• Yesterday was a primary friendly market, yet with clear requirements, namely generous spreads & credit quality.
• Spreads are tighter, oil is stable, & AI euphoria is once again pushing equities into the green.
• Very thin European IG pipeline going into today ahead of the FOMC today & ECB tomorrow.
  • FOMC - Rate announcement @ 6:00pm GMT 
    • ‘Hold’ expected with Hawkish tone (9.4% probability of rate hike)
  • ECB set for its rate decision tomorrow @ 2:15pm CET
    • ‘Hold’ expected with Hawkish tone (3.2% probability of rate hike)
• Focus on the UK Budget today. The traditional ‘leaks’ suggest few ‘shocks’ are expected.
• Reverse Yankee supply was the stand-out feature in corporate primary (see ‘End of Day’ for full details)
  • 2nd heaviest day of corporate supply in 7 weeks (€9.025bn on 9th Sept), second only to Monday’s €7.3bn.
• Investor caution means that new transactions are being marketed with wider NICs than seen as recently as a week ago, across all asset classes. 
• € IG priced €7.75bn from 8 deals (4 x Corp, 3 X FIG & 1 x SSA) via 12 tranches
  • €16.55bn WTD or 85.4% of our ‘Supply Survey’ forecast of €19.38bn
• US$ Reg S delivered $750m from 1 deal (1 x FIG) via 1 tranche
  • 1st Reg S $ print since Santander UK’s €1.5bn on the 1st of September
• Zero issuance in the Sterling (£), non-domestic Swiss Franc markets
• Brent Crude remains elevated, little changed from this point yesterday, currently trading at c.$115.82 (c.$115.75 this time yesterday)
• The VIX eased back, currently set to open at 17.52 (18.39 this time yesterday)
• iTraxx 5yr Europe & iTraxx Senior & Sub financial indices all fell significantly yesterday & are set to open at 64.831 (-3.23%), 73.576 (-3.13%) & 124.482 (-4.63%) respectively.
• Pipeline:  The European IG pipeline is as follows. 
  • 1 x € FIG (1 x Subordinated)

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

Key € IG Supply Stats for Yesterday

• Corporate
  • Total IG: €5.3bn
  • Avg. tranche size €663m
  • Avg. IPT to Pricing -25.19
  • Avg. cover 3.13 X
• FIG
  • Total IG: €1.8bn
  • Avg. tranche size €600m
  • Avg. IPT to Pricing -6 (covered) €750m
  • Avg. IPT to Pricing -11.5 (unsecured) €1.05bn
  • Avg. cover 2.64 X
• SSA
  • Total IG: €650m
  • Avg. tranche size €650m
  • Avg. IPT to Pricing 0
  • Avg. cover 1.27 X

