EU Close

iTraxx has closed unch, €IG cash is mixed & pointing to another muted move at the index level. €IG equity eqv's finished +0.5%, broad based gain outside of comm's & tech. Vol again coming from earnings, UBS the drag and tailwind from Toyota for Auto's.

Bayer (Baa2 Neg, BBB Pos, BBB+ Neg) a clear underperformer - Snr lines another +4-10bps wider today after loosing a 11th Circuit appeal that federal law on labels pre-empts state-based claims from plaintiffs - linking it to the EPA's finding glyphosate isn't carcinogen which led to week-killer Roundup coming without a warning label. It still has a appeal pending in 3rd circuit on similar grounds. Equities taking it in stride, credit the mover on todays news. We pointed to some divergence on CDS/Equities moves last week on its $2.25b Jury pay-out/loss - that seems to have closed since & Snr lines now trading on par Viatris (Baa3 Stable, BBB- Neg). Today's news has continued stoking Analyst estimates on rising settlement costs (vs. initial guidance) - Moody's likely one to watch after Neg. outlook in Nov & under assumption at the time of €7b remaining in litigation provisions.

Rates rally this afternoon which seems linked to Yellen comments on CRE risks "“I’m concerned...I believe it’s manageable, although there may be some institutions that are quite stressed by this problem.” It helped local belly rates rally -3bps & Gilts -5bps. Not much from Mester ('24 Voter) in his prepared remarks; "The stress generated by the bank failures last March has subsided...But stress could come again to banks that continue to rely on uninsured deposits for their funding while having sizable exposures to CRE assets that will need to be repriced at higher interest rates." Major bank equities trading through the headlines.

Fed Collins (’25 voter) in an hour - only opening remarks ahead of main appearance tomorrow