• This has been a volatile week in the bond markets with a glut of mostly overbearingly negative geo-political events & mixed Central bank activity. While some large deals were stood down, the primary markets have yet again shown their resolve by printing a week-to-date €34.1bn of IG supply, which represents 84.66% of the expected €40.3bn from our ‘Weekly Supply Survey’ last Friday.
• While busier than Wednesday, yesterday was the 3rd most active session of the week with € IG pricing €5.75bn from 6 deals (1 x Corp & 5 x FIG) via 7 tranches.
• The Swiss Franc market yielded Chf110m from 1 deal (1 x FIG) via 1 tranche.
• No activity in the Sterling (£) & US$ Reg S markets.
• Biggest news this morning is the BoJ’s 25bp rate hike to 1.25% (31yr high - more below).
• Brent Crude has continued to stage a recovery as Saudi Arabia supply pressures eased, currently trading at c.$103.67 (versus c.$105.27 this time yesterday).
• The VIX finally mirrored other indices easing back currently at 15.44 (versus 17.1 this time yesterday).
• iTraxx Europe & iTraxx Senior & Sub financial indices are all notably tighter than this point yesterday, at 52.727 (-1.74%), 55.136 (-1.60%) & 88.545 (-1.70%) respectively.
• Pipeline: The European IG pipeline has only 2 SSA trades pending.
  • 2 x € SSA (1 x EuGB)

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

Key € IG Supply Stats for yesterday

• Corporate
  • Total IG: €300m
  • Avg. tranche size €300m
  • Avg. IPT to Pricing NA
  • Avg. cover NA
• FIG
  • Total IG: €5.25bn
  • Avg. tranche size €875m
  • Avg. IPT to Pricing NA (covered) - €0
  • Avg. IPT to Pricing -34.92 (unsecured) - €5.25bn
  • Avg. cover X 5.54
• SSA
  • Total IG: €0
  • Avg. tranche size €0
  • Avg. IPT to Pricing NA
  • Avg. cover NA

Geo-Political News

• Russian Parliamentary voting commences. Citizens across Russia have begun casting ballots in nationwide parliamentary elections, marked by tight state oversight & the complete exclusion of mainstream opposition figures. The Kremlin is seeking to secure an absolute legislative mandate for its governing apparatus amid ongoing military engagements & stringent Western economic measures. State-backed media emphasis remains firmly on public participation & domestic stability, while international monitors highlight severe restrictions on free speech, civil society groups & political dissent. Electronic voting systems have been broadly deployed across dozens of regions, raising persistent concerns among foreign observers regarding systemic opacity, data manipulation & potential ballot tampering. Authorities have simultaneously heightened police presence & digital surveillance around major urban polling stations to pre-empt public demonstrations or unauthorised civil disruptions. To quote Stalin: “It doesn't matter who votes, it matters who counts the votes".
• Bank of Japan raises rates. The BoJ raised its benchmark borrowing rate by 25bps to 1.25%, their highest in 31yrs following a split decision among monetary board members. Central bank officials flagged accelerating domestic inflation dynamics, rising wage settlements & ongoing currency fluctuations as primary catalysts for the tightening. The decision marks a firm departure from decades of hyper-accommodative monetary settings, reflecting growing official confidence in underlying demand recovery despite lingering external headwinds. Board members who dissented voiced operational caution over potential borrowing cost drag on small business debt servicing & household consumption metrics. Financial markets reacted swiftly as bond yields shifted higher across the long end (30yr JGB now over 4.0%). Officials reiterated that future rate adjustments will remain strictly data dependent.
• US Congress approves extra-territorial tariff mechanism. Legislators in Washington have cleared a legislative framework authorising Trump to impose punitive tariffs reaching 100% on foreign nations purchasing crude oil from Russia. The bill expands secondary sanctions tools, targeting 3^rd party sovereign entities & commercial trading intermediaries operating within major international energy markets. US trade officials argue the measure is vital to choking off capital flows financing foreign military actions, while sovereign energy buyers in Asia have voiced strong objections. The law grants discretionary authority to executive agencies to issue targeted enforcement waivers or institute immediate trade penalties. Bilateral diplomatic contacts have intensified across affected capitals, with officials expressing concern over escalated trade frictions & rising domestic energy costs.
• US expands secondary sanctions targeting Tehran. The US Treasury Department has expanded economic measures aimed at curtailing international trade networks linked to Iran, issuing explicit warnings to foreign corporate entities. Officials confirmed secondary enforcement actions will target foreign shipping firms, financial clearing facilities & commodities brokers facilitating energy sales. Foreign enterprise entities face complete exclusion from US financial networks & dollar-clearing mechanisms should commercial relationships persist with designated Iranian firms. Iranian officials condemned the economic measures, stating that maritime logistics within regional energy export routes will continue despite foreign financial sanctions.
• Naval incident heightens tensions between India & Pakistan. India has formally summoned Pakistan’s diplomatic representative following an armed naval vessel collision occurring within international maritime boundary zones. Foreign ministry officials described the incident as unprofessional & hazardous operational behaviour, demanding formal structural accountability & operational reviews from naval authorities. Officials confirmed that while the naval assets involved sustained limited structural damage, the incident highlights persistent security risks along contested maritime approaches.

