EUROZONE ISSUANCE: EGB Supply – W/C 24 November
The Netherlands, Italy, Germany and Finland will all look to come to the market in the upcoming week. We pencil in issuance of E22.1bln for the week, down from E24.8bln this week.
- The Netherlands will kick off issuance for the week on Tuesday with E1.0-2.0bln of the on-the-run 30-year 3.50% Jan-56 DSL (ISIN: NL0015002P70) on offer via auction. This will be the first reopening of the DSL since its launch via DDA in September.
- Italy will hold a BTP Short Term /BTPei auction on Tuesday. On offer will be E1.5-2.0bln of the on-the-run 2.10% Aug-27 BTP Short Term (ISIN: IT0005657330), E0.75-1.00bln of the 1.10% Aug-31 BTPei (ISIN: IT0005657348) and E1.25-1.50bln of the 2.40% May-39 BTPei (ISIN: IT0005547812).
- We expect this will be the final BTP Short Term / BTPei auction of 2025 with the auction scheduled for 29 December likely to be cancelled.
- Germany will come to the market on Tuesday with E4bln of the 2.20% Oct-30 Bobl (ISIN: DE000BU25059) on offer.
- Germany will return to the market on Wednesday with E3bln of the 10-year 2.60% Aug-35 Bund (ISIN: DE000BU2Z056).
- Finland will look to hold an ORI auction on Wednesday.
- Italy will look to conclude issuance for the week on Thursday with a 5/10-year BTP / CCTeu auction. the with details to be confirmed Monday. We expect to see the on-the-run 5-year 2.85% Feb-31 BTP (ISIN: IT0005671273) and the on-the-run 10-year 3.45% Feb-36 BTP (ISIN: IT0005676504) on offer. We don’t have a strong view regarding the CCTeu that will be on offer.
- As with the BTP Short Term / BTPei scheduled for the end of the year to be cancelled and expect this to be the last 5/10-year BTP / CCTeu of the year.
NOMINAL FLOWS: The upcoming week will see redemptions of E35.3bln, from a formerly 10-year OAT. Coupon payments for the week total E6.0bln of which E5.7bln are French and E0.2bln Italian. This leaves estimated net flows for the week at negative E19.1bln down from a negative 3.4bln this week.
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FED: FOMC No Longer Getting Weekly ADP Payrolls Data: WSJ
The Wall Street Journal reports citing sources that the ADP has stopped providing the Fed with weekly data on private payrolls and earnings.
- Per the WSJ piece, the Fed has had access to the data since "at least 2018", and was available to the Fed with "a roughly one-week delay". The publicly-available ADP payrolls report is published monthly.
- Recall that back in August, in calling for a September rate cut with more over the following 3-6 months, Gov Waller cited weakness in "timely data that Federal Reserve staff maintains in collaboration with the employment services firm ADP to construct a measure of weekly payroll employment...in the weeks after the July jobs report's reference
period, preliminary estimates from ADP show continued deterioration". That was seen as a sign that the labor market may have been worse than indicated by publicly available government statistics. - According to the WSJ, "ADP stopped providing its data to the Fed shortly after a speech by Fed governor Christopher Waller in late August drew attention to the Fed's longstanding use of its weekly payroll data, according to a person familiar with the matter. It couldn't be learned what prompted the change. The Fed's use of ADP data wasn't a new revelation."
- Indeed, a Fed staff article on the topic from 2019 is here
- If the WSJ's report is correct, the upshot is that the Fed will more or less be relying on most of the same labor market data as the rest of us in making its decision on a cut next week, and potentially for the upcoming meetings - suggesting it's wading through even foggier territory in assessing current labor market conditions.
GBPUSD TECHS: Trend Signals Remain Bearish
- RES 4: 1.3613 76.4% retracement of the Sep 17 - Oct 14 bear leg
- RES 3: 1.3544 61.8% retracement of the Sep 17 - Oct 14 bear leg
- RES 2: 1.3527 High Oct 1 and a pivot level
- RES 1: 1.3471 High Oct 17 and a key near-term resistance
- PRICE: 1.3351 @ 15:26 BST Oct 22
- SUP 1: 1.3249 Low Oct 14 and the bear trigger
- SUP 2: 1.3220 0.764 proj of the Sep 17 - 25 - Oct 1 price swing
- SUP 3: 1.3142 Low Aug 1 and a key support
- SUP 4: 1.3041 Low Apr 14
GBPUSD traded lower on the softer CPI print Wednesday. The move down signals the end of the recent corrective bounce between Oct 14 - 17. The move down exposes key short-term support at 1.3249, the Oct 14 low and bear trigger. A breach of this level would confirm a resumption of the downleg that has been in place since Sep 17. Key near-term resistance has been defined at 1.3471, the Oct 17 high. A break would be bullish.
PIPELINE: Corporate Bond Update: GM Financial, Softbank Launched
- Date $MM Issuer (Priced *, Launch #)
- 10/22 $2B #Softbank $900M 35.5NC5.5 7.625%, $1.1B 40NC10 8.25% (includes E750M 37NC7)
- 10/22 $1.5B #Alberta 10Y SOFR+81
- 10/22 $1B Rep of Korea WNG 5Y +17
- 10/22 $1B #GM Financial 3Y +78
- 10/22 $Benchmark Dominican Republic 10Y 6.0%
- 10/22 $Benchmark Pershing Square 7Y investor calls
