• Primary supply this week was always going to be front-loaded ahead of the ECB, yet rapid rises in oil prices (caused by both a realisation of a prolonged conflict the US cannot resolve, & an escalation of fighting in Yemen choking off the critical alternative channel in the Red Sea), put paid to any activity yesterday, & likely today.
• As a result there was zero primary activity in the € IG, £, Chf & US$ Reg S markets.
• As expected the ECB raised its deposit rate by 25bps yesterday, its 2nd hike since the Iran war broke out in February.
• Focus will shift to the States today, with markets looking for direction from US CPI (Aug) data at 1:30pm BST.
• Having briefly hit $110 overnight, Brent Crude is falling this morning, but still at elevated levels, currently trading at c.$105.51; (this time yesterday c.$100.6).
• The VIX remains at its highest level since the end of July, currently at 17.84; up from this point yesterday (16.46).
• iTraxx Europe & iTraxx Senior & Sub financial indices are all higher than this point yesterday, sitting at 53.856 (+2.65%), 56.156 (+2.45%) & 90.637 (+2.90%) respectively.
• Pipeline: There are currently no mandated deals pending in the European IG pipeline.

Contact Stuart Aylward with questions or comments on stuart@creditflowresearch.com

Key € IG Supply Stats from yesterday

• Corporate
  • Total IG: €0
  • Avg. tranche size €0
  • Avg. IPT to Pricing NA
  • Avg. cover NA
• FIG
  • Total IG: €0n
  • Avg. tranche size €0
  • Avg. IPT to Pricing NA (covered) - €0
  • Avg. IPT to Pricing NA (unsecured) - €0
  • Avg. cover NA
• SSA
  • Total IG: €0
  • Avg. tranche size €0
  • Avg. IPT to Pricing NA
  • Avg. cover NA

Geo-Political News

• Sharp Rise in Oil Prices, driven by intensifying fears that no end of the Middle East conflict is in sight & is only escalating. Yemeni Houthi forces have now seized the strategic port city of Mocha & launched targeted assaults near the Bab el-Mandeb Strait, effectively establishing a physical military checkpoint. This critical choke point directly threatens alternative export channels utilised by Saudi Arabia & other major energy producers trying to bypass ongoing hostility in the Strait of Hormuz. The threat of prolonged supply interruptions through both major regional waterways has forced prices significantly higher. Naval disruptions in these transit routes risk bottlenecking global crude movement, elevating global fuel costs, & renewing inflation concerns for international central banks.
• Canadian military assistance to Ukraine has expanded following a bilateral summit in Calgary, where Canadian PM Mark Carney & Ukrainian President Zelenskyy signed a C$350m (c.$255m) defence agreement focused on air defence interceptor missiles. Funded through the Jumpstart procurement mechanism, these interceptors aim to reinforce Ukrainian territorial defence against escalating long-range missile & drone strikes targeting critical national energy infrastructure. Beyond immediate missile deliveries, Canada signalled its intent to join Europe’s FREYJA anti-ballistic defence initiative & pledged additional loan guarantees for Ukrainian natural gas imports ahead of the winter season. The meeting culminated in the signing of a long-term strategic partnership declaration establishing multi-decade defence, critical mineral, & economic cooperation between the two nations.
• Nuclear oversight escalation, following Iranian non-compliance, occurred as the International Atomic Energy Agency’s 35-nation Board of Governors formally voted to refer Iran to the United Nations Security Council. This step, marking the first such referral in two decades, comes after inspectors cited an ongoing lack of technical cooperation regarding undeclared nuclear locations & unexplained uranium traces. The diplomatic resolution was brought forward by the US, France, Germany, & the UK, passing despite direct opposition from Russia & China. UN Security Council involvement introduces potential international sanctions frameworks at a time when regional military friction & energy supply security are already under acute strain.
• North America & Western Europe underwater infrastructure security threats came into sharp focus following reports that a coordinated joint intelligence operation involving naval forces from the UK, Norway, & the US detected covert underwater military exercises. Foreign submarine units were monitored conducting manoeuvres designed to test physical interdiction capabilities against critical undersea fibre-optic telecommunications & power infrastructure in the Arctic ocean. The disclosure underlines persistent vulnerability across global seabed communication backbones, prompting allied military commands to increase maritime surveillance & defensive patrols around critical transoceanic cables.
• South Asia security arrangements shifted after Pakistan issued a direct warning to Iranian leadership regarding regional proxy activity. Pakistani defence officials stated that continued cross-border destabilisation or strikes directed toward Gulf state energy facilities could activate joint security agreements involving Pakistan, Turkey, & Saudi Arabia. The explicit mention of mutual defence obligations reflects widening regional concern over secondary economic spillover, military escalation, & supply chain fragmentation stemming from ongoing warfare along critical maritime supply routes.
• Civic infrastructure strikes in Ukraine caused severe civilian casualties & damage to commercial property after Russian targeted drone strikes hit a commercial retail complex in Sumy. Local authorities confirmed multiple deaths & widespread injuries, highlighting the intense air assault campaign currently waged against regional urban centres. The continued targeting of municipal infrastructure highlights Ukraine's urgent reliance on incoming Western surface-to-air missile supplies to safeguard critical civilian sectors & sustain domestic power grid resilience.
• Diplomatic engagement timelines were outlined as Ukrainian leadership indicated that preliminary structural framework talks aimed at ending active hostilities with Russia could yield progress by late September. Ukrainian officials are scheduled to meet with US security advisors in New York to negotiate parameters surrounding energy grid security, maritime grain transit, & international safety guarantees. These discussions precede planned high-level talks involving Trump, where Ukraine seeks to preserve long-term military intelligence sharing & strategic air defence supply commitments.

