EU AUTOMOTIVE: Autos: Week in Review
- Auto spreads outperformed by around 3bp, tightening 6bp on the week. High beta VW, PORSCH, RENAUL and TTMTIN were the best performers, the latter reversing weakness last week.
- Conditions remained enticing for primary issuers. BMW and Toyota printed deals at/through fair value, while CA Auto Bank came to the FRN market.
- Motability was one of the few names to leave some NIC this week, even after secondary widening post mandate. Our roadshow notes flagged inflation and residual value issues, with little sign of positive catalysts near term.
Nissan was put on outlook negative by S&P, despite it being the only agency to rate it HY already. Positive FCF requirement looks like a high bar, but the current spread driver is the potential Honda merger, which isn’t considered with talks still underway.
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USD: USDJPY edges to session high
- USDJPY is edging towards the intraday high, the move is small and gradual, and taking its cue from the selling interest going through In Bonds.
- US Tnotes hovers at session low, as Desks await the FOMC later and look for less cuts in 2025 as Trump takes over.
- Resistance in the USDJPY is further out, past the 154.00 figure, at 154.48 High Dec 16.
US DATA: Mortgage Applications Tread Water
- MBA composite mortgage applications dipped -0.7% last week (sa) after increasing 5.4% the prior week.
- Refis pulled back a touch with -2.6% having surged 27% the week prior.
- New purchase applications meanwhile edged 1.4% higher after -4.1%, with the previous increase dissipating after what appeared to be a lagged response to lower mortgage rates heading into the fall.
- New purchase applications are at 61% of 2019 levels vs 36% for refis.
- The 30Y conforming mortgage rate increased 8bps to 6.75%. It has averaged 6.70% in the last three weeks, which compares to a recent high of 6.9% in early Nov and September lows of around 6.15%.
UK: BOE: Instant Answer Questions for December meeting
Instant Answer questions for the December 2024 policy decision. Outcome to be posted at midday Thursday.
1. Was the Bank Rate changed, and if so by how much?
2. Number of members voting for 25bp cut?
3. Number of members voting for unchanged rate?
4. Number of members voting for other policy action?
NB: On questions 2-4 we will name the dissenters (and the magnitude of dissent)
5. Did the MPC drop reference to a “gradual approach” to removing “policy restraint being appropriate” from their Statement?
6. Did the MPC say that “the risks from inflation persistence are receding”?
7. Did the MPC again say Bank Rate is likely to “remain restrictive for sufficiently long”?
8. Did the MPC again say it will “decide the appropriate degree of monetary policy restrictiveness at each meeting”?
9. Did the MPC leave its guidance paragraph materially unchanged versus the November policy statement?
