EUROZONE ISSUANCE: EGB Supply – W/C 3 November (1/2)
Oct-31 16:29
The EFSF is likely to hold a syndicated transaction early in the upcoming week while the EU, Austria, Germany, Spain, France and Belgium will all look to hold auctions. We pencil in issuance of E34.8bln for the week, up from E31.0bln this week.
- The EFSF sent a Request for Proposal for an upcoming transaction on Wednesday, meaning a syndication in the upcoming week is likely (we pencil in Monday or Tuesday). There is still E4.5bln outstanding before the EFSF’s 2025 funding plan is completed and we think it is more likely than not that the entirety of that will be raised via this transaction.
- The EU will kick off the month’s auction issuance on Monday by holding an EU-bond auction. On offer will be up to E2bln of the 2.50% Dec-31 EU-bond (ISIN: EU000A3L1DJ0), up to E2.5bln of the 3.375% Dec-35 EU-bond (ISIN: EU000A4D8KD2) and up to E1.5bln of the 3.375% Oct-54 EU-bond (ISIN: EU000A3K4EY2).
- Austria will look to hold an RAGB auction on Tuesday. As expected, the on-the-run 10-year 2.95% Feb-35 RAGB (ISIN: AT0000A3HU25) will be on offer, but the auction size is smaller than we had pencilled in at E862.5mln (E750mln to be allotted). This will be another single line auction.
- There is a chance that this is the last auction of the year and that the December auction is cancelled and there is precedent for this in 2022, but our base case is for two smaller auctions.
- Germany will come to the market on Tuesday with E5bln of the 2.00% Dec-27 Schatz (ISIN: DE000BU22114) on offer.
- Germany will return to the market on Wednesday to hold a 15-year Bund auction. On offer will be E1bln of the 2.60% May-41 Bund (ISIN: DE000BU2F009) alongside E1bln of the 2.50% Jul-44 Bund (ISIN: DE0001135481).
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US: Senate Rejects GOP Funding Bill, Shutdown Continues
Oct-01 16:27
The United States Senate has rejected a House Republican funding bill for the third time, ensuring the US government will remain shut until at least Friday. There was no change in the vote count, with all Republicans (except Senator Rand Paul [R-KY]) and three Democrats voting in favour of the CR. The vote followed a separate ballot on a Democrat-led funding bill that also failed. Both outcomes were expected.
- Democrat Senators John Fetterman (D-PA), Catherine Cortez Masto (D-NV), and (Democrat-aligned Independent) Angus King (I-ME) voted in favour of the CR, as they did yesterday.
- Senators Jeanne Shaheen (D-NH), Maggie Hassan (D-NH), and retiring Gary Peters (D-MI), the group that (along with the above and Senate Minority Leader Chuck Schumer [D-NY]) voted to keep the government open in March, again voted against the CR.
- A short time ago, Max Cohen at Punchbowl News reported that Shaheen "says she will continue to vote no on GOP CR [and] thinks she can get a deal that includes an ACA credit fix when the House returns... says she’s in talks with Republicans on this."
- While there hasn't been any movement on the vote tally, a bipartisan group of Senators huddled on the floor for an extended period, which might suggest some informal discussions are underway.
- Senator Peters, one of the above swing votes, and Senator Mike Rounds (R-SD), who has floated a one-year extension to the Obamacare subsidies as a potential offramp, were among the group.
- Burgess Everett at Semafor notes, "From what I could tell one thing beyond discussed on the floor that Dems are wondering if there’s a shorter term CR that could set up quicker negotiations on the ACA subsidies"
US STOCKS: Midday Equities Roundup: Health Care & Utilities Outperforming
Oct-01 16:15
- Stocks gaining ahead midday Wednesday, political distractions at bay as focus turns to fundamentals rather than the US Government shutdown as of midnight Tuesday. Additional support for equities could be tied to the Supreme Court denying Pres Trump's demand to fire Fed Gov Cook, allowing her to stay on at least until oral argument on the case is heard in January 2026.
- Currently, the DJIA trades up up 56.81 points (0.12%) at 46453.89, S&P E-Minis up 6.75 points (0.1%) at 6745.5, Nasdaq up 39.5 points (0.2%) at 22698.78.
- Leading gainers ahead midday included Health Care and Utility sector shares, pharmaceuticals leading the former: Regeneron Pharmaceuticals +9.06%, Moderna +8.75%, Biogen +7.67%, Amgen +6.75% and Eli Lilly +6.66%.
- The Utilities sector was buoyed by AES, the energy company surging 16% higher in the first half as wires reported BlackRock's GIP is in advanced talks to purchase the company. Follow-through support for other energy companies includes: Constellation Energy +3.79%, Vistra +3.33%, PG&E +3.18% and NextEra Energy +2.41%.
- Conversely, Materials and Communication Services sectors led decliners by midday. Weighing on Materials: Corteva -7.05%, Ecolab -1.95%, Linde -1.92% and Eastman Chemical -1.53%. Meanwhile, News Corp -5.62%, Interpublic Group -4.12% and Omnicom Group -3.95% weighed on the Communication sector in the first half.
OPTIONS: Larger FX Option Pipeline
Oct-01 16:00
- EUR/USD: Oct03 $1.1700(E1.2bln), $1.1845-55(E2.2bln), $1.1875(E1.2bln); Oct06 $1.1700(E1.1bln); Oct07 $1.1650(E1.8bln), $1.1750(E1.0bln), $1.1820(E1.7bln)
- USD/JPY: Oct03 Y148.00($1.0bln); Oct06 Y147.00($1.3bln)
- EUR/GBP: Oct03 Gbp0.8785-05
- AUD/USD: Oct03 $0.6600(A$1.5bln); Oct06 $0.6700(A$1.1bln)
- NZD/USD: Oct03 $0.6450(N$1.2bln)
