a EUR500m no grow 10yr senior line via BNP Paribas, Danske Bank and Nordea. For more colour including the official comps list, see IGM's CORP SNAPSHOT

** DVB Bank (A2/AA-) is expected to go live with a minimum EUR100m Feb 2020 floater via BayernLB and DZ Bank

Broader market developments on Wednesday

** EU risk assets stretched gains, ahead of Fed policy verdict. Price action follows US data beats with ADP Employment hitting its highest level since June 2016 (at 246k, exp 168k), and ISM Mfg at its highest since Nov 2014 (at 56.0, exp 55.0). EZ's final Mfg PMI marginally upgraded

** Govvies - Bond bears back in the driving seat, despite residual month-end flows, amid an improved tone in equity markets. German and French curves bear steepen. SPGBs and OATs form the weakest links as markets set up for Thursday's (up to EUR7bn) French and (up to EUR5bn) Spanish bond auctions (10yr yields up to 8.7bps higher). Continued political uncertainty in France also a negative

** EUR/USD comes under pressure in late afternoon, as DXY makes a marginal recovery on better-than-expected US data after Tues's 0.91% drop. DXY spot briefly reclaims 100.00 handle

** iTraxx indices sea-sawed albeit in a narrow range but Crossover was on course for 2nd straight close above 300

Market snapshot (15.36)

EUR/USD -0.35% at 1.0746, following two straight days of gains

DXY Spot +0.48% at 99.987

SXXP +1.05% / SX7P +1.61%

GER 2yr -0.6bp at -0.728% / 10yr +3.8bps at 0.470%

Brent +0.61% at USD56.04

iTraxx Main -0.1 at 73.8 / Crossover +0.6 at 302.3

What to watch Thursday

** Data: Spanish Unemployment is seen rising in Jan (est +60.6k, prev -86.8k), despite the Jan Mfg PMI employment sub-sector hitting its highest level since July 1998 on Wednesday. Eurozone Dec PPI will affirm inflationary pressures in the bloc (est 1.2% YoY, prev 0.1%). UK Construction PMI is seen weaker while US data is 2nd tier

** Events: Watching BoE policy announcement. No change expected though, putting focus on latest inflation report and BoE Carney's subsequent presser. ECB releases latest economic bulletin. Also watching ECB's Draghi (12.15), Angeloni (16.00), Praet (17.00) and Coeure (18.45) for any hawkish signals in wake of sharp inflation rise in Jan - Strategy team's thoughts on rising price pressures in Europe - Inflation forces gather in the Eurozone, curve steepening implied for now?

** Supply: Look out for any further pressure on OATs and SPGBs ahead of chunky French (up to EUR7bn 2026 & 2031) and Spanish (up to EUR5bn 2019, 2024, 2030 & 2037) bond auctions

** Earnings: 25 Stoxx600 and 36 S&P500 companies report

SSA Priced / SSA Pipeline

CORP Priced / CORP Pipeline

FIG + Covered Priced / FIG + Covered Pipeline

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