Halister News

(Bloomberg) -- Non-farm payrolls seen at +173k in Oct. vs +156k in Sept. (forecast range +105k to +208k); measures number of employees on payrolls; sometimes referred to as establishment survey.

• Click here for research roundup of strategist comments ahead of the payrolls report
• Payroll growth this year has averaged +178k/month
  • “Aggregate demand is expected to stay in solid shape as businesses remain optimistic about the outlook and maintain current staffing levels": Bloomberg Intelligence
• Unemployment rate seen at 4.9% in Oct. vs 5% in Sept. (forecast range 4.8% to 5%); tracks number of unemployed as percentage of labor force
• Average hourly earnings est. +0.3% m/m in Oct. vs +0.2% in Sept. (forecast range 0.2% to +0.4%); tracks total hourly remuneration
  • Also today, international trade balance in goods and services seen at -$38b in Sept. vs -$40.7b in Aug. (forecast range -$35.5b to -$44b)

(Bloomberg) -- Net change in employment seen at -15k in Oct. vs +67.2k in Sept. (forecast range -25k to +23.1k); measures number of employed people as tracked by household labor force survey.

• Canada’s unemployment rate seen at 7% in Oct., same as Sept. (forecast range 6.9% to 7.1%); tracks number of unemployed persons as percentage of labor force
  • Details of report should show pullback in self- employment, which was responsible for 50k in Sept.; weaker public administration and education hiring should also weigh on headline number: TD Securities
• Also, Canada’s merchandise trade deficit seen at -C$1.7b in Sept. vs -C$1.94b in Aug. (forecast range -C$1.24b to - C$2.5b); tracks value of exports, imports
  • Data will be watched by Bank of Canada in light of “heightened uncertainty” of rising exports: TD

(Bloomberg) -- Thursday’s High Court ruling on Brexit has spurred discussion about a flurry of possible “soft Brexit” scenarios but once investors realize a harder option is back in full play, sterling will fall again, Nomura analyst Jordan Rochester writes in client note.

• While the court ruling spurred speculation of a new vote, that’s not Nomura’s base case
• Expect a parliamentary vote to back beginning the Brexit process
• Were early elections to be called, would likely put an end to the possibility of a soft Brexit
• A snap election would only serve to improve the government’s majority in the house, strengthening the Brexit mandate
• GBP/USD could trade higher in coming sessions if position reduction into the U.S. elections continues
  • Eventually, pair will trade below 1.20 to 1.15; may have a floor above those levels for now as “false hopes” are likely persist

(Bloomberg) -- Ukraine GDP warrants “missing catalysts shorter term,” Bank of America strategist Gabriele Foa says in e-mailed report.

• BofA favors Eurobonds maturing 2022 as note “cheaper” than shorter maturities that are benefiting from high carry
• Reiterates curve to likely steepen medium-term on credit normalization “as most illiquid sovereigns trade steeper”
• NOTE: Morgan Stanley Recommends Buying Ukraine 2022 Bonds on Valuation
• NOTE: Exotix Retains ‘Buy’ on Ukraine Govt Bonds on Macro Improvements

(Bloomberg) -- Credit-market spreads remain well-anchored, though weaker Asian equity markets overnight reflect the fragility of risk appetite and anemic macro conditions, Bloomberg strategist Simon Ballard writes.

• Trading volumes could decline today as we head into the weekend and in the run-up to the U.S. election
• Focus today will be on the U.S. October jobs report; consensus is for +173k non-farm payrolls, revisions to prior months will also be watched
• Politics continues to dominate GBP credit-market landscape after Thursday’s Brexit lawsuit ruling
  • Continued uncertainty over Brexit may weigh on the pound, denting investor sentiment and further weakening U.K. risk asset valuations

• Risk Appetite Model firmly focused now on Nov 8 election
• Bloomberg Barclays Eur-Agg Corporate index closed Thursday at 111bps (flat); Bloomberg Barclays Eur HY index closed at 386bps (-1bps)
• CDX IG closed -0.4bps at 79.65; iTraxx Asia Ex Japan IG is currently -1.7bps at 116.73 and iTraxx Australia quoted +0.6bps at 107.13

NEWS

• Corporate News
• BMW Third-Quarter Profit Gains on SUV Sales in China, Europe
• Richemont Announces Management Overhaul as Sales Plunge
• Takata Raises Profit Forecast Amid U.S. Unit Bankruptcy Concerns
• IAG Sees Avg Ebitdar About EU5.3B/Yr vs Previous View EU5.6b
• Brunel 3Q Revenue Declines 30%, 2016 Outlook Unchanged
• Paddy Power Betfair Raises 2016 Underlying Ebitda Forecast
• Loomis 3Q Sales Miss Estimates; Operating Margin Improves

• Financial News
• Tullett Prebon 3Q Revenue Rises 15%; 9-Month Revenue Gains 7%
• Erste Bank 3Q Net Income Rises 22%; CET1, Risk Provisions Drop
• Van Lanschot Says 3Q Result in Line With First Two Quarters
• Commerzbank 3Q Operating Profit Rises vs 2Q, Declines vs 3Q15
• Credit Suisse’s Cost-Cutting Is Hindered by Rising Risks

• Rating News
• S&PGR Revises AMP Ltd. Outlooks To Negative; Rtgs Affirmed
• Fitch Affirms Australian Covered Bond Ratings on New Criteria
• Brocades’ Ratings Under Review for Downgrade by Moody’s

• Other News
• Fannie-Freddie Shed Risk as Capital Cushion Shrinks Toward Zero
• Clinton Has Narrow Edge With Five Days Until Election: Poll Wrap
• Fed Rate Increase Odds Approach 80% as Job Growth Seen Rising

ANALYST VIEWS

• We are in for an uncertain week, with perhaps a few more after that (as Brexit comes back to the fore). It’s not how we would have wanted the year to come to an end, but it does mean that havens might just hold up at around these levels, yields stay anchored or go lower and returns for fixed- income players hold into year-end (central bank interventions permitting): creditmarketdaily.com

NEW ISSUES

• BASF EU1b 4Y, EU500m 10Y Bonds
• Cap Gemini EU500m 5Y MS +52
• RCI Banque EU750m 5Y MS +60
• SpareBank 1 SR-Bank EU500m 5.25Y MS +45
• Virgin Money Holdings GBP230m PNC5 AT1 8.75%
• Autodis Total EU520m 5.5NC1.5 Fixed, 5.5NC1 FRN
• Guala Closures EU510m 5NC1 Snr Sec FRN E+475
• Moscow Domodedovo Airport 5Y Reg S $350m at 5.875%
• European IG credit pipeline here and HY credit pipeline here
• Issuers exposed to S-T rollover and interest-rate reset risk here

• NOTE: Simon Ballard is a credit strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
• NOTE: Exceptionally, EU Credit Daily will not be published Friday October 28. It will return Monday October 31