Markets

• US Equity markets closed higher across all three primary yesterday, driven by robust performance in tech & Mega cap shares following lower treasury yields. Investor sentiment reflected cautious optimism as markets digested the latest monetary policy guidance & economic growth figures. The Dow closed at 51,778, rising 316 points or 0.61%. The S&P finished at 7,638, up 86 points or 1.14%. The Nasdaq outperformed its counterparts, closing at 26,418, up 440 points or 1.69%.
• Asian Equity bourses are displaying mixed performance across the region as market participants weigh the BoJ’s unexpected interest rate hike against broader regional trade developments. The Nikkei is trading higher at 65,230, advancing 1,094 points or 1.71%, supported by financial stocks offsetting exporter concerns. The Hang Seng is showing modest gains at 24,768, up 165 points or 0.67%, as property & mainland consumer counters stabilise. The Kospi is outperforming regional peers, currently trading at 6,899, surging 183 points or 2.73% on aggressive buying across semiconductor & hardware manufacturing names.
• European & UK Equity futures are pointing towards a mixed open. Souring sentiment across European futures stems from concerns regarding persistent inflationary pressures & potential secondary global trade tariffs. FTSE Futures are signalling a soft start, currently down -0.12%. Dax Futures reflect sharper selling pressure, pointing to an opening drop of -0.32%. CAC 40 Futures are defying the broader regional weakness, indicating an opening advance of 0.54% supported by selective luxury & defensive stock momentum.
• UK & Eurozone Bond Markets European bond yields are opening with a firm upward bias this morning, following the BoJ's rate hike to a 31yr high & subsequent global sovereign debt repricing. Eurozone rate expectations remain sensitive to global central bank policy paths, with the 10yr Bund yielding 3.475% as traders adjust exposure to European fixed income ahead of upcoming growth data. In the UK, gilt markets face renewed pressure amid lingering fiscal concerns & broader global yield curve steepening. The Gilt curve rallied strongly yesterday, particularly at the long end with the BofE actively limiting long-end supply of Gilts. The 10yr yield fell over 7bps on the session to 5.225%.
• Currency Snapshot: 
  • Sterling is trading around key technical levels, with £ / US$ priced at 1.337 as market participants balance resilient UK domestic services inflation against broader US dollar dynamics. Traders are closely monitoring upcoming UK economic prints for directional clarity.
  • Euro shows relative stability across major trading pairs, quoted at € / US$ 1.1488 & € / £ 0.85923. Cross-currents from regional growth updates & ECB policy expectations continue to anchor near-term rangebound trading across European currency desks.
  • Swiss Franc remains steady as a traditional risk haven, with $ / Chf trading at 0.8232 & € / Chf at 0.94567. Capital flows reflect cautious positioning amid global trade tariff developments & broader geopolitical uncertainties.

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).
• 16th September: Watercare Services Limited (exp. Issue rating of Aa3 by Moody’s), mandated Citi, HSBC, MUFG & Société Générale as Joint Lead Managers to arrange a series of fixed income investor meetings commencing on 17th of September. Citi is coordinating logistics for Amsterdam, Frankfurt & London, Société Générale is coordinating logistics for Paris. An inaugural 7yr € benchmark, fixed rate, senior secured Reg S transaction may follow, subject to market conditions. 

Recent Supply

Key Market Data