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Tuesday's primary highlights

** Primary supply picked up on Tuesday where EUR10.6bn printed on the day following just EUR1.55bn on Monday. For a breakdown of Tuesday's deals see IGM's EUR DAILY NICS & BOOKS

** KfW spearheaded supply with its third fixed-rated EUR benchmark of the year. This time the issuer tapped the 10yr part of the Global curve for EUR5bn at m/s -16, having tightened pricing 2bps from initial guidance on the back of demand of over EUR8bn. See IGM SSA PREVIEW

** In FIG, Iccrea Banca S.p.A. refreshed its fledgling EUR fixed-rate benchmark curve with a new EUR600m Feb 2020 line whilst the tightening of secondary spreads seen over the last few sessions continued. Last week's CaixaBank 3.5% 10NC5 T2 was bid 41 bps inside reoffer. For more see IGM's FIG SNAPSHOT

** Stadshypotek kicked-off EUR covered bond supply for the week with a EUR500m Feb-2024 Swedish covered bond. The deal attracted demand of over EUR1bn which allowed pricing to be revised to a final m/s -1 reoffer from a m/s +2 area starting point. For more, including fair value analysis see the IGM COVERED SNAPSHOT

** PEMEX had the EUR corporate market to itself on Tuesday. The borrower raised EUR4.25bn via a 4.5yr/7yr/11yr three-parter which amassed blowout combined demand of around EUR17.6bn which allowed pricing to be ramped in by an eye-catching between 35-40bps from IPTs across the three tranches. For the official comps list and more see IGM's CORP SNAPSHOT

** Away from the single currency Japan Bank for International Cooperation ("JBIC") priced a USD2bn Feb 2020 fixed/FRN two-part at m/s +57/ 3mL +57 on the back of books topping USD3.475bn whilst Erste Abwicklungsanstalt (EAA) printed a USD1bn 2yr at m/s +20

Wednesday's primary supply prospects

** Nord/LB Luxembourg S.A. Covered Bond Bank has hired Commerzbank, DZ Bank, NordLB, UBS Investment Bank and UniCredit for a EUR500m no grow 4.5yr Lettres de Gage publiques which is expected to launch Wednesday

** BerlinHyp AG is also set to tap the Euro market on Wednesday having mandated Barclays, BayernLB, Commerzbank, HSBC and UniCredit as joint bookrunners for a EUR500m no grow 8yr Hypothekenpfandbrief (Mortgage Covered bond) benchmark transaction

** Austrian real estate company CA Immobilien Anlagen Aktiengesellschaft is taking IoIs for a 7yr EUR sub-benchmark issue at m/s +165/170 IPTs via Erst/Raiffeisen after holding an investor call Tuesday

Tuesday's broader market developments

** Initial read on Fed Chair Yellen's introductory remarks was bullish/hawkish - dollar, UST yields and probability of a March hike all rose (latter increased to 36% via BBG WIRP from circa 30%)

** Bund yields took a cue from USTs to push higher while peripherals mostly outperformed again

** European stocks didn't really go anywhere before or after Yellen with Stoxx600 trading sideways following the 14-month high seen Monday. Banks outperformed again though

** Busy day for data saw most European releases disappoint - German ZEW, EZ GDP and EZ IP all missed. UK CPI also undershot but PPI surged, signaling higher price pressures down the track

** Resignation of President Trump's national security advisor got lots of airplay but in the end had limited effect on risk appetite

** Synthetic credit markets held firm into and after Yellen's initial remarks

Market Snapshot (15.40)

SXXP +0.03% / SX7P +0.90%

GER 2yr +0.3bps at -0.809% / 10yr +4.1bps at 0.369%

ITA 10y +0.2bps at 2.11%

US 10yr +5.7bps at 2.495%

DXY +0.31%

iTraxx Main -0.1 at 73.4 / Crossover -0.9 at 295.4

What to watch Wednesday

** Data: Watching UK's latest labour market report, while Spanish final CPI should affirm the flash print (3% YoY). Eurozone Dec trade figures are seen a tad narrower. Across the pond, key releases are US CPI, Retail Sales, Industrial Production and Empire Manufacturing

** Events: Focus on Fed Yellen's congressional testimony to House Panel (15.00). Also watching Fed's Rosengren (17.00) and Harker (17.45), as well as latest Riksbanks policy verdict/presser (08.30/10.00) - rates seen on hold.

** Supply consists of just GBP1.25bn worth of 2026 Gilt Linkers

** Earnings: 15 Stoxx600 and 18 S&P500 companies report

SSA Priced / SSA Pipeline

CORP Priced / CORP Pipeline

FIG + Covered Priced / FIG + Covered Pipeline

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