US TSYS: Post-UofM Sentiment React

• Reoffer 99.529 to yield 4.309%
• Spread: MS+77bps (Guidance was MS+85bps area, revised to MS+80bps area)
• Size: E2.5bln (slightly smaller than the E3-4bln MNI pencilled in)
• Books closed in excess of E4.6bn (incl. E550mln JLM)
• Coupon: 4.25%
• Maturity: 30 September 2036
• Settlement: 30 September 2026 (T+5)
• HR: 99% vs 3.00% Aug-36 Bund (ISIN: DE000BU2Z072) + 81.3bps. Ref yield 3.496%
• ISIN: SK4000030532
• Bookrunners: DB, HSBC (B&D), JPM, SLVSPR
• Timing: TOE 14:35BST / 15:35CET

From market source, with MNI colour

The S&P Global US PMIs were far stronger than expected in the flash September update, with manufacturing hitting a 52-month high and services a 59-month high. Input costs also surged higher on the back of higher energy prices, less surprising considering the survey was collected 10-22 Sep, although selling price inflation was more muted and still below those seen through March-July.  

• Manufacturing: 57.0 (cons 53.7) in Sep prelim after 53.9 in Aug
• Services: 58.7 (cons 55.8) in Sep prelim after 56.5 in Aug
• Composite: 58.4 (cons 55.3) in Sep prelim after 56.0 in Aug. 

Some highlights from the PMI press release (in full here): 

• “US business activity growth accelerated for a fourth successive month in September to reach the fastest rate for over five years.
• A further surge in service sector business activity was accompanied by a renewed improvement in manufacturing output growth.
• Employment also rose sharply, with jobs added at a pace not seen for over four years, as firms sought to meet rising demand.
• However, backlogs of work continued to rise at an increased rate and supply chain delays intensified, pointing to a lack of operating capacity which fed through to higher prices. Input costs meanwhile surged higher on the back of the recent spike in energy prices, adding to a worsening inflation picture.”

Plus further color on price components: 

• “Average input costs measured across both goods and services surged higher, the overall rate of inflation hitting the highest since October 2022. The increase was blamed widely on higher fuel and transport costs, though wage pressures were also noted to have picked up in many cases.”
• “Selling price inflation also picked up in September, though was muted by competition in some instances, notably in the service sector. While above that seen in August, September’s overall selling price rise was below the rates seen between March and July.”

Further commentary from the IRanian security chief carried by Middle Eastern media outlets notes "Rezai: If neighbouring countries cooperate with the United States in halting Iranian air travel, their airports will not be able to function."