Halister News

--ALARIC NIGHTINGALE

(Bloomberg) -- Initial jobless claims seen at 256k in wk ended Oct. 1 vs 254k prior wk (forecast range 250k to 270k); represents inflow of workers receiving benefits

• Claims below 300k for 82 consecutive weeks, longest streak since 1970
• “Reluctance to furlough workers implies stronger economic growth": Bloomberg Intelligence

(Bloomberg) -- Evraz Jan. 2021 Eurobond should trade on par with TMK April 2020 bond in terms of Z-spread, implying potential yield decline of 90bps, BCS analysts Maria Radchenko and Oleg Petropavlovskiy say in research note.

• Evraz beats TMK on key fundamentals, such as liquidity, revenue, interest coverage ratio, is more sensitive to economic recovery
• Evraz’s “BB” credit rating superior to TMK’s “B”

(Bloomberg) -- ICU Medical paying $600m in cash and issuing to Pfizer ~$400m in newly issued ICUI shares.

• So long as PFE owns 10% or more of ICUI, can nominate one director to board
• ICUI prelim 3Q results:adj. EPS $1.20 vs est. $1.09; rev. $96m; adjusted EBITDA ~$33.5m

Statement: Link

(Bloomberg) -- Wal-Mart reiterates FY17 adj. EPS view $4.15-$4.35 (est. $4.34), sees FY18 GAAP EPS “relatively flat” vs FY17’s adj. EPS: comments in statement ahead of investor meeting.

• For FY19, expects EPS growth ~5% (does not specify GAAP or adj.)
• Expects continued momentum in store business; incremental U.S. e-commerce operating investments, including Jet.com, are expected to accelerate e-commerce growth
• Capital investments seen ~$11b for FY18 as new store openings moderate, remodels accelerate, invests in e- commerce, digital initiatives; capex target remains $11b for FY17
• Remains on track to generate ~$80b in operating cash flow from FY17 through FY19
• Has $11.7b remaining on $20b share buyback authorization; expects to complete buyback “around” end of FY18
  • NOTE: WMT mkt cap $221.7b: Bloomberg data
• Total unit growth plans (includes new, expanded, relocated units): FY17 Walmart U.S. stores 130, total (incl. intl, Sam’s Club) 331-351, FY18 plan Walmart U.S. 55, total 249-279
• WMT’s 2016 Investment Community Meeting begins ~9am ET
• See PREVIEW WAL-MART INVESTOR MEETING: Forecast Update, Investments

(Bloomberg) -- GBP bulls may find more solace vs JPY as technical deterioration on latter (cloud breakouts on x/jpy) may curtail sustained GBP/JPY downside; pair has seen its first bullish alignment in 13-EMA and MACD histogram since late August, Bloomberg technical analyst Sejul Gokal writes.

• NOTE: Click here for today’s technical, options and positioning monitors

RATES OBSERVATION (see chart):

• Investors should watch the U.K.-Japan 10y real yield spread, which has influenced GBP/JPY movements more significantly, as nominal yield spreads diverge since late Sept. (spike in U.K. 10y b/e inflations amid pound slump driving down U.K. real yields)
  • Narrowing of current negative real-yield spread (less in favor of Japan) could help boost GBP/JPY in line with constructive technicals

• GBP/JPY: Convincing bull session yday above ichimoku conv. line and 13-DMA, and turn in Elder Impulse System to ‘green’ (13- EMA, MACD histogram rising together) alleviate downside risks for now; with 9-day RSI at ~48, scope for a squeeze higher toward 21-DMA at 132.65 and then 55-DMA at 133.69 (see LIVE chart)
  • Daily view: Bullish
  • Daily range: Current move 58 pips vs 134 expected (10- day average true range)
  • Resistance: 132.65; 133.27; 133.69; 134.48
  • Spot: 131.82
  • Support: 131.46; 130.51

• NOTE: For more detail on G-10 technical levels, click here
• NOTE: Sejul Gokal is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- France to sell 0.25% 11/2026, 1.50% 05/2031, 1.75% 05/2066 for EU6.5b-EU7.5b at 10:50am CET.

• Lack of concession seen in RV, though richness on repo, expected to support, according to analysts

• Mizuho (Antoine Bouvet)
  • Optimistic about 10y bond given specialness on repo, despite mixed performance going into the sale
  • Back-up in yields likely to drive some demand away from semi-core into core bonds, though expect this dynamic to be more prevalent on a larger selloff
  • 15y issue has cheapened on French fitted curve going into the supply announcement, but has since performed well making the bond less attractive in RV
  • Expect 50Y tap will go well, despite the competing 50Y BTP sale earlier this week; repo markets suggest there remain a substantial short base among dealers in this bond

• SocGen (Marc-Henri Thoumin)
  • 10y has seen no particular cheapening against surrounding issues
  • 05/2031 has seen limited concession overall, but the bond offers some pick-up against the 10y sector
  • 50y issue has seen some cheapening at the long end in recent session; concession has been amplified by the introduction of the 50y BTP, makes the case for a post- auction rebound more compelling

• Commerzbank (David Schnautz)
  • Expect France to allocate low size in 50y benchmark as overall range when France tapped old 04/2060 issue, suggested under EU1b size
    • Suggests EU6.5bn split between the 10y, 15y benchmarks at EU4.5bn, EU2b, respectively