Markets

• US Equity markets ended firmly in the red yesterday, driven by broad-based risk-off sentiment as spiking crude prices renewed inflationary anxiety & Treasury yields edged higher. Heavyweight tech & capital goods stocks anchored performance across the main bourses, with sentiment burdened by ongoing geopolitical instability in global trade choke points. The Dow fell 317 points to close at 52,064 (-0.60%), the S&P dropped 45 points to 7,591 (-0.58%), & the Nasdaq slipped 172 points to finish at 26,082 (-0.65%).
• Asian Equity bourses are experiencing sustained selling pressure, tracking overnight weakness from North America while processing local geopolitical friction & surging energy input costs. Market sentiment across regional trading floors remains heavily dampened by global supply-chain vulnerabilities & higher implied discount rates. The Nikkei has led losses across the region, dropping 1,435 points to 63,836 (-2.20%). The Hang Seng declined 212 points to 24,743 (-0.85%), while the Kospi fell 155 points to 6,878 (-2.21%).
• European & UK Equity futures indicate a cautious start ahead of the open, reflecting widespread market hesitation amid high sovereign bond yields & persistent energy price shocks. The CAC 40 Futures display explicit weakness, pointing down -0.51%, while Dax Futures trade marginally lower by -0.06%. Bucking the softer continental trend, FTSE Futures show modest resilience, up 0.06% as heavy weightings in energy major constituents provide isolated underlying support to the index benchmark.
• UK & Eurozone Bond Markets are heavily dominated by the surge in oil prices, which have reigniting mid-term inflation expectations & are threatening to complicate monetary policy paths. European sovereign yields remain elevated, with the 10yr Bund holding at 3.499%, as traders evaluate potential supply-side shocks to regional headline consumer prices. In the UK, the 10yr Gilt yield sits at 5.373%, reflecting persistent structural inflation risk premiums & elevated government debt issuance requirements. Fixed-income traders face a complex macro backcloth where geopolitical supply shocks limit the scope for rapid policy rate cuts by both the BofE & ECB (who hiked rates by 25bps yesterday).
• Currency Snapshot: 
  • Sterling trades at 1.350 against the US$ & 0.859 against the Euro, exhibiting localised resilience supported by firm market expectations that the BofE will maintain a relatively restrictive monetary stance to combat persistent domestic services inflation & elevated benchmark Gilt yields.
  • Euro pricing stands at 1.161 relative to the US$, 0.944 against the Swiss Franc, & 0.859 against Sterling, showing modest pressure due to the Eurozone’s high vulnerability to imported energy inflation & potential regional economic growth drag from elevated crude prices.
  • Swiss Franc quoted at 0.813 against the US$ & 0.944 against the Euro, maintaining its structural safe-haven appeal amid global equity market pullbacks, Middle Eastern geopolitical escalation, & elevated safe-haven capital demand across international currency markets.

Economic Data (Western European Today)

Govt Bond Auctions (Western European Today)

• There are no UK or European bond auctions today.

Holidays

• There are no public or national holidays scheduled across the UK, & the Eurozone for the remainder of this week. The next major public holidays are:
  • Germany - 3rd October (German Unity Day)
  • USA - 12th October (Columbus Day / Indigenous Peoples' Day).
  • Spain - 12th October (National Day of Spain)
  • Eurozone - 1st November (All Saints Day)

Pending Deals & Mandates 

• None.

Recent Supply

Key Market Data