Tue, Dec 01, 2020 @ 08:03 GMT
Home EU Issues Social Bonds With Record Demand

EU Issues Social Bonds With Record Demand

Notes/Observations

  • EU first social bond issuance saw record demand of €230B in the duel tranche offering
  • Continued wait-and-see mode around US fiscal stimulus
  • Companies expected to report earnings during the NY morning include Lockheed Martin, Manpower, Procter & Gamble, ProLogis, Philip Morris, Travelers

Asia:

  • RBA Oct Minutes discussed options of reducing targets for cash rate and 3-year yield towards 0% without going negative, buying Govt bonds further out on yield curve. Members discussed cutting the cash rate towards zero and buying longer-dated government bonds
  • RBA Assist Gov Kent: Board considering case for further easing but cannot speculate on details
  • China Sept New Home Prices M/M: 0.3% v 0.5%e
  • China PBoC Monthly LPR announcement left the 1-Year Loan Prime Rate unchanged at 3.85% and left the 5-Year Loan Prime Rate at 4.65%

Coronaviurs:

  • Total global cases 40.3M (+1.1 d/d%); total deaths: 1.1M (+0.4% d/d)
  • Ireland PM Martin: To close most stores, bars and restaurants for six weeks

Europe:

  • EU’s Sefcovic – statement after Joint Committee meeting noted that EU and UK agreed to intensify contacts on all levels of Brexit negotiations. Despite some progress, much work remained to be done by the Uk to implement the Irish protocol
  • UK Gov official Gove noted that as things stood a Brexit deal would not happen before end of transition, EU did not intensify talks
  • ECB’s Weidmann (Germany) noted thatlLarge scale borrowing at the EU level is worrying, should remain a one-off crisis measure

Americas:

  • Democrats: still disagree with the GOP on stimulus language; Senate Maj Leader McConnell: The Senate will vote a virus relief this week; Senate Min Leader Schumer: The republican stimulus proposal is still unacceptable

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 +0.20% at 367.52, FTSE +0.27% at 5,900.57, DAX -0.18% at 12,831.50, CAC-40 +0.66% at 4,961.80, IBEX-35 +0.87% at 6,920.00, FTSE MIB +0.47% at 19,465.50, SMI -0.03% at 10,180.92, S&P 500 Futures +0.57%]
  • Market Focal Points/Key Themes: European indices open mixed but later turned to trade modestly in the green; focus on potential covid measures as case numbers increase across Europe; better performing sectors include materials and utilities; energy and telecom sectors among the underperformers; Britvic enters 20-year franchize agreement with Pepsico; Caixabank unloads a NPL portfolio ahead of merger with Bankia; Moderna expects covid-19 vaccine results in November, with approval in December; earnings expected in the upcoming US session include Philip Morris, Vivendi, Procter & Gamble and Netflix

Equities

  • Consumer discretionary: Remy Cointreau [RCO.FR] -1.5% (sales)
  • Financials: Swedbank [SWEDA.SE] -1% (earnings)
  • Industrials: UBS [UBSG.CH] +3% (earnings), Reckitt Benckiser [RB.UK] +2.5% (earnings)
  • Technology: Logitech [LOGI.CH] +17% (earnings), Nordic Semiconductor [NOD.NO] +8% (earnings), TeamViewer [TMV.DE] -7% (placement)

Speakers:

  • Sweden Central Bank (Riksbank) Parliamentary hearing on monetary policy. Gov Ingves: testified that recovery could become both protracted and volatile; much affected by course of pandemic. Appeared that the worst was over but much uncertainty remained. Combination of measures were most effective to support economy. Reiterated stance that room for further rate cuts is limited but remains possible to return to negative rates. Dep Gov Ohlsson testified that improvement in labor markets likely to take longer than expected
  • EU said to update list of countries whose residents should be allowed to visit the bloc amid the coronavirus pandemic. Planned to remove Canada, Tunisia and Georgia from its list of countries whose residents should be allowed to visit and reopen its doors to travelers from Singapore
  • Poland MPC Member Ancyparowicz saws steady interest rates during horizon period; MPC does not target FX
  • More reports circulating that BOJ could finely tune its forecasts in the upcoming Quarterly Outlook for Economic Activity and Prices

Currencies/Fixed Income

  • EUR/USD drifted higher in the session with little data for fresh impetus. The inaugural sale of the EU SURE social bonds to aid member nations on the employment front saw a record demand of €150B for the duel-tranche issuance. Pair higher by 0.2% to edge closer to the 1.18 level.
  • GBP was initially softer in the session after UK rebuffed the EU’s effort to restart the deadlocked trade negotiations. Some analysts warn that the market mighty be underpricing the risk of the UK dropping out of the EU without a deal. Pair managed to recover to trade marginally higher at mid-session (last at 1.2960 area).
  • Dealers noted that Europe’s primary bond market has surpassed €1.5T in 2020 (record issuance)

