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EUR Market Wrap

CREDIT UPDATE
  • Bunds have reversed a good portion of yesterday’s tightening, with 2y/10y yields +6bp/+5bp with our DM team flagging in-line to slightly-firmer-than expected European CPIs, the continued burden of gov’t) local digestion of the FOMC and some marginally hawkish comments from the usually dovish ECB GovCo member Herodotou as driving rates sentiment.
  • Main/XO opened wider and ground tighter from there, particularly since the 10am CPI releases, to sit +flatbp/+0.3bp DoD. iTraxx Sub Fins are outperforming at -0.7bp DoD. FICM shows €IG/€HY at +2.7bp/+3.2bp though swaps spreads imply more muted moves against govies. Primary markets are quieter again today given the macro calendar with just one deal each from €IG Corp, €FIG and €HY.
  • SXXP is -0.1% with Banks (ING, BNP weak earnings), Retail (seems broad-based in the wake of H&M earnings) and Basic Resources (weak forestry earnings as flagged) all down by ~1% while Energy (strong Shell earnings) and Travel & Leisure (Evolution +7% on strong earnings) are +~1.2%.

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