EU COMMUNICATIONS: Omnicom Q4 Results
OMC Baa1/BBB+ Curve Steady
Looks neutral for credit though equity is indicating lower; flat dividends may have disappointed though management has been flagging increases post-Interpublic. Nothing of note on that deal; progressing well towards a H2 close with synergy guidance confirmed.
- Q4 org revs +5.2% (vs. +4.6% cons). Q4 EBITDA +6.5% (-1.9% vs. BBG cons).
- FY CFO USD 2bn vs. USD 1.9bn YoY (+21% vs. cons). FY Net FCF (after payouts) USD -0.1bn.
- Reported gross leverage of 2.4x vs. 2.4x at FY23 with net leverage 0.7x vs. 0.5x at FY23.
- FY25: org rev +3.5-4.5% (FY24: +5.2%, cons: +3.9%), EBITDA margins +10bp.
- Flagged that they will address their USD line maturing April 26 after the IPG deal closes.
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BOBL TECHS: (H5) Southbound
- RES 4: 118.640 Low Dec 6
- RES 3: 118.520 High Dec 13
- RES 2: 118.173 20-day EMA
- RES 1: 117.490/870 Low Dec 30 / High Jan 3
- PRICE: 117.190 @ 10:21 GMT Jan 6
- SUP 1: 117.150 Intraday low
- SUP 2: 117.000 Round number support
- SUP 3: 116.700 Low Jul 26 2024 (cont)
- SUP 4: 116.471 76.4% of the Jun 10 - Oct 1 2024 price swing
A bear cycle in Bobl futures remains in play and last week’s sell-off plus today’s extension, reinforces the bearish set-up. Price has recently traded through 117.723, the 76.4% retracement of the Nov 6 - Dec 2 bull cycle. Attention is on key support at 117.180, the Nov 6 low. It has been pierced, a clear break would strengthen the current downtrend. Initial resistance is at 117.870, Jan 3 high. Key short-term resistance is 118.173, the 20-day EMA.
BONDS: Core Global FI Pressured By Data & Supply, EGBs Tighten To Bunds
Core global FI markets have sold off this morning.
- Firmer-than-expected Hesse CPI data out of Germany (based on comparisons with the national CPI expectations) drove further hawkish repricing on the ECB-dated OIS strip and some weakness in bonds.
- ~100bp of ECB cuts now priced through ’25 vs. 115-120bp seen just before the Christmas break.
- Issuance-related pressure also noted ahead of the data, with EUR & GBP supply swelling, expectations for a brisk start for $IG ’25 issuance noted and Tsy coupon supply due over the next three days (as well as the risk of EGB syndication announcements).
- Bund futures -31 at 132.33, lows of 132.22 printed.
- Initial support at 132.00 untested.
- German yields 1-4bp higher, curve flattens. 2s10s 24.6bp, just over 5bp off December highs.
- EGB spreads to Bunds tighter given the Hesse CPI, equity rally and stronger-than-expected peripheral & French services PMIs.
- BTPs and OATs the outperformers, narrowing by ~2bp vs. Bunds.
- 10-Year gilts little changed vs. Bunds, spread ~216bp after trading either side of 220bp over the holiday period.
- Benchmark UK yields 1-2bp higher, cross-market inputs continue to dominate.
- Gilt futures -26 at 91.97, off lows of 91.78. Initial support at the Dec 19 low/bear trigger (91.64) untested.
- SONIA futures +0.5 to -2.0. BoE-dated OIS pricing 56bp of cuts through ’25, 1.5bp less dovish on the day.
- German national CPI data due this afternoon.
- Final U.S. services PMI and durable goods data also due later today, as is factory orders.
- Elsewhere, Fed Governor Cook will speak.
JPY: USDJPY tests the Overnight high
- While the Pound and the EUR have paired some gains versus the Yen, the Dollar is looking to make an attempt at its earlier overnight high of 157.83.
- Risk On tone could be helping as the Emini extends further highs, and the US Yields are doing very little.
- Nonetheless, initial focus for Market Participants is the 158.08 level, the December high.