Geo-Political News

• Iran Reiterates its Demands for a Resolution of the War Iranian Supreme Leader Ali Khamenei reiterated strict preconditions for halting hostilities with Washington, insisting on an immediate cessation of the naval blockade & the complete lifting of economic sanctions. Simultaneously, Tehran engaged in intensive regional diplomacy, hosting official delegations from Qatar alongside senior security leadership from Saudi Arabia, Turkey, & Pakistan to negotiate friction points & avert further armed escalations. Washington maintains intense pressure on Tehran to secure structural concessions regarding Iranian nuclear enrichment facilities & ballistic proliferation. The diplomatic intervention highlights shared regional trepidation that unchecked hostilities will permanently disrupt commercial passage through the Strait of Hormuz.
• Nordic Leaders Face Backlash After Speaking with Putin Finnish President Alexander Stubb & Norwegian Prime Minister Jonas Gahr Støre held direct bilateral telephone discussions with Russian President Vladimir Putin to evaluate structural terms for resolving the military conflict in Ukraine. The joint outreach represents the first high-level communication between frontline European leadership & the Kremlin in over 15mths, drawing immediate criticism from Baltic & European counterparts concerned about undermining established diplomatic isolation protocols. Both Nordic heads of state defended the initiative as an essential tactical dialogue aimed at presenting coordinated European security terms directly to Moscow ahead of multilateral discussions scheduled in Abu Dhabi. The conversation emphasised sovereignty requirements for Kyiv alongside regional de-escalation across shared northern borders.
• Record Israeli Election Turnout Set to Produce Coalition National legislative elections across Israel recorded exceptional voter participation reaching 77.7%, marking the highest democratic turnout documented in over 5 decades across the country. Exit polls reveal that neither the incumbent administration led by Benjamin Netanyahu nor opposing political blocs are likely to command an outright parliamentary majority. Netanyahu campaigned aggressively on his record orchestrating military engagements across Gaza, southern Lebanon, Syria, & Iranian territory over the preceding 3yrs, framing his security governance as vital for regional survival. Nevertheless, the resulting legislative stalemate signals protracted coalition bargaining or prolonged governance paralysis, potentially complicating domestic fiscal discipline & sovereign debt issuance. The tight distribution of legislative mandates underscores significant political polarization within the Israeli electorate, which directly influences defense spending allocations, regional security operations, & broader geopolitical alignment across neighbouring jurisdictions.
• US Midterm Election Campaigning Drives Market Volatility Legislative campaigning entered its final week ahead of the pivotal US midterm elections, amplifying policy uncertainty across global financial markets as polling indicates contested control across both congressional chambers. Electoral outcomes will establish federal fiscal trajectories, determine corporate tax stability, & define future regulatory scrutiny across the banking, energy, & healthcare industries over the coming legislative cycle. Investors are closely assessing probabilities surrounding divided governance versus unified party control, with legislative gridlock traditionally limiting sweeping domestic policy overhauls while elevating negotiations surrounding the federal debt ceiling. Furthermore, the incoming congressional composition will significantly impact international trade policy, tariff authorizations, & strategic funding commitments directed toward European & Indo-Pacific security alliances.
• ECB Approves Intesa Takeover of Monte dei Paschi The ECB granted formal regulatory authorization for Intesa Sanpaolo to proceed with its €32bn acquisition offer for Banca Monte dei Paschi di Siena, removing a primary supervisory impediment toward consolidating Italy’s domestic banking sector. The transactional clearance also authorizes indirect control over investment bank Mediobanca, fundamentally reshaping Italian corporate finance & domestic retail branch concentration. While domestic competition watchdogs & securities regulators must still finalise approvals regarding branch divestments to Unipol, the decision provides operational momentum for sovereign financial integration. The resulting entity will command unparalleled domestic market share across lending, private banking, & life insurance asset management.
• Canada Secures Comprehensive Trade Partnership With UAE Canadian Prime Minister Mark Carney finalized a Comprehensive Economic Partnership Agreement with the United Arab Emirates in Ottawa, concluding bilateral negotiations within a record 47-day timeframe. The bilateral accord establishes a long-term economic framework that eliminates or sharply reduces tariff schedules across more than 99% of Canadian merchandise exports destined for Gulf ports. Concurrently, the arrangement solidifies an institutional commitment from Abu Dhabi to allocate C$70bn into Canadian strategic assets, targeting natural resource development, commercial aerospace, engineering services, & clean energy infrastructure. By opening preferential commercial pathways across the Arabian Peninsula, Ottawa accelerates its strategic supply chain diversification away from single-partner trade reliance. The comprehensive treaty significantly enhances Canadian competitive footing across regional logistics hubs, creating substantial commercial avenues for agricultural exports, advanced industrial engineering, & mineral exploration enterprises.

