CREDIT PRE-MARKET: EUR Market Wrap
Jan-06 06:54
- Bunds closed 3-6bp wider with 2y/10y yields at 2.16%/2.42% after a strong US ISM print helped yields finish at the highs of the day. WoW move of +6.4bp/+2.8bp.
- Main/XO ended +0.4bp/+1bp at 56.7bp/307bp while €IG was -0.3bp at 1.02% (Corps -0.3bp at 0.95%, Fins -0.4bp at 1.11%, €HY -6bp at 3.02%) with Energy the biggest sector mover at -1.6bp (now the best MoM performer at close to -9bp vs. -4.3bp for €IG. $IG was -0.1bp at 0.79% (Corps -0.1bp at 0.78%, Fins -0.3bp at 0.82%, $HY -7bp at 2.74%).
- SXXP/SPX ended -0.5%/+1.3% at 508pts/5942pts for a WoW move of +0.2%/-0.5%. €IG's biggest risers/fallers included Neste Oyj (+5%), Kering SA (-5%), ArcelorMittal SA (-5%), Forvia SE (-4%), Diageo PLC (-4%).
- SX5E/SPX futures are +0.6%/flat. Overnight team flagged that US yields rose in early trade amid cautious Fed comments from the weekend though follow through was limited and bonds sit up from lows. The better-than-expected Caixin services PMI print in China did little to shift sentiment with China equities lower.
- Later the Fed’s Cook speaks. US & European December services/composite PMIs and preliminary December German CPI data are released.
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MNI UST Issuance Deep Dive: Dec 2024 (2/2)
Dec-06 21:53
Throughout November’s policy and market volatility, though, Treasury auctions largely impressed, with 5 of 7 nominal coupon sales trading through.
- Auction Results: November’s nominal coupon auctions were generally strong, with five out of seven auctions trading-through, of which four saw a positive reading on MNI’s Relative Strength Indicator (RSI). The remaining two auctions; 3 and 20-year auctions tailed. See page 2.
- Upcoming Supply: Issuance resumes next week with sales of $58B in 3Y Note, $39B in 10Y Note (reopen), and $22B in 30Y Bond (reopen). December is set to see $15B in nominal Treasury coupon sales, in addition to $22B in 5Y TIPS and $28B FRN for a total of $365B – slightly below the Oct and Nov totals of $369B which were joint-highest since Oct 2021.
- MNI's review includes a calendar of upcoming auctions and buyback operations.
US TSYS/SUPPLY: MNI UST Issuance Deep Dive: Dec 2024 (1/2)
Dec-06 21:51
MNI's latest US Treasury Issuance Deep Dive has just been published (PDF link here):
November proved a dramatic month for Treasuries. Yields were volatile before and after the Nov 5 election - after ending October at 4.28%, 10Y yields peaked at five-and-a-half-month high just above 4.50% mid-month before closing November just below 4.18%, as markets attempted to price in the implications of a Republican “sweep”.
- Also buffeting rates was speculation over the would-be successor to Treasury Secretary Yellen. President-elect Trump’s selection of hedge fund manager Scott Bessent was greeted with bull flattening in the curve, implying perhaps that he’s seen as more cautious on fiscal deficits than some of the alternatives (he has expressed support for halving the annual budget shortfall to 3% of GDP).
- The first quarterly Refunding process of Bessent’s Treasury is in early February, by which point we may start to have a better sense of the incoming administration’s approach to both fiscal policy and to more issuance-specific considerations such as duration management.
- Bessent for instance has argued that Yellen’s Treasury erred from a risk management perspective by boosting short-duration issuance, and there are suggestions he would be in favor of reversing course, telling Bloomberg in June “When rates are very low, you should extend duration…I think it’s very unfortunate what Secretary Yellen’s doing. She’s financing at the front end, and she’s making a bet on the carry trade, which is not good risk management.”
US LABOR MARKET: MNI US Employment Insight: Soft Enough To Keep Fed Cutting
Dec-06 21:05
Our latest Employment Insight has just been published and emailed to subscribers.
