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Tuesday's primary highlights

** Euro supply picked up on Tuesday where EUR8.235bn was issued to bring the weekly total up to EUR13.135bn, which is well on course to beat the EUR16.175bn which priced during the whole of last week. For the full list of EUR deals on Tuesday see the IGM EUR DAILY NICS & BOOKS Report

** European Financial Stability Facility (EFSF) spearheaded issuance with a EUR5bn two-part consisting EUR4bn Mar 2021 & EUR1bn Feb 2056 tranches which saw demand of over EUR5.6bn and EUR1.2bn respectively

** A trio of corporates hit the Euro market where Parker-Hannifin Corporation and Daimler printed respective EUR700m and EUR1.25bn 8yr lines whilst 2i Rete Gas issued a longer EUR435m Aug 2026 deal. There was plenty of demand for all which resulted in an average spread compression from IPTs to reoffer of 18.6bps across the three tranches. For more on the day's corp deals, including relative value analysis, see the IGM CORP SNAPSHOT

** FIG was without benchmark supply whilst French names underperformed in the secondary market amid heightened political uncertainty. See the IGM FIG SNAPSHOT for our full tracker of recent FIG deals

** Away from the single currency, the United Kingdom received GBP11.9bn of orders for a GBP2bn reopening of its 0.125% Nov 2065 index-linked treasury gilt. The tap priced at UKTi -0.25bp, the tight end of initial guidance at UKTi -0.25bp/flat


Busy session shaping up on Wednesday

** Kingdom of Spain is waiting in the wings with a new Obligacion del Estado syndicated 15-year Euro benchmark maturing in July 2033. Barclays, BBVA, HSBC, JP Morgan, NatWest Markets and Santander are lead managers on the trade. See earlier SSA PREVIEW for relative value analysis

** The Federal State of Lower-Saxony has mandated Goldman Sachs International and NORD/LB to lead manage an upcoming EUR500m (no grow) 4yr fixed rate Landesschatzanweisung

** After conducting an investor roadshow last week, Caisse des Depots et Consignations (CDC) is teeing up a debut EUR500m no grow 5yr Green Bond via BNP Paribas, Credit Agricole CIB, HSBC, JP Morgan, Natixis and SG CIB

** WL Bank could pull the trigger on a new EUR500m no grow 7yr Hypothekenpfandbrief (mortgage covered bond) after hiring Barclays, DekaBank, Deutsche Bank, DZ Bank and UniCredit on Monday. Also eyeing the covered market is United Overseas Bank (UOB) which has mandated Deutsche Bank, DZ Bank, HSBC and UOB for a 5yr EUR and/or 3yr USD RegS Singapore legislative mortgage covered bond. See the IGM COVERED SNAPSHOT for the official comps list for the UOB deal

** Bank of England is poised to visit the USD market with a new 3yr Global via BAML, Citi, Goldman Sachs and HSBC. This is rather traditional for the BoE, with the issuer printing a 3yr USD Global benchmark in Feb or Mar every year since 2007


Tuesday's broader market developments

** Reflation trades trumped European political worries in equity markets

** Sentiment also buoyed by Eurozone PMIs which improved by more than expected � driven by strength in services

** Helps Stoxx600 to a fresh 14-m high despite weakness in financials as HSBC profit miss weighs on sector. S&P500 hits new record

** EUR/USD heads south though with Euro pulled lower by political concerns while dollar pushed higher on hawkish Fed Stance (March probability rose to 40%)

** German 2yr yields hit new record low while long end yields rose ahead of Wednesday's 30yr bund auction and also as Spain announced a new 15-yr syndicated deal

** OATs see intraday weakness but 10yr spread to bunds doesn't breach the post-crisis peak at +81bps seen Monday (Tuesday's session wide +79.5)

** iTraxx indices opened wider but spent much of session grinding back in

Market snapshot (15.50GMT)

SXXP +0.47% / SX7P -0.34%

GER 10yr +2.2bps at 0.315%

FRA 10yr +3.6bps at 1.087%

EUR/USD -0.747% at 1.0535

iTraxx Main -0.8 at 73.1 / Crossover -2.6 at 295.1


Wednesday's event risk

It's a busier day for data, auction supply and central bank events but if recent sessions are any guide then we can expect to see two main themes pre-occupy markets, namely 1) the global reflation trade which is helping to keep equities near multi-year/record highs and 2) European politics

** Data: All three components of German IfO are seen falling in Feb, UK Q4 Prelim GDP is seen steady, EC Jan Final CPI headline/core reading are both seen unrevised at 1.8%/0.9% YoY while US Jan Existing Home Sales seen rising to 5.54m AR from 5.49m

** Events: Fed minutes will be scoured for clues on the extent to which March is live. Despite last week's hawkish/bullish comments from Yellen, hawkish comments from other Fed officials and a string of upbeat US data, markets still aren't convinced with the probability of a March hike seen as a circa 40% probability (via BBG WIRP)

** Supply: Germany auctions EUR1bn 30yr bunds, ahead of which long end German yields rose on Tuesday. US markets take down $13bn 2yr FRNs and $34bn 5yr USTs. Spain will also price a 15yy by syndication

** Earnings: 27 Stoxx600 and 12 S&P500 companies to report




SSA Priced / SSA Pipeline

CORP Priced / CORP Pipeline

FIG + Covered Priced / FIG + Covered Pipeline


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