Markets

• US Equity advanced yesterday as tech momentum drove gains. Nasdaq led upside performance, adding +1.18% to finish at 26,478, supported by sustained capital deployment into enterprise software & semiconductor infrastructure. S&P advanced +0.60% to settle at 7,723, underpinned by broad-based strength across consumer discretionary & industrial shares. Dow lagged broader indices but recorded modest upside, rising +0.03% to finish at 52,378, reflecting balanced sector rotation away from traditional defensive equities toward cyclical growth assets.
• Asian Equity bourses are trading higher across active market dealing, led by substantial upward momentum in semiconductor & hardware manufacturers. Kospi leads regional performance, advancing +6.54% to trade at 6,007, propelled by aggressive institutional buying across domestic memory chip makers & battery producers. Nikkei exhibits solid participation, gaining +1.34% to stand at 64,116 on corporate export resilience & positive cross-asset risk appetite. Hang Seng is displaying moderate gains, rising +0.09% to trade at 23,061, as cautious tech buying balances broader property sector drag.
• European & UK Equity futures are mixed ahead of the open. CAC 40 futures outperform regional peers, trading up +0.48% at 8,245 on corporate banking restructuring optimism following sector transaction clearances. Conversely, DAX futures trade down -0.25% at 24,180, pressured by industrial export caution & selective manufacturing softness. FTSE futures similarly point lower, dropping -0.20% to stand at 9,510, weighed down by localized resource sector adjustments & basic materials weakness in early pre-open trade indications.
• UK & Eurozone Bond Markets Eurozone sovereign debt markets face selective curve steepening pressures this morning, with 10yr Bund yields at 3.358% following an intraday rise of 1.3bp from 3.345%, though easing 4.1bp compared to last week's 3.399%. 10yr French OAT paper commands the most attention after yields compressed 9.8bps to 4.92% from 5.018% yesterday, consolidating flat relative to last week’s 4.928% print as regional banking consolidation clears key hurdles. Gilts demonstrate mild upward yield pressure across early trading, with the 10yr yield hovering at 5.345% after tightening 1.4bps from yesterday’s 5.359% close. The 10yr Gilt yield remains 6.9bps below the 5.414% recorded last week. Traders will closely be watching the detail in today's budget with regards to any debt management targets.
• Currency Snapshot:
  • Sterling softened against the US dollar over the past 24 hours, with GBP/USD retreating -0.11% from 1.331 yesterday to trade at 1.329, reflecting an extended downward trend compared to last week’s level of 1.340. Against the single currency, the British pound posted marginal weakness, as EUR/GBP traded higher at 0.837, up +0.05% from 0.836 the prior day & broadly matching levels seen a week ago.
  • Euro exhibited mixed performance, easing -0.05% against the US dollar to print at 1.112 compared to 1.113 yesterday, extending a notable weakening trend from 1.122 last week. Conversely, the shared currency edged higher against the Swiss franc, advancing +0.07% to 0.923 from 0.922 yesterday, building upon a modest strengthening path compared to last week’s 0.920 print amid balanced continental capital flows.
  • Swiss Franc recorded minor depreciation against the US dollar, with USD/CHF climbing +0.11% to 0.830 from 0.829 yesterday, sustaining a clear softening trajectory compared to last week’s 0.821 benchmark. The franc similarly gave up ground against the euro, reflecting reduced safe-haven demand as European financial restructuring news supported regional sentiment, anchoring cross-border foreign exchange turnover across Zurich desks.

Economic Data (Western European Today)

Govt Bond Auctions (Western European Today)

Holidays

• There are no public or national holidays scheduled across the UK, & the Eurozone for the remainder of this week. The next holidays scheduled are as follows.
  • Eurozone - Next: 1st November (All Saints Day) - Sunday
  • UK - Next: Christmas Day (25 December) & Boxing Day (26 December).
  • USA - Next: 11th November (Veterans Day) & 26th November (Thanksgiving)

Pending Deals & Mandates

Euros (€)

• 19th October: Sumitomo Life Insurance Company (exp. Issue ratings of A- / A- by S&P & Fitch) mandated JP Morgan, BofA Securities, Goldman Sachs, SMBC Nikko & BNP Paribas to arrange a series of fixed income investor conference calls commencing Monday the 19th October. JP Morgan will be coordinating logistics. A potential € benchmark, Reg S, Fixed to fixed, step-up 30NC10 callable subordinated bond offering will follow, subject to market conditions.

Recent Supply Data

Key Market Data