MNI EU Credit Weekly: Plus Ca Change

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Executive Summary: 

• Spreads widened mildly this week, with the EUR benchmark 3bp wider. Risk off was driven by French political developments with contagion from OATs to Banks, and corporates to a lesser extent. Primary continued to achieve strong pricing but generally struggled to perform. Another expected increase in supply next week should test market resilience.
• French politics dominated the macro space, although widening was more contained than in similar episodes previously. Questions on Fed Independence persisted as President Trump moved to remove Governor Cook.
• Fund Flows returned to positive for EUR-IG while small outflows continued in USD-HY and European equities.
• Supply was high this week with over €20bn priced. Books were weaker than YTD aggregates while average NICs moved gradually higher for a fifth straight week. An increase to €30-31bn is expected next week.