Economic Data

  • (FI) Finland Sept Unemployment Rate: 7.6% v 7.7% prior
  • (DE) Germany Sept PPI M/M: +0.4% v -0.1%e; Y/Y: -1.0% v -1.4%e
  • (CH) Swiss Sept Trade Balance (CHF): 3.3B v 3.5B prior; Real Exports M/M: -2.1% v +3.0% prior; Real Imports M/M: +2.1% v -0.5% prior; Watch Exports Y/Y: -12.0% v -11.6% prior
  • (JP) Japan Sept Final Machine Tool Orders Y/Y: -15.0% v -15.0% prelim
  • (ZA) South Africa Aug Leading Indicator: 103.5 v 99.9 prior
  • (EU) Euro Zone Aug Current Account: €19.9B v €17.0B prior
  • (IT) Italy Aug Current Account: €6.0B v €10.2B prior
  • (GR) Greece Current Account: +€0.1B v -€0.9B prior
  • (PL) Poland Sept Sold Industrial Output M.M: 15.5% v 13.4%e; Y/Y: 5.9% v 3.7%e
  • (PL) Poland Sept PPI M/M: 0.1% v 0.1%e; Y/Y: -1.6% v -1.5%e
  • (TW) Taiwan Sept Export Orders Y/Y: 9.9% v 8.0%e
  • (HK) Hong Kong Sept Unemployment Rate: 6.4% v 6.2%e (15-year high)

Fixed Income Issuance

  • (EU) EU opened its book to sell EUR-denominated SURE social bonds with order book over €230B (record level)
  • To sell €10B in 10-year SURE bond; spread set at +3bps to mid-swaps
  • To sell €7.0B in 20-year SURE bond; spread set at +14bps to mid-swaps
  • (ID) Indonesia sold total IDR32.75T vs. IDR20T target in bills and bonds
  • (UK) DMO sold �600M in 1.25% Nov 2032 inflation-linked Gilts (UKTi); Real Yield: -2.976% v -2.853% prior; bid-to-cover: 3.16x v 2.51x prior
  • (DK) Denmark to sell USD-denominated 2-year bonds; guidance seen +1bp to mid-swaps
  • (CH) Switzerland sold CHF762.8M in 3-month Bills; Avg Yield: -0.774% v -0.766% prior

Looking Ahead

  • (UK) BOE’s Vlieghe – (IL) Israel Oct 12-month CPI Forecast: No est v 0.4% prior
  • (AR) Argentina Sept Budget (ARS) No est v -89.5B prior
  • 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills
  • 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
  • 05:30 (DE) Germany to sell €4.0B in 0.00% Nov 2022 Schatz
  • 05:30 (ZA) South Africa to sell combined ZAR6.6B in 2026, 2032 and 2040 bonds
  • 06:00 (PT) Portugal Aug Current Account Balance: No est v €0.1B prior
  • 06:00 (PT) Portugal Sept PPI M/M: No est v 0.0% prior; Y/Y: No est v -5.0% prior
  • 06:30 (EU) ESM to sell €2.0B in 6-month bills
  • 07:00 (TR) Turkey to sell 2022 and 2027 Bonds
  • 07:00 (BR) Brazil Oct IGP-M Inflation (2nd Preview): 2.6%e v 4.6% prior
  • 07:45 (US) Goldman Economist Chain Store Sales
  • 08:00 (HU) Hungary Central Bank Interest Rate Decision: Expected to leave Base rate unchanged at 0.60%; Expected to leave Overnight Deposit Rate unchanged at -0.05%
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:00 (HU) Hungary Central Bank (MNB) Interest Rate Decision
  • 08:30 (US) Sept Housing Starts: 1.455Me v 1.416M prior; Building Permits: 1.506Me v 1.476M prior (revised from 1.470M)
  • 08:30 (CA) Canada Sept Teranet House Price Index (HPI) M/M: No est v 0.6% prior; Y/Y: No est v 5.7% prior; House Price Index: No est v 240.43 prior
  • 08:55 (US) Weekly Redbook LFL Sales data
  • 09:00 (EU) Weekly ECB Forex Reserves
  • 09:00 (HU) Hungary Central Bank Gov Matolcsy post rate statement
  • 09:00 (US) Fed’s Williams
  • 09:00 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed)
  • 10:00 (MX) Mexico Weekly International Reserve data
  • 10:50 (US) Fed’s Quarles
  • 12:00 (RU) Russia Sept Unemployment Rate: 6.4%e v 6.4% prior
  • 12:00 (RU) Russia Aug Real Wages Y/Y: 1.5%e v 2.3% prior
  • 12:00 (RU) Russia Sept Real Retail Sales Y/Y: -2.1%e v -2.7% prior
  • 13:30 (US) NY Fed Head of Markets Group Singh
  • 16:30 (US) Weekly API Oil Inventories
  • 17:00 (KR) South Korea Sept PPI Y/Y: No est v -0.5% prior
  • 19:30 (AU) Australia Aug Leading Index M/M: No est v 0.5% prior
  • 20:00 (KR) South Korea first 20 Days of Oct Imports Y/Y: No est v -6.8% prior; Exports Y/Y: No est v 3.6% prior
  • 21:10 (JP) BOJ Outright Bond Purchase Operation in 1~3 Years, 3~5 Years and 5~10 Years maturities
  • 21:30 (KR) Bank of Korea to sell KRW2.0T in 2-Year Bonds
  • 22:00 (NZ) New Zealand Sept Credit Card Spending M/M: No est v -5.8% prior; Y/Y: No est v -11.9% prior
  • 23:00 (CN) China to sell 2-year and 5-year Government Bond
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