• The market mood was in a very negative mood on Friday, with back-to-back zero print days in the € IG, £, Chf & US$ Reg S markets. 
• Supply this week is once again expected to be front-loaded, with Eurozone CPI data on Wednesday.
• We also have further Central Bank activity, with both the Fed (Wednesday) & the Bank of England (Thursday) due to make their rate decisions. Consensus is for the Fed to hike by 25bp, while the Monetary Policy Meeting announcement is expected to announce rates to be held at 3.75%; with an outside risk to the upside.
• With a negative geo-political mood prevailing going into the open we may well see issuance punctuated by stronger credits, with the potential for heavy EGB supply. Rumours persisted Friday around a hyperscaler issuing in €’s, though much has been tabled about AI over the weekend, so let’s wait & see.
• Supply Survey forecasts for this week (see below) set the scene for a week on a par with last week, with consensus for another €40bn+ week..gip
• Brent Crude hit $108.5 several hours ago, though has tapered off slightly, currently trading at a still; elevated c.$106.6 (versus c.$104.19 at Europe’s Friday close).
• The VIX remains elevated, currently at 15.84.
• iTraxx Europe & iTraxx Senior & Sub financial indices go into the open at 53.023, 55.276 & 88.89 respectively.
• Pipeline: The European IG pipeline has just the one trade scheduled.
  • 1 x € SSA (1 x EuGB)

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

Primary IG Supply Survey Results for this week

Key € IG Supply Stats for last week

• Corporate
  • Total IG: €15.68bn
  • Avg. tranche size €825m
  • Avg. IPT to Pricing -32.4
  • Avg. cover 2.72 X
• FIG
  • Total IG: €15.60bn
  • Avg. tranche size €821m
  • Avg. IPT to Pricing -5.3 (covered) 
  • Avg. IPT to Pricing -27.0 (unsecured) - €0
  • Avg. cover 1.98 X
• SSA
  • Total IG: €10.75bn
  • Avg. tranche size €1.536bn
  • Avg. IPT to Pricing -2.6
  • Avg. cover 5.33 X

Geo-Political News

• Houthis claim major advance in the Red Sea & oil spikes again. Yemeni Houthi forces claimed a critical military advance along the maritime corridors of the Red Sea 0ver the weekend, launching coordinated ballistic missile & drone strikes that hit vital regional military infrastructure. They have now seized control of the strategic port city of Mokha, the town of Dhubab, & Perim Island. This positioning grants them effective operational dominance over the entire Red Sea coastline & the vital Bab el-Mandeb Strait choke point. Consequently, commercial energy traffic through the region has ground to a virtual halt as international maritime insurers withdraw cover for vessels entering these high-risk transit routes. Brent crude benchmark prices surged rapidly (currently c. $106.6) amidst acute global supply disruption fears. In response to the escalating violence & security volatility, scheduled diplomatic talks in Oman between key Persian Gulf states & Iran were abruptly postponed. Global energy markets face a bleak near-term outlook as maritime freight routes remain severely blocked, directly threatening energy security across import-reliant European & Asian industrial hubs while compounding broader international inflationary pressures.
• AI CEOs highlight urgent need to ‘slowdown’ development. The CEO of Anthropic (Dario Amodei) issued a stark public warning advocating for an immediate deceleration in the rapid development & deployment of advanced corporate AI models, to establish vital safety safeguards. Echoing these operational concerns, OpenAI CEO Sam Altman formally endorsed the sentiment & confirmed the indefinite postponement of his firm’s anticipated IPO to prioritise core safety governance over commercial expansion. Elon Musk publicly agreed with the call for technical restraint, citing potential systemic risks to global digital infrastructure. Conversely, US President Trump rejected these corporate warnings, signing executive orders designed to streamline commercial AI infrastructure deployment while ignoring threats of statutory caps. This widening rift between tech leaders & US regulators highlights growing systemic friction between national economic competition & fundamental safety oversight.
• Russian drone strikes Ukrainian rail line near Polish border. Russian forces executed targeted drone strikes against critical Ukrainian railway infrastructure located mere miles from the border of Poland, a sovereign NATO member state. Ukrainian transport authorities reported severe physical damage to key logistics lines utilised for international cargo & civilian transit, temporarily severing vital western supply arteries linking Ukraine to EU supply networks. Polish defence forces responded by immediately scrambling tactical aircraft & elevating combat readiness along their eastern frontier to secure sovereign NATO airspace. The proximity of the military bombardment to NATO territory represents a dangerous escalation in tactical targeting choices by Moscow, drawing immediate condemnation from Western defence officials.
• Trump urges Zelenskyy to halt strikes on Russian diesel refineries. US President Trump directly requested Ukrainian President Volodymyr Zelenskyy to cease military drone attacks targeting domestic Russian diesel refining facilities. Washington warned Kyiv that continued targeting of Russian refining infrastructure risks triggering catastrophic supply shocks across global refined petroleum markets, exacerbating international fuel shortages. Zelenskyy defended the tactical strikes as essential defensive measures to undermine Moscow’s state revenues & military logistics networks supporting operations along the frontline. However, the diplomatic intervention from Washington signals shifting US policy priorities, placing energy market stabilisation above tactical attrition strategies in Eastern Europe. The request highlights growing geopolitical tension between US economic stabilisation objectives & Ukrainian defensive priorities as energy markets react to disrupted global refining capacities.
• BRICS Summit yields joint declaration on global conflict restraint. Leaders attending the BRICS summit in New Delhi reached a delicate consensus, issuing a joint declaration urging maximum operational restraint amidst ongoing military conflicts in West Asia & Eastern Europe. The multilateral document, produced after intense overnight negotiations led by Indian diplomats, avoided explicitly naming participating belligerents but highlighted severe concerns regarding military strikes on energy infrastructure & nuclear sites. Indian PM Narendra Modi, Chinese President Xi Jinping, Russian President Vladimir Putin, & Iranian President Masoud Pezeshkian endorsed the final text. UN Secretary-General António Guterres supported calls made at the summit to reform global governance structures, including the UN Security Council. The event showcased the bloc’s attempts to present a unified diplomatic front despite deep internal political divergences among its member states.
• North Korea conducts joint firepower drill involving ballistic missiles. North Korea conducted large-scale military exercises involving ballistic missiles, cruise missiles, & tactical attack drones off its eastern coast near Wonsan. South Korean military commanders detected multiple short-range ballistic missile launches traveling approximately 250km into the Sea of Japan. State media in Pyongyang confirmed the joint firepower demonstration was conducted in direct response to trilateral naval exercises recently completed by joint forces from South Korea, Japan, & the US. The aggressive military display highlights ongoing security instability on the Korean Peninsula, reinforcing regional arms dynamics as Washington & its Asian allies maintain elevated defence readiness.

Markets

• US Equity markets pushed higher on Friday, driven by broad strength across tech & industrial sectors. The Dow gained 509 points, or 0.98%, to settle at 52,573; the S&P rose by 65 points, or 0.86%, to finish at 7,657; while the Nasdaq advanced 251 points, or 0.96%, to end at 26,333. Investor sentiment was bolstered by resilient economic data & sustained buying momentum in major capitalisation equities, pushing indexes near record territory despite ongoing geopolitical headlines. Dow & S&P futures, however, are in the red this morning (-0.12% & -0.51% respectively).
• Asian Equity bourses present a mixed picture today amidst regional geopolitical headlines & broader market consolidation. The Nikkei is down 646 points, or 1.01%, to stand at 63,365, while the Kospi has dropped sharply by 191 points, or 2.76%, to 6,719 due to heavy selling across local tech giants. Conversely, the Hang Seng is managing modest gains, rising 87 points, or 0.35%, to trade at 24,893 as bargain hunting in domestic consumer shares provided underlying market support.
• European & UK Equity futures indicate a cautious opening for the upcoming session as traders digest regional macroeconomic data & energy market developments. FTSE futures point to a modest positive start, gaining 0.17%, while CAC 40 futures signal stronger opening demand, rising by 0.75%. In contrast, Dax futures point to early vulnerability, declining by 0.27% as industrial sector sentiment remains constrained ahead of the opening bell.
• UK & Eurozone Bond Markets Debt yields face upward pressure again today as regional traders respond to elevated global crude prices & persistent inflationary risks. Benchmark 10yr Bund yields are positioned at 3.503%, with market participants pricing in tighter policy settings from the ECB to manage lingering energy-driven price momentum. UK government debt faces similar repricing pressure ahead of the session, with 10yr Gilt yields standing at 5.343%. Market focus centres on upcoming fiscal indicators & supply schedules, with investors demanding higher risk premiums given global geopolitical volatility & potential policy responses from the BofE.
• Currency Snapshot: 
  • Sterling trades at 1.350 against the US Dollar, maintaining a steady range as currency markets balance firm UK sovereign yields against broader risk sentiment. Against the single currency, the Euro trades at 0.856 relative to Sterling, reflecting stable cross-rate valuation ahead of upcoming economic releases across Northern Europe.
  • Euro holds at 1.156 against the US Dollar, constrained by regional growth concerns & energy import costs impacting the single currency bloc. Across the Swiss border, the Euro trades at 0.946 against the Swiss Franc, reflecting modest structural demand for defensive assets amidst global geopolitical uncertainties.
  • Swiss Franc continues to demonstrate its traditional safe-haven characteristics in global FX trading, with the US Dollar exchanging at 0.818 against the Swiss Franc. Solid capital inflows into Swiss asset markets maintain firm underlying support for the currency against major international pairs.

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 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

Euro (€)

• 11th September: The State of Baden-Wuerttemberg (rated Aaa / AA+ / AAA by Moodys, S&P & Scope) mandated Deutsche Bank & DZ Bank as Joint ESG Structuring Coordinators & BNP Paribas, Crédit Agricole CIB, Deutsche Bank, DZ Bank, LBBW & Nordea as Joint Lead Managers for its upcoming inaugural €600m (wng), 10yr, European Green Bond ‘EuGB’ LSA format. The transaction will be launched in the near future, subject to market conditions. The target market for the bonds are retail, professional & eligible counterparties, each as defined in MiFID II & UK MiFIR product governance (all channels for distribution of the Bonds are appropriate).

Recent Supply

Key